EU-Canada Comprehensive Economic and Trade Agreement

Geraint Davies Excerpts

Monday 6th February 2017 General Committees

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is my great pleasure to serve under your chairmanship, Sir Edward. Having served with you on the Public Accounts Committee after 2001, I know how important parliamentary scrutiny and establishing costs and benefits are to you, and the European Scrutiny Committee shares that perspective.

The EU’s ambitious free trade agreement with Canada is due to be considered by the European Parliament only next week, on 15 February. It is therefore unfortunate that, despite the European Scrutiny Committee’s repeated requests since September last year for a debate on the Floor of the House, it has only been possible to schedule a debate today, some three and a half months after the Government agreed to the decisions authorising the EU to sign the provisional comprehensive economic and trade agreement, and that we are having that debate in Committee, rather than on the Floor of the House.

The Government’s agreement to those decisions constituted an override of parliamentary scrutiny. The European Scrutiny Committee summoned the Secretary of State to an emergency evidence session immediately afterwards to explain matters, and he gave various undertakings. However, the failure to schedule a debate on this significant trade deal in good time means that the House has lost an important opportunity to scrutinise and have a say on the Government’s position on the comprehensive economic and trade agreement, which has generated so much interest here and across Europe.

I will start with the broader Brexit implications that the European Scrutiny Committee considered. CETA is the EU’s most ambitious free trade agreement to date and will, among other things, lead to the elimination of almost all tariffs on most goods, open up trade in services and enable mutual recognition of professional qualifications. Much of the agreement will be provisionally applied, and the Government tell us that UK consumers and businesses will see immediate benefits. However, what will happen after we leave the EU? Do the Government have plans to ensure that we continue with CETA, or will we need a new deal after we leave?

The questions of competence that arise in respect of many EU agreements with third countries are particularly acute with CETA. The Commission originally wanted the EU to act alone in entering this agreement with Canada. It accepted that CETA should be a mixed agreement, entered into by both the EU and the member states in their own right, only following pressure from member states. The European Scrutiny Committee is concerned that there should be clear and transparent delineation of the extent to which the EU has exercised its competence in signing the agreement and the extent to which member states have exercised theirs. That question is important for three reasons: first, to support the Government’s policy that the EU should act only where it has exclusive competence; secondly, to counter the Commission’s clear wish to limit member states’ involvement in such agreements; and thirdly, to facilitate any exercise of disentanglement that Brexit requires.

This fraught issue will be affected by the outcome of litigation that will be considered later this year in the European Court of Justice on the Singapore free trade agreement. It is also relevant to determining the procedure for concluding future agreements, including between the post-Brexit UK and the EU.

The Committee has been concerned to identify precisely who can trigger and terminate provisional application of CETA. That is important, given the controversy that CETA has aroused, and the uncertainty as to whether it will ever be ratified. For reasons set out in the Committee’s report, that matter has not been satisfactorily resolved.

To move on to the prospective benefits of CETA, the Government have stated that it would bring about £1.3 billion of economic benefit to the UK. However, the Minister has not addressed our question—I hope he will—about which sectors might be expected to incur losses. Given the concerns expressed in the UK and other countries about the vulnerability of certain sectors, it is important that the Government should demonstrate transparency on that point, especially as they are talking about different sector arrangements with the EU, post-Brexit.

CETA’s provisions for the investment court system, or ICS, have generated particular controversy, and the Government should confirm whether they will come into effect on ratification by all member states, or by each member state, irrespective of, or subject to, the Singapore judgment. In addition, as Belgium has signalled its interest in referring the ICS mechanism to the European Court of Justice for a ruling on its compatibility with the EU treaties, the Minister should inform us whether he thinks the view of the Court is necessary and beneficial and should have been requested much earlier by the Commission.

I have outlined the main issues and concerns raised by the European Scrutiny Committee since September, and they are reflected in the amendment that I have tabled. I am sure that hon. Members will have much to add, and I look forward to the Minister’s response.

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[The Chair]

Good.

[Geraint Davies]

I want to press the Minister on this point: there have been two Back-Bench business debates—one in November and one the previous November. There was a consensus on a vote in both debates that the international trade agreements—the transatlantic trade and investment partnership and CETA—should be scrutinised across Parliament in full parliamentary debates. With respect to the timetabling of the present matter, there have been three and a half months since the provisional agreement of CETA. There was a prior opportunity for the Government to call a debate. They could have done so in the knowledge that the Council of Foreign Ministers was going to sign. The Government could have timetabled it.

Instead, the Secretary of State was dragged kicking into the European Scrutiny Committee by the hon. Member for Stone (Sir William Cash), who demanded answers. At that point the Secretary of State said he would ensure that there was a full debate in Parliament, which he has not done. Now the issue has been hidden under the cloud of Brexit, so the media and others will take no notice of something that, if ICS goes forward, is a threat to our democracy, human rights and the rule of law. Will he answer the timetabling point again, and when he does will he also say whether he supports the ICS in principle?

[Greg Hands]

As I have already said, the ICS is not part of the provisional application.

[Geraint Davies]

Do you support it?

[Greg Hands]

Let me deal with the hon. Gentleman’s point about the two Back-Bench business debates. As I understand it, they were not actually about CETA at all; they were about TTIP, which is not the agreement we are considering today. The European Parliament has pushed back its own debate on CETA to 15 February, which is significantly later than when it originally intended to debate and vote on this agreement. We are ensuring that our debate in the House of Commons takes place in advance of the European Parliament’s debate. That is the right thing to do, and I am confident that Members will back the decision today to go ahead with the provisional application of this agreement.

[Geraint Davies]

On a point of information, the debates were about international trade agreements and embraced TTIP and CETA. May I press the Minister on whether he agrees with ICS? He stated that it would not be applied, but does that not depend on how the Singapore agreement goes? He said that labour and environmental standards would not be reduced, but could they be increased, in particular with the advent of ICS? ICS would empower transnational companies, through arbitration courts, to sue the Government if they introduced new laws such as a tax on sugar to protect public health, or constraints on the effect that fracking could have on water quality, due to the extra cost or lost benefits resulting from those laws? According to him, the ICS provisions will not be ratified yet, but does he agree with ICS in principle?

