Trade Bill

Baroness Kramer Excerpts

Monday 21st January 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I want to raise what probably feels like a niche issue from a slightly different angle; it seems relevant when we are talking about amendments dealing with the regulation of performance and the environment. If I may, I will do so through an example, although I think that the example probably applies in many other areas.

When I was a Minister at the Department for Transport, I dealt briefly with a niche industry in the UK: specialist car manufacturers, sometimes known as small and ultra-small volume manufacturers. Noble Lords will know their names: Lotus, Williams, Aston Martin and so on. The industry is almost uniquely British; a few Italians may play in the same arena, but globally the industry is essentially British. It has managed to thrive because the EU has recognised the significance of the industry through its turnover of around £3.5 billion per year. That is not insignificant, although it is not on the same scale as agriculture.

The EU has been willing to carve out special provisions for this group of manufacturers, which often cannot meet performance and environmental standards in the way that mass automobile manufacturers can and should. It has managed to open up global markets for those cars by incorporating those niche provisions in its trade agreements: 65% of these cars are exported. The largest market is the United States, where environmental and performance standards are never really an issue; it starts from a very low base. The manufacturers get permission to sell these cars in the EU, which is the next-biggest market, followed by South Korea and Japan. It is only because of the EU’s size that it has been able to create those niche opportunities for this industry. I am interested to know whether the UK believes that it can continue, in its rollover arrangements, to provide that ongoing protection to what one might describe as a somewhat resented industry, even though it is rather successful.

The other achievement of the EU because of its power, breadth and size is its vigorous and strict standards for mass-market cars, despite its significant exception to deal with this essentially British industry. The EU will have no interest in continuing that arrangement post Brexit; as I said, some cars are made in Italy, but no Government anywhere else in the EU will be concerned about this issue. The industry is already very concerned that, following no deal, it may find the EU quick to eliminate the carve-out. That is possible and it is a serious question, but another question concerns whether the carve-out can be preserved in these rollovers and continued in future arrangements when the UK will be negotiating from a much weaker position.

Can the Minister help us work our way through this? I suspect that this industry is not the only niche one. As the Minister will know, the EU has been very good about providing opportunities for highly specialist and select industries that are specific to one of its member countries. I suspect that my experience with the automotive sector is repeated elsewhere. The EU uses its large heft to protect the relatively small. Can the Minister give us some clarity, since these deals are being negotiated as we speak?

[Baroness Hooper (Con)]

My Lords, I fully accept the Government’s assurances in relation to this group of amendments that there is absolutely no intention to lower standards and that the existing protections for consumers will be preserved. However, as has been shown in the discussions so far, there is a cause for concern. While the British Government intend to roll over the agreements without making any change, there is some uncertainty about whether the other parties with which we will be negotiating have the same point of view. The issues have been discussed sufficiently for me not to repeat what has been said, but I suggest that there are a couple of safeguards which have not been mentioned.

The global demand for British goods is based on our high standards. People buy British goods not because they are cheap but because of their high quality. Therefore, to disregard food standards would undermine any possibilities in that area. I understand that the EU withdrawal Act ensures that all existing EU environmental law will continue to operate in UK law. That again provides businesses and stakeholders with certainty.

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

My Lords, the richness and intensity of this debate demonstrates the expertise in this Committee and the importance of getting this right. I assure the Committee that the Government are committed to upholding and strengthening our high standards in food safety, the environment and animal welfare as we leave the EU. In her Florence speech, my right honourable friend the Prime Minister reconfirmed this, saying we are,

“committed not only to protecting high standards but strengthening them … we will always be a country whose pitch to the world is high standards at home”.

The European Union (Withdrawal) Act 2018 will not only provide a functioning statute book on the day we leave the EU but will ensure that all existing EU laws on standards continue to apply in the UK. Leaving the EU means we now have a unique opportunity to design a set of policies to drive environmental improvement with a powerful and permanent impact tailored to the needs of our country.

Amendment 8 was tabled by the noble Lord, Lord Purvis of Tweed, and was spoken to by the noble Lord, Lord Grantchester. I reassure noble Lords that this amendment is not necessary. The process of exiting the EU will not alter the UK’s commitment to upholding international laws and our international commitments. This includes commitments on climate change and the sustainable development goals. The UK is a world leader in our strong commitment to human rights, labour and environmental standards around the world. We will continue proudly to comply with our international obligations, a point I am happy to reiterate.