[Greg Hands]

Let me try to take each of those two points. The UK has had its reservations about ICS, but importantly, that is part of the negotiation. We want and expect to see the details of ICS thrashed out in the coming months. The Commission and the Council have pledged to keep talking, and we are not alone in having reservations about ICS. We believe it is important to have investor protection in these agreements.

As for any decision to increase regulation, that comes back to nation states having the right to regulate. A right to regulate means an ability to decrease or increase regulation in accordance with whatever a Government and Parliament think is an appropriate course of action.

[Geraint Davies]

On saying that we will sign up to CETA and then do our own thing after Brexit, is the Minister aware that when CETA is fully signed, it will tie us into the agreement for 20 years and bind future Governments? We cannot just jump up and say, “We will have another agreement”, quite apart from the fact that it will be a worse agreement, because we have less negotiating power than the EU. Will he confirm that this is a 20-year agreement, and that he can give no firm undertaking that we can exit it?

[Greg Hands]

I thank the hon. Gentleman for his question. I will say two things. First, it does not stand to reason at all that the UK standing alone would negotiate a worse agreement than the European Union; he makes a massive set of assumptions there. Secondly, the 20-year provision relates only to investments made while CETA is in force in the UK, which there may or may not be, and while the UK is still party to CETA.

[Geraint Davies]

rose—

[The Chair]

One more question.

[Geraint Davies]

If we sign up to CETA and existing investors’ rights continue for 20 years, a fracking company that comes from the United States via a Canadian subsidiary could be subject to the capital tax concessions of 75% now in place for frackers, and to loose planning restrictions that meant that frackers could frack under your house, Sir Edward. Does the Minister agree that if a future Government decided that the planning constraints and tax concessions were too lenient, and wanted to focus on renewables, in line with the Paris agreement, the frackers could sue the Government, within a 20-year timeframe, for lost profit under ICS?

[Greg Hands]

That is an extremely hypothetical case. Let me be absolutely clear: CETA will no longer apply to the UK if it has been only provisionally applied. Only once CETA has been ratified by all EU member states and Canada can it be brought into force. Investments made during provisional application will not benefit from that sunset clause. The hon. Gentleman’s case is very unlikely to happen.

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[Greg Hands]

Can I answer the hon. Gentleman’s specific point on the ICS in a moment?

[Geraint Davies]

The Minister said his reservations about the ICS were about costs and choosing arbitrators and so on. He did not suggest that there was anything intrinsically wrong with the ICS. Does he agree with me that it is intrinsically unnecessary because investors are protected in Britain and Europe by three tiers of law: national, European law and the European Court of Human Rights? Similarly and in parallel in Canada, investors are protected by provincial courts, appeal courts and the Canadian Supreme Court.

Those established systems of public and contract law have protected trade between Canada and the EU in the past. The problem with the arbitration courts is that they are unnecessary, apart from the fact that they may be inherently dangerous to our democracy.

[Greg Hands]

Let me repeat that the ICS has not been provisionally applied. I know that I keep having to say that but it is an important point in relation to today’s debate. CETA confirms the right of state parties to regulate in the public interest. Non-discriminatory action by states should not give rise to a successful investor claim in the first place. A lot of the hon. Gentleman’s fears are not well grounded.

Tribunals can only award compensation to investors in the event of a breach of the agreement being proven. The ICS cannot force a state to amend or remove legislation. With this kind of thing, in a general sense it is important for there to be investor protection in trade agreements. How precisely that is done will be a matter for debate later. I will repeat that it is not part of what is being provisionally applied in this agreement.

[Geraint Davies]

With respect, the Minister has just said that arbitration courts cannot overturn legislation. What about the case of Ethyl v. Canada, which overturned a law to protect public health? What about the case of Metalclad v. Mexico? The authorities’ attempt to stop planning permission for a landfill that was polluting an entire town was overturned by an arbitration panel. The list goes on: the case of Cargill v. Mexico overturns a soft drinks tax of the sort that the right hon. Member for Tatton (Mr Osborne) was trying to introduce here. There are consistent international examples of arbitration courts overturning publicly agreed, democratically agreed laws. What the right hon. Gentleman is saying is not true.

[Greg Hands]

I am not aware of the specific cases the hon. Gentleman cites. I do not believe that we in the UK have been forced to change our regulation or our legal system as the result of an arbitration. The ICS cannot require us to change our laws; it is only a compensatory mechanism. Finally, I repeat that that is not what is provisionally applied under the CETA agreement.

[Geraint Davies]

rose—

[The Chair]

One more, Mr Davies.

[Geraint Davies]

Changing the subject, during the European Scrutiny Committee hearing the Minister and the Secretary of State said that the driving force behind signing up was our desire not to damage our relations with the EU and Canada, rather than the detail of whether the agreements might have a negative impact on our industries and, more important, our rights to decide. On the Minister’s final point, the issue here is that fining countries that pass laws to protect their citizens, public health, the environment or rights at work is intimidatory—it is the fine, the pressure, the cost. The ICS does not come in and literally write legislation. It says, “If the Government introduce a fizzy drinks tax, we will penalise you, so don’t. Let people have diabetes and die early.”

[Greg Hands]

It would have to be proved that that is a discriminatory action against a particular company, which I am not clear would be the case in the example the hon. Gentleman gives.

Let me return to the point about not wishing to damage relations with Canada. May I ask the hon. Gentleman—

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[Greg Hands]

The answer is this, Sir Edward. Starting “Line 10, leave out from “part;” to end and insert”, this amendment in the name of the hon. Member for Swansea West continues: “regrets the signature and the provisional application in the coming months of the Comprehensive Economic and Trade Agreement; is of the opinion that the provisions regarding the Investment Court System are potentially harmful as they have the potential to empower corporate trade interests to the detriment of public bodies protecting the environment, food safety, public health and social rights”. This amendment expresses regret about the signature and the provisional application, even though the hon. Gentleman was a member of the European Scrutiny Committee that, at its meeting in September, agreed that the treaty should be signed.

[Geraint Davies]

rose—

[The Chair]

As you have been mentioned, Mr Davies, you may have the chance to ask another question.

[Geraint Davies]

On a point of order, Sir Edward. Is it in order for members of the Government to have access to the Public Bill Office when people are considering prospective amendments? That amendment was never put. This is outrageous! It is spying. This is a very serious point.

[The Chair]

I am advised that that is not a matter for the Chair.

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[Geraint Davies]

Okay, then I will go on and ask a question. I will take up the matter with the House authorities. It is disgraceful.

The previous draft amendment, which the Minister read out, expressed concern about the implementation of the investment court system. There is enormous concern about this across Europe, which is why it has been taken out of the agreement and put to one side. Such expressions have been made across the Council of Europe, representing 830 million people, which passed a legal affairs resolution only the week before last stating that the ICS should at least be amended to be in accordance with the European Court of Human Rights, that there should be a one-year opt-out, and that fines should be strictly limited to actual damages. There is nothing anti-CETA about that amendment. It says that there are concerns, so there should be a debate. It is outrageous that the Minister got hold of that somehow—perhaps he can tell us who leaked it?

[Greg Hands]

Sir Edward, as I understand it, amendments can be tabled in the Public Bill Office and withdrawn, which is what I understand the status of the amendment I read out to have been. It was tabled, and it is perfectly possible for people to go in and see what amendments have been tabled. Contrary to what the hon. Gentleman says, the amendment does express regret about the signature and the provisional application. I think the onus is on the official Opposition to work out what their position is on CETA. Are they in favour of CETA or against it?

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[Geraint Davies]

On the Minister’s point that he saw a previous draft of the amendment, may I say that the problem with the procedure has been that there has not been proper scrutiny or sufficient parliamentary time to discuss the matter? At the final moment, I was alerted, as a member of the European Scrutiny Committee, to the fact that I would be speaking on behalf of the Committee and that I had a few hours to table an amendment. The main concerns that have been expressed across Europe on this issue have been about the ICS, so I quickly drafted an amendment that basically pointed to the concerns about that. The Minister has rightly pointed out that that has now been put to one side and that it will be ratified separately. Basically, the amendment said that there were concerns about that and that we wanted a full parliamentary debate and to move forward. That amendment was withdrawn.

May I turn to the amendment on the table, rather than the draft scribble that I did in the heat of the night, having been told that there was a tight deadline on amendments being tabled? This amendment says that we welcome

“the prospect of enhanced trading relations between the United Kingdom and Canada”.

Let us be clear: we on the Labour Benches want more trade. We want harmonised trade and market access, but we do not want a new system of laws to be introduced for multinational companies to fine democratically elected Governments, whether they are in Canada or across Europe, in respect of laws that are passed to protect citizens in relation to public health, the environment and rights at work. That is the concern.

However, that part of our concern is not in the amendment. The amendment simply reflects the position of the European Scrutiny Committee, whose focus is on proper scrutiny. In essence, the amendment says that the Secretary of State should fulfil his obligation and his promise to the Committee to have a full debate, because fundamental issues are involved. I appreciate that people will not all agree on these things, but that is the point of democracy and debate. I appreciate the Opposition may have a view, or there may be breaks in different parts of the Opposition. We may disagree or agree, but that is not the point. The point is that this is of fundamental importance not just to our economy but to the services and democracy that we enjoy.

Am I right, Sir Edward, in thinking that I should give my entire contribution now?

[The Chair]

Yes, that is right.

[Geraint Davies]

Thank you, Sir Edward.

The view of the European Scrutiny Committee is that in the light of the unfortunate lack of scrutiny, all members of the Committee should find it in their heart and mind to add the words in the amendment to the motion so that we can all come together and agree it. The Government might say, “Sorry, we don’t want more scrutiny; we want to take control, but we want to take it in the corner without other people having any involvement”, but I am afraid that I will certainly not vote for a motion that does not require extra scrutiny, given that the Secretary of State has given a solemn undertaking to provide it.

I will give some of the reasons for further scrutiny given the concerns about CETA, particularly when the ICS is introduced to it. The key debate in Europe has been about why we need the ICS, and the answer that has been given is that it is to protect investors. However, we must ask how investors are protected at the moment. Are they adequately protected? The answer is that they are. In Europe they are protected by county courts, national courts and national law, European law and the European Court of Human Rights. In Canada there are provincial courts, appeal courts and the Supreme Court. The United States has a similar legal system. It is not surprising that our long-established systems of public law, contract law and commercial law balance the interests of the investor against the wider public interest.

That is particularly important in examples such as the balance of investor and environmental interest in fracking. Or perhaps an investor such as a fizzy drinks manufacturer might come along and the Government might say, as the right hon. Member for Tatton (Mr Osborne) did, “Actually, we’re about bit worried about diabetes and obesity; 45% of sugar consumption by teenagers is from fizzy drinks, so we’ll put a tax on them.” If that went to court, the court could say, “We’ve got to balance the public interest with investor interest”. However, an arbitration court is all about the interest of the investor and whether a particular law has had an impact on the future profitability of a legitimate investor. In the narrow case in Mexico that I mentioned, of course the court, using that narrow definition of investor interest, ruled that the tax had reduced the investor’s sales and profitability, and the public had to pay the price. That is outrageous, and we should not just nod that sort of thing through.

We have systems of law that protect both the investors and the public. The precursor to the ICS—the so-called investor-state dispute settlement—was introduced in 1957 in an agreement between Germany and Pakistan, because the Germans thought that there was some risk to their investment. I do not have anything against arbitration courts per se if they are about, for instance, European countries investing in high-risk countries with undeveloped judiciaries and unstable political environments. That means that investors can take necessary risk and the arbitration court can take a view on unreasonable sequestration.

That is not what we are talking about here. We are talking about mature economies, judiciaries and democracies that already trade enormous amounts of goods and services. The great advantage of CETA is that it will pave the way for the regulation and harmonisation of standards—there are concerns about standards, incidentally, but I will come to that in a moment. The opportunity is something like 0.5% of GDP, so it is not overwhelming. Most of the problems are about tariffs, but the big problem has been about the ICS. I know that the Minister says we have set that to one side, but it will be a problem downstream. Issues such as this are fundamental to democracy, the rule of law and human rights, so we will need a proper debate. If the ICS comes in downstream and intimidates Governments into not introducing laws to protect their citizens, it will be a major problem for democracy itself. That is why there has been such a big debate among the 47 countries of the Council of Europe, above and beyond the European Union.