Additionally, my right honourable friend the Secretary of State stated during the passage of the Trade Bill in the other place that our aim in undertaking this transition programme is to seek continuity of effect of existing trade agreements. This is not an opportunity to renegotiate terms. We are clear that, given the time pressure to have these agreements in place before we exit, there is neither the intention nor the opportunity for the UK Government or our trading partners to change the effects of the existing agreements. This is a technical exercise to ensure continuity in trading relationships. It is not an opportunity to renegotiate the current agreements. As my noble friend Lady Neville-Rolfe said, we have to make sure that we do not make it overly cumbersome. Third parties to whom we have talked on all the continuity agreements have stressed their interest in continuity; it is in our mutual interest. That is where the hypothetical hits reality: this is in their interest and the interest of their consumers and businesses.

The noble Lord, Lord Purvis, referred to investor protection dispute settlements. There is a later group of amendments in this Trade Bill debate relevant to that and, in the interests of time, I wonder whether we can move discussion of that to then. I see that the noble Lord is happy with that suggestion.

Turning to Amendment 9, let me reassure the House that the scope of the Trade Bill is to ensure the continuity of effect of existing EU trade deals. The noble Lord, Lord Kerr, asked about standards in deals with India and China. I reiterate that the power in Clause 2 could not be used to implement a trade agreement with those countries because the EU does not have trade agreements with them and the Clause 2 power is limited to countries with which we have a trade agreement.

As the Clause 2 power is intended only as a vehicle for changing UK law as a result of our entry into continuity trade agreements, it is clear that it will not be used to make changes to UK standards. This is in line with public commitments that the Prime Minister and Ministers from across Government, including from Defra and DIT, have made on the maintenance of the current standards. It would not be logical for the UK to lower our rigorous levels of protection in order to secure a trade deal, as demand for UK exports is based on our reputation for quality. As the Secretary of State for International Trade said:

“Let me tell the House that Britain will not put itself at the low-cost, low-quality end of the spectrum, as it would make no sense for this country economically to do so, nor morally would it give us the leadership we seek. I believe there is no place for bargain-basement Britain. High standards and high quality are what our global customers demand, and that is what we should provide”.—[Official Report, 6/7/17; col. 1365.]


My noble friend Lady Hooper stressed that powerfully.

My noble friend Lady Byford talked about future free trade agreements but they are not part of the Bill. This is all about continuity of the existing ones. We will bring forward proposals for future free trade agreements in the coming weeks, and I am happy to reiterate the commitment made in the other place by the Secretary of State for International Trade that Parliament will have the ability to inform and scrutinise those agreements in a timely and appropriate manner.

We want to achieve the same outcome of maintaining our standards, but if we were to amend the Bill in this way, we would be likely to delay ratification of agreements—something that neither we nor our partner countries want. We appreciate the concern about scrutiny of agreements. On earlier amendments we covered the scrutiny procedures at length and the need to make sure that the House has the ability to look at these continuity trade agreements. The amendment would duplicate some of that process. I would argue that, particularly given the time pressure, there will be good opportunities for Parliament to scrutinise the trade agreements that are being transitioned.

Amendment 10, tabled by my noble friend Lady Neville-Rolfe, would ensure that the Clause 2 power would not be able to make provisions in international agreements that restricted the ability of public sector employees to deliver public services. I hope that I have already been clear that the Clause 2 power will not be used to do such things, as it will be used only to deliver continuity. These changes would require reopening negotiations with third countries and that would constitute a change in policy, which would not be continuity. I reassure my noble friend that the UK Government, not our trade partners, will continue to make decisions about public services. Public sector jobs are under no threat whatever from this agreement or any other.

[Baroness Kramer]

The Minister has just said that our public services are not at threat from this agreement or any other, but the United States has been very clear that its two primary objectives in a free trade deal with the UK are access to the full range of public services and for there to be a private option. It has been very clear about that—one can talk to any of the healthcare companies. That surely falls into the category of other agreements that she has just described.

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[Baroness Fairhead]

The noble Baroness raises an important point. That is why we are seeking an agreement and implementation period which will allow that timing. I can say that the Government will establish our own world-leading green governance body, the “Office for Environmental Protection”, or OEP, to champion and uphold environmental standards in England.

[Baroness Kramer]

I am sorry, but I have a question for the Minister—this may be my mistake in not having followed other legislation closely enough. My understanding is that this will have far fewer teeth than its existing European counterpart, so that it can say things, but it cannot in any way enforce. I understand that the British Government demanded that it should not have enforcement powers.

[Baroness Fairhead]

My understanding is that the OEP will be an independent statutory environmental body that will hold the Government to account on environmental standards once we leave the EU.

[Baroness Kramer]

I think the Minister understands that there is a difference. It is often said that this body can hold the Government to account, for example through an affirmative statutory instrument. It cannot actually stop the Government doing anything, because there is no mechanism that enables it to enforce against the Government. My understanding is that this is a different example; this new body will not be able to enforce. That is completely different from its current equivalent in the European Union. I would hope that the Minister at least recognises this, even if she defends it and says that the difference does not matter. I would be interested to know why she might think it does not matter, but I hope that at least she recognises it.