[Barry Gardiner]

I am listening carefully to my hon. Friend’s points and I agree with a great deal of what he says. Does he consider that there is an irony in the fact that we are leaving the European Union in order to come out from supranational institutions that can override national Parliaments and courts, yet at the very same moment we appear to be signing up to an agreement that will give us a supranational court that sits over us?

[Geraint Davies]

More than an irony—a tragedy. The view of some, apparently, is that we should move out of the orbit of the European Court of Human Rights, which supports the fundamental values of human rights, democracy and the rule of law, and into the orbit of arbitration courts whose basic remit relates to the interests of the investor, as opposed to the wider interests of the environment. If the Minister has looked at the detail of the chapters of CETA, he will have observed that the investor chapter is armed with arbitration courts that trump national and international law, but that there are no such teeth in the environment chapter, for instance. There is no enforceability of the Paris agreement that we have all signed up to in order to save the planet. Nor, for that matter, is there any enforceability of labour rights.

We need a debate, because ICS is down the road—I accept that it has not yet come in and we can do the other bits first, but there is a concern that that is an unnecessary and dangerous prospect. I do not want to run through hundreds of cases, but there was a famous case in which Obama said to TransCanada, “We don’t want this sand oil pipeline coming in from Canada to the US, because it is a breach of the Paris agreement.” As I understand it, the case has now been dropped because Donald Trump has taken over the presidency, but TransCanada was going to sue the US for $15 billion. My hon. Friend the Member for Brent North mentioned ratcheting and reassurances about health services; there was a case in which Slovakia attempted to renationalise part of its health service and was penalised in court with fines. Hon. Members may remember that at the last election the Labour party stood up and said that it wanted to freeze energy prices; one may or may not like that idea, but Argentina was sued for $1 billion under ISDS by energy companies from America and Europe for doing exactly that. Philip Morris, famously, has been pursuing a case against Australia and Uruguay to stop plain tobacco packaging, which was introduced to reduce deaths from cancer.

The problem with these courts is that they are secret, they have a narrow remit, they are run by commercial lawyers, they are inconsistent in outcomes and they do not normally have appeals. Under the new ICS they will have appeals, but they will not adopt the doctrine of precedent, so one court’s verdict may not inform the next court. The Council of Europe, which I mentioned earlier, has therefore said, “Hold on—we are very concerned about the investment court system, but if and when it does come in, it should be subject, as a minimum, to a number of constraints. In accordance with the European Court of Human Rights, there should be one-year opt-outs with six-year investor protection, and there should be actual damages rather than the fantasy projections of profit that have been sued for.”

I have already mentioned the problems with secrecy and lack of accountability. The Secretary of State seemed to think that it was marvellous that we should be able to go into a library on our own and have a look at the CETA documents, without taking photocopies. Obviously, no one can really understand what they are looking at and gain a meaningful view in the amount of time they are given. It seems to have been a bit of a joke, to put it mildly.

There are other issues that the Minister may want to respond to. There is widespread concern about European standards, for example, in relation to genetically modified food and other food standards, so can he give us any assurances that we will not be slipping to the lowest common denominator in health and equality standards? There are concerns that the precautionary principle, which has been a principle of EU law, has not in fact been instilled into CETA.

People are also concerned that there is a move away from openness in clinical trials. As Members may be aware, the clinical trials directive requires pharmaceutical companies to go public with the outcomes of their clinical trials. As I understand it, CETA will give private companies the right to withhold the outcomes of clinical trials. For example, if a company such as the one that manufactured thalidomide found that half the trials for a certain drug were negative and half were positive, it could publish only the half that were positive. What does the Minister have to say about that? What about the issues relating to trade secrets in CETA? He may think that these are minor points, but I want some reassurance.

I am trying to make the case that, given that there are so many issues, we need a proper debate. Parliamentarians are concerned. When we look at VW fixing emissions, for example, we see that there are new opportunities in CETA for trade secrets. If an employee blows the whistle because they discover that their company is harming public health, for example with diesel emissions, or a drug that harms babies—whatever it is—they can be punished by the company. These are issues of concern that require clarity and debate.

There are concerns about labour rights and whether there will be an assurance that International Labour Organisation conventions will be fulfilled. There are concerns about level playing fields and whether procurement will be equal and apposite. There are concerns about winners and losers, which the European Scrutiny Committee has also debated. We are told that there will be an overall GDP gain of something like 0.5%, but which sectors will win and which will lose? Will small companies lose out? The Prime Minister has already said that she will back certain winners, so perhaps motor manufacturers will get a good deal, but there is some fear that Welsh lamb producers could face a 40% tariff after Brexit. We also have the concern, raised by my hon. Friend the Member for Brent North, about geographical indicators. Welsh lamb was not a geographical indicator originally, so in theory someone could sell in Britain lamb that had been produced in Canada and call it Welsh lamb. That is a real problem.

[Ms Ahmed-Sheikh]

It is important to be clear that no one in this debate is against trade—quite the opposite. What we are talking about is the fact that many Members wanted an opportunity to debate this because they have postbags full of letters from people with experience in a variety of areas that they wish to bring to the fore so that they can inform the UK Government’s future trade policy and also voice their concerns. This is not about having a debate for debate’s sake, which feels like what we are doing here; this is about the Government missing an opportunity genuinely to listen to Members who have received representations from constituents who have knowledge in these different areas, some of which the hon. Gentleman has referred to, which are worth hearing. That is why this is just not up to standard.

[Geraint Davies]

I thank the hon. Lady for making that excellent point. I must say that, even though this debate has been buried in a foxhole, I have received hundreds of emails from people across the country saying, “At least you’re doing something about it” in having this sitting. I appreciate that that is better than nothing, but this is such a big issue that we need a wider debate.

The Sun carried a half-page article under the headline, “EU deal will give pasties a pasting”, because there is reasonable concern about the Cornish pasty and geographical indicators. The Italians and the French have been slightly quicker off the mark in registering champagne, various sorts of cheeses and pastas and all the rest of it, than us. We have caught up a bit, but there need to be clear undertakings that there will be new geographical indicators so that we can have protection. We know that the Americans and Canadians are used to global brands, while we are more used to a European approach, so those issues need to be talked about.

The issue of transparency and scrutiny needs to be talked about as this agreement will be the forerunner to the Transatlantic Trade and Investment Partnership, if it is ever revived, which depends on Donald, of course. This agreement could be a blueprint for global trade. If it is to be, it needs to embrace not only the best in trade, transparency and harmonisation, but the best in ensuring that trade is compatible with our environmental imperatives to deliver the Paris agreement and human rights as well.

You will be glad to hear, Sir Edward, that I shall close my remarks here. I simply wanted to lay down some markers that this issue is crucial to all parliamentarians—not just across Britain, but across Europe and Canada. We need a proper debate, which we were promised. We want to give this agreement our blessing, subject to that ratification by the House of Commons. That is why I am speaking to this reasonable amendment, which accords with what the European Scrutiny Committee has said. People should not say, “We don’t support this because we heard that you were thinking of a different amendment to start with.” That has nothing to do with this amendment, which is about scrutiny, democracy, accountability and upholding our rights, rather than nodding them away.

[The Chair]

The Minister could speak now, but I think I will call Mr Gardiner and then Mr Grant. However, they must allow the Minister at least 15 minutes to reply. Is that all right with the Minister?

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[Barry Gardiner]

The hon. Gentleman is right that all Members of the House have the right to attend the Committee, but he will have noticed that this one and only opportunity for them to do so was deliberately timetabled at the same time that the European Union (Notification of Withdrawal) Bill is being considered in Committee on the Floor of the House. I do not believe that is a coincidence. I do not believe that is a mistake. I believe that it is part of a deliberate attempt to stop proper scrutiny. The hon. Gentleman talks about scrutiny and about moving this debate on to substantive issues within CETA, but the debate on the motion and amendment is precisely about whether this matter should go to the Floor of the House. That is why the process is important. We need to see that proper process has been kept, and sadly it has not.

[Geraint Davies]

Will my hon. Friend give way?

[Barry Gardiner]

I want to respect the Chair’s stricture.

[Geraint Davies]

Does my hon. Friend agree that in the three and a half months that the Government have had to hold the debate, this is probably the best time for them to have it in terms of hiding bad news under the noise of the Brexit debate? This is clearly pre-planned to stop proper scrutiny, public debate and media coverage.

[Barry Gardiner]

I wholeheartedly agree. We must now move forward. The Government said that it was of the utmost importance to have the debate on the Floor of the House, yet we find ourselves 68 days later with a debate up in Committee Room 10.

The European Scrutiny Committee issued the Government with a waiver, to allow them to sign CETA at the Council of Ministers. The Committee made it clear that the waiver did not extend to the provisional application or conclusion of CETA. The Secretary of State chose to disregard the Committee. We have heard from the Minister today the reason why: because it was bundled. It is important that we hear from him whether the UK made any objection or moved any procedural motion during the Council of Ministers to unbundle it, so that the Secretary of State could observe the protocols that he had undertaken to the Committee.

I can only concur with the Chairman of the European Scrutiny Committee, who said that it was a “serious” breach when the Secretary of State failed to honour the waiver he had been given. That stands in stark contrast to the many statements made by the Government in recent days to assure us of their commitment to respecting parliamentary scrutiny and accountability.

In the same vein, there has been a marked failure to present CETA for consultation before the devolved Administrations, despite the fact that their Departments are all listed in the annex of entities covered by the public procurement rules of CETA and are thus exposed to CETA’s strictures on central and sub-central Government entities alike. I call on the Government to remedy that failure as a matter of urgency, before initiating the process for ratification of CETA in the House. I hope that the Minister feels that he can give an undertaking on at least that level.

With regard to process, the Government failed to meet their own successive promises to bring CETA forward for a full debate on the Floor of the House. The Secretary of State was, at best, disingenuous in the statements made to the Chairman of the European Scrutiny Committee. He explicitly broke the waiver that the Committee had given to him, when he approved both the provisional application and the conclusion of CETA, and his Department has failed to engage with and consult the devolved Administrations in respect of an agreement that has specific application to them. Those are serious procedural failures that show a disregard for the proper scrutiny of Parliament, and they provide, in themselves, a compelling case for the Committee now to insist that the Government bring that full debate to the Commons. However, there are substantive reasons as well as procedural ones and, in many respects, they are more compelling.

I turn, therefore, to the content of CETA. It will be a surprise to the Committee to learn that the Government have not commissioned any research on what the impact of CETA might be on the UK economy. That should be a matter of concern, because the Government have repeatedly claimed, as the Minister did in his opening remarks, that CETA will bring up to £1.3 billion extra to the UK economy. Let me straightaway say that I would be the first to cheer if that were a credible prospect, but the Government admitted in their explanatory memorandum of July 2016 that it simply took a projection of overall gains to the EU and divided it by the UK’s share of EU GDP to come up with that figure. That is back-of-an-envelope calculation. It has to qualify as one of the crudest and least credible methodologies ever adopted to project the impact of a major trade agreement.

Only one study to date has disaggregated the prospective impacts of CETA on individual EU member states, and it concluded that countries such as France, Germany and Italy would indeed see an increase in their exports as a result of CETA. However, the study is clear that the UK would experience a decrease in both its exports and its balance of trade. At a time when the UK balance of trade is already under so much pressure, the very possibility that we might suffer a loss of exports should give us pause for proper scrutiny. At the very least, a proper impact assessment of how the agreement will specifically affect the UK needs to be conducted. That further underlines the need for the promised debate on the Floor of the House.

Members will also be surprised to learn that the Government have failed to list in annex 20 to the agreement a single one of the dozens of great British food products that qualify for protected geographical status. The UK is the only major EU member state that failed to secure such protection in CETA for its food businesses. The “Geographical Indications” annex of CETA is page after page of products listed for protection by France, Germany, Italy, Greece, Spain, Romania, Austria, Hungary and the rest, but there is not a single one from the UK. There is no protection for Scotch beef, Scotch lamb, Scottish farmed salmon, Welsh beef, Welsh lamb, Cornish pasties, west country farmhouse cheddar, blue Stilton, or white for that matter. More than 50 other British products that should qualify for protected geographical status are simply not protected. How can the Secretary of State have failed to protect a single one of our products under CETA? No wonder he does not want the matter to be discussed on the Floor of the House of Commons.

CETA is also remarkable in its complete disregard for the interests of small and medium-sized enterprises. Even TTIP contained a dedicated chapter outlining the support measures that the EU and the USA would introduce for SMEs. By contrast, in all the 2,255 pages of CETA there is not one single commitment to further the export interests of SMEs.

In recent times, we have heard much talk of the Government’s commitment to parliamentary sovereignty. The Prime Minister has declared that leaving the EU will allow Britain to be a fully independent, sovereign country once again, no longer subject to

“supranational institutions that can override national parliaments and courts.”

Likewise, the Secretary of State for International Trade has given us his vision of

“Britain as an independent sovereign nation, with a parliament beholden to no one”.

Yet, if we look at last week’s White Paper, it spelled things out very clearly. It has an annex about CETA—it creates a framework of supranational institutions that are precisely designed to override national Parliaments and courts. Along with the CETA Joint Committee, which will have binding powers over sovereign Parliaments in future, CETA includes the investment court system, the latest form of the ISDS mechanism, to allow foreign investors to sue host Governments over public policy measures that undermine their profits. Under CETA, a foreign company will have the right to bypass the domestic courts and avail itself of its own privileged commercial judicial system to challenge any regulatory reforms that run counter to its “legitimate expectations” as a profit-making enterprise, claiming vast sums in compensation even when Parliament has approved the reforms.

We in the Labour party are opposed to any system that grants foreign investors private justice in their own private courts. As noted in the charter for progressive trade deals that we adopted last year, we uphold the basic principle of equality before the law, which requires foreign investors to abide by the same rules as everyone else, in the same judicial system as everyone else. Foreign investors can have full confidence in the British legal systems to obtain redress where their interests have been unfairly harmed, and the British people can have confidence that the courts will then balance the competing interests of foreign companies and the public good when making their judgments. A company, however, does not even have to win its case in the investor court system to undermine UK sovereignty. The very threat of a legal challenge and the scale of both costs and potential damages can make Governments back away from regulation that would be in the public interest, and can exert its own regulatory chill on Government plans for new legislation. It was a legal technicality that prevented Philip Morris from obtaining billions of dollars of compensation that it sought in its case against Australia’s law on plain packaging for cigarettes. That did not stop other countries backing away from introducing similar measures for fear of being hit with their own claims.

--- Later in debate ---

[Peter Grant]

I think that means I have as long as the hon. Member for Brent North had after starting to come to his conclusions, so I will try and keep by comments brief.

The Minister asked what the Opposition’s view of CETA was. Well, there is not just one Opposition—even on this small Committee there are at least two Oppositions, and possibly more, but we will see later. The Scottish National party’s position on trade is that we want it. We form the Government of a country whose exports are worth almost £30 billion a year, excluding oil and gas—that counts as Scottish produce when it is bad news but not when it is good news. That is equivalent to about £100 a week exported for every man, woman and child in the country.

We can do that because we have confidence in our producers to compete on a level playing field with anybody anywhere in the world on quality, whether in food and drink, which have been mentioned, our tourism provision or invisible exports such as higher education. Scotland has nothing to fear from fair trade, which is why we are staying in the single market even after some Members here have chosen to leave, but we have to ensure that removing barriers to fair trade does not create opportunities for the destruction or hijacking of important public services. I welcome the assurances that the Minister has given us today, but I still want to hear them given to the entire House of Commons, not simply because I think that is what should happen, but because a Minister of the Crown promised that it would happen.

The Minister and some of his colleagues on the Government Benches keep talking about debating the process as if that did not matter. We should remember that the European Parliament, the Court of Justice and the European Commission are processes. If we are not interested in processes, why are we going through the chaos of Brexit to change the process by which our laws are made and interpreted? The process matters. Strange though this may seem coming from somebody who, as hon. Members will have gathered, is not a great fan of this place, I think that the principle of Ministers’ accountability to Parliament is so important that I would be prepared to see a delay in a trade deal that I was 100% in favour of if that would ensure proper parliamentary scrutiny. When I am here, I am not just speaking for myself. When the whole House is assembled, we are all speaking for others, and those others have raised significant concerns, whether they are well founded, based on misinformation or based on good information. Those concerns can be addressed without scuppering the whole treaty.

This issue is too important to be discussed late on a Monday evening in an upstairs Committee room in the House of Commons. I had a look at the BBC website a few minutes ago. There are 11 different headlines on the politics page, but this debate does not feature—that is how successfully it has been hidden away. I cannot see into the minds of the managers of the Government’s business. It might just be a coincidence that we got notified of the date, time and place of this meeting on exactly the same day as the programme motion for Committee stage of the Withdrawal from the European Union (Article 50) Bill appeared on the Order Paper. It might just be a coincidence that after five months of waiting for an urgent debate, it suddenly gets programmed for a day on which nobody but nobody is going to be paying the slightest bit of attention to it.

If the Minister is concerned that delaying the signing of CETA will somehow damage Britain’s reputation in trade circles around the world, what does it do to the Government’s reputation when a Minister goes before a Select Committee and says that he agrees that there needs to be an urgent debate before the full House of Commons, yet months later it still has not happened, and then another Minister comes along and says, “Well, yes, the Secretary of State gave that commitment, but it really doesn’t matter because we’re far too busy getting out of the European Union to worry about parliamentary democracy”? I do not think anything can make us too busy for that.

I simply do not believe that it is purely due to a lack of time that after five months we have not had an urgent debate on a major issue that has caused a lot of concern to well-meaning, sincere and genuine citizens the length and breadth of these islands. I simply do not believe that, if the Government wanted to schedule a debate on the Floor of the House at some point since 7 September, they could not have found a way of doing so. If that is not the case, and if five months genuinely was not long enough to schedule a three-hour debate on the Floor of the House, we should remember that the same Government tell us that they can negotiate an entirely new relationship with 27 different countries in just under 18 months. If that does not send a chill down the spine, I do not know what will.

Incidentally, I do not care what amendments the hon. Member for Swansea West doodled down, submitted and decided not to follow through with. Perhaps Government Members should think more about articles that were written about the case for staying in the European Union, which were somehow never published, by someone who had a kind of road-to-Damascus conversion and is now one of the most enthusiastic supporters of Brexit. We should remember that he has also changed his opinion about Donald Trump since he got elected to the presidency.

We are not debating amendments that were drafted and never submitted or amendments that were submitted and then withdrawn; we are debating the amendment before us. I ask this of Conservative Members. I know that the Government and the Whips have told them what they want to do, but if they seriously believe that a major reason for exiting the European Union was to restore parliamentary democracy—I will not refer to parliamentary sovereignty, because that does not exist equally in all four parts of these islands—and if they want to restore parliamentary supremacy over Europe, surely we should also be maintaining parliamentary supremacy over Ministers of the Crown.

This is not an isolated case. I have sat beside the hon. Member for Swansea West many times in the European Scrutiny Committee, and I have lost count of the number of times that that Committee, which has a built-in Government majority, has savaged Ministers one after the other for their complete failure to show any respect whatever for the due processes of the House. If the Government do not like the processes, they are perfectly entitled to bring forward changes and to ask the House to agree to them.

[Geraint Davies]

Does the hon. Gentleman agree that if our Chairman, the hon. Member for Stone, were here, he would demand a full debate and full scrutiny, as we do today?

[Peter Grant]

I am grateful for that intervention. I rather suspect that the hon. Member for Stone is more than capable of speaking for himself. We disagree significantly on a number of issues, but on this issue he and I agree entirely. Given that he has never opposed any of his Committee’s reports, and that we have had report after report severely criticising the Government for failure to bring important matters of public policy forward for debate, either in Committee or in the House, it is reasonable to take it that not only the Chair, but members of that Committee across the parties, agree that the Government, for far too long, have not been interested in being held to account by the House of Commons.

I make a final plea to those on the Government Benches. I am not asking them to support the amendment because I want to give the Government a going over, because, quite frankly, they are doing that well enough themselves just now. I am not doing it because I want to block the treaty, because my view is that, with a few changes, the treaty could be a good thing for the vast majority of people on these islands. I am asking them to do it because it is what they believe in.

Tory Members are taking us out of the EU. Some of them did not support that at the referendum, but last week only one Member on the Tory Benches voted against the Bill, so they are now accepting that the UK is leaving the EU, and a major purpose in doing that is to restore what they term parliamentary sovereignty. If they are not prepared to stand up for parliamentary sovereignty when it relates to Ministers in the UK Government, we have no chance of restoring parliamentary democracy anywhere else. I make a final plea: please do what you know is the right thing to do. We are not talking about holding things up. We are simply talking about giving the House of Commons its proper place in oversight over Government decisions that will continue to affect all our lives, and the lives of future generations for many decades to come.

[Greg Hands]

We have had a good, wide-ranging and lengthy debate, which I welcome. I would like to address some of the important issues raised by members of the Committee, but first I make it clear that the NHS is not at risk from CETA. That is of fundamental importance to the Government. A careful assessment of the legal protections was carried out by lawyers, and we ensured that we were fully satisfied that the NHS is not at risk.

Nothing in CETA prevents the pursuit of legitimate public policy objectives, such as protecting the NHS. To reinforce that point, CETA does not get in the way of our sovereignty on any such matters. The joint interpretive instrument clearly states that the parties have the right to regulate in this manner. The UK can choose to protect public health—by regulating fizzy drinks, for example; that was one of the issues raised earlier. Linked to that is the fact that Governments are also allowed to protect labour rights—

[Geraint Davies]

Will the Minister give way?

[Greg Hands]

I am going to make progress first. There are a lot of points to answer after two hours of debate.

Linked to that is the fact that Governments are also allowed to protect labour rights and human rights. A fair, non-discriminatory and proportionate action taken by a member state Government, including to protect human rights, would not breach investment protection. Governments are also able to take action to protect the environment as they see fit. I want to restate that this Government support transparency and proper scrutiny of the agreement. We have followed the usual procedure and engaged extensively with the scrutiny Committees in both Houses, as I outlined. I will add more detail in a moment. Crucially, we have worked hard to secure this debate in advance of the vote on CETA in the European Parliament on 15 February.

To be clear, the Committee requested the debate on 7 September, ahead of the conference recess, which, as we all know, ran from 15 September to 10 October, so it was not possible to schedule the debate before then. CETA was fast-moving, and was originally scheduled for agreement at the end of September. It was only later on that it slipped to 18 October, and eventually 20 October. I hope that the hon. Member for Brent North understands that it has not been possible to schedule the debate on this timetable. The Government have, as has been noted, opened a TTIP reading room for parliamentarians; that is not dissimilar to the operations of the European Parliament. We warmly welcome that ability of Members of Parliament to engage. We have also written proactively to the scrutiny Committees in both Houses on the subject of ongoing trade negotiations; that goes back some time.

The Government are fully committed to transparency and consulting with a wide range of stakeholders during trade negotiations, including the devolved Administrations, while recognising that trade policy is reserved to the United Kingdom. We have provided updates to the devolved Administrations during the process, and my Department looks forward to consulting with them going forward.

On the investment court system of arbitration, the UK welcomes the investment protection provisions in CETA. We also welcome the clear statement of the right of Governments to regulate. We support the inclusion of dispute settlement provisions. It is important for there to be a dispute settlement procedure, but we continue to have concerns about the cost and effectiveness of the proposed ICS. The UK will continue to work with other member states to improve the system.

[Geraint Davies]

If we must have a dispute settlement system, how is it that we have had successful trade between Canada and the EU based on the fact that we have national courts, European law and the European Court of Human Rights in Europe, and provincial courts, the Supreme Court and appeal courts in Canada? Investors are happy. We do not need the system. No case has been made.

[Greg Hands]

Foreign investment is incredibly important to this country. It is also important that we protect our investors in markets such as Canada. It is important that we ensure those things are protected, while also protecting the right of member states and Parliament to legislate as they see fit, and the right to regulate. The UK will continue to work with other member states to improve the system. I restate that crucially, the ICS is not being provisionally applied here. Parliament and the UK will therefore have the option further to debate and scrutinise the system, and CETA in its entirety, as part of the ratification process.

In the time available, I will deal with as many of the many points raised as I can. The hon. Member for Brent North asked why there has been no impact assessment of ICS or its predecessor, ISDS. The answer is that ISDS has been in operation for some time. The UK Government have never had a successful case taken against us. All the cases listed earlier were not actions against the UK Government. I reinforce that the system does not, will not and cannot supersede national laws.

--- Later in debate ---

[Greg Hands]

The figure of £1.3 billion may be the same one that the hon. Gentleman cites, but I am confident that my figure is the result of modelling commissioned by the Government.

I was asked whether environmental standards can be increased. Article 24.3 of CETA specifically provides that parties are free to establish their own environmental standards. The hon. Member for Swansea West raised fracking. Contrary to what he said, CETA does not get in the way of the right to regulate. Exactly as we would expect, it does not give fracking companies the right to invest in the UK if they are in breach of UK national laws.

[Geraint Davies]

Will the Minister give way?

[Greg Hands]

No, because I am worried about finishing within the time limit.

Crucially, the mere loss of profit is not sufficient to ground a claim in the ICS process. Even if it were, it would not require us to change our laws. Why did we not raise reservations, as other countries did, and protect our public services? Well, we do have a few reservations in CETA, but we have never been subject to a trade dispute concerning public services. We are confident that if one arose, we would defend it.

On geographic indicators, CETA allows for future protection of geographic status, as I have already said. When the negotiations took place in 2011, there was insufficient trade in specific goods for us to qualify. However, it is incredibly important to think about the impact that CETA will have on our ability to export key UK products. I mentioned Scotch whisky earlier; UK cheeses will now be able to enter the Canadian market free of tariffs or other barriers. There will also be zero tariffs on industrial goods. There are a host of things, and all of them will be of immense benefit to the UK and all its constituent parts.

We have delivered on our undertaking to have a debate on CETA. The hon. Member for Brent North was right to draw attention to the European Scrutiny Committee’s request for a debate before the provisional application of CETA at the very latest, but there has not yet been provisional application; that is subject to the European Parliament’s vote on 15 February. Nor has the matter fully progressed through the Canadian Parliament. We are fully in conformity with the European Scrutiny Committee’s request. I urge Members to vote against the amendment.

I am glad that the hon. Member for Swansea West raised previous debates on international trade treaties. One fascinating aspect of this debate is where the official Opposition stand on these subjects. I am glad that he mentioned his debate on 15 January 2015, because two of the then Back Benchers who featured in that debate were the right hon. Members for Islington North (Jeremy Corbyn), and for Hayes and Harlington (John McDonnell), who spoke out very strongly against TTIP and against this kind of international trade treaty.

[Geraint Davies]

The Minister will also remember the right hon. Member for Hitchin and Harpenden (Mr Lilley) speaking strongly against this proposal, with reference to national sovereignty and interference. All sorts of people take all sorts of angles on this; that is why we need a debate. All we are saying is, “Have a debate”, because we cannot agree. It is absolutely outrageous to railroad democracy in this way, and it is a recipe for future railroading.

[Greg Hands]

I note that we have already had two and a quarter hours tonight—there has been quite a good debate. The hon. Gentleman is right that concerns have been voiced, but there is not necessarily outright opposition. We, too, have concerns about ICS, and I have raised some of them tonight. However, I have to point out that he is wholly opposed to CETA. At least, that is what he said last week.

[Geraint Davies]

I am not.

[The Chair]

Mr Davies, you are murmuring a lot. You’d better give way to him, Minister, because I do not want him to blow up; it could be messy.

[Geraint Davies]

In essence, I am in favour of free trade, and I think CETA and TTIP could be blueprints for future trade. The issue is to get them right, and not to give them special powers whereby transnational companies can undermine our democracy and liberties.

[Greg Hands]

I am not going to dwell on this for too long. We heard this evening the hon. Member for Brent North make what sounded like a very long speech against the agreement; it now turns out that he is in favour of it. The hon. Member for Swansea West was strongly against it last week and called for debates on this subject previously, in which the leader of his party and the shadow Chancellor appeared with him. The hon. Member for Nottingham East, who is a member of the International Trade Committee, is not here this evening but may well have a different view. As for the Labour Whip, who knows where Labour Whips stand these days on party policy?

I have two other points. The hon. Member for Brent North talked about a study showing that apparently the UK would suffer a loss of exports. He carefully did not mention what that study was. I suspect it is the Tufts University study, which uses an approach that is useful for analysing a number of global macroeconomic issues, but is not suitable for trade policy analysis. The ICS is not a supranational court. It cannot override or amend national laws and is, in any case, not subject to provisional application. I urge all Committee members to support the original motion proposed by the Government.

[Geraint Davies]

Will the Minister give way?

[Greg Hands]

No, I will not. It was not possible to schedule a debate ahead of the extraordinary Foreign Affairs Council trade meeting on 18 October. It was strongly in the interests of the UK to signal political agreement at that Council. We worked hard to secure this debate—in advance, crucially, of the vote on CETA in the European Parliament on 15 February. Owing to the pressures of the legislative timetable, it has not been possible to have this debate in the main Chamber of the House, for reasons that are clear if Members look at the Annunciator.

I am pleased that we have had this opportunity to debate this important matter within the appropriate timetable. I urge the Committee to vote against the amendment. The Government are strongly committed to engaging further with Parliament as we move towards ratification of the agreement on a timely basis. I commend the Government’s motion to the Committee, and urge Members to support the motion and oppose the amendment.

Amendment proposed: line 10, leave out from “part;” to end and insert

“welcomes the prospect of enhanced trading relations between the United Kingdom and Canada; is disappointed that the Government has so far failed to provide a full debate on the floor of the House as recommended by the European Scrutiny Committee; notes that this is a mixed agreement which must be laid before Parliament for at least 21 sitting days, without the House having resolved that it should not be ratified, before the United Kingdom can ratify it; and believes that the Government should provide an opportunity for the House to come to a decision on this issue following a full debate on the floor of the House in advance of ratification.”—(Geraint Davies.)

Question put, That the amendment be made.