Trade (Comprehensive and Progressive Agreement for Trans-Pacific Partnership) Bill [Lords]

Debate between Iain Duncan Smith and Liam Fox

Report stage
Tuesday 19th March 2024 Commons Chamber

[Sir Liam Fox (North Somerset) (Con)]

It is always a pleasure to follow the right hon. Member for Birmingham, Hodge Hill (Liam Byrne).

I rise to echo the comments made so eloquently and clearly by my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), and to add just a few comments of my own. I have always been in favour of the CPTPP, and, as I said from the Front Bench in 2019,

“It is absolutely essential, particularly given the rise of protectionism globally, that we commit ourselves to a rules-based system based on the WTO. Of course, we have abilities to augment that by other regional relationships, which is why we have had the public consultation and the debate in Parliament about the potential accession to the CPTPP”.—[Official Report, 6 June 2019; Vol. 661, c. 250.]

I have also always believed that the benefits of the CPTPP have been at least as much about geopolitics as about simple import and export numbers. As the Royal United Services Institute put it,

“Joining the CPTPP provides the UK with not just economic benefits, but the means to help define and defend a rules-based order in the face of China’s diplomatic and economic heft.”

At a time of tense relations between China and the United States, the United Kingdom has joined a trade agreement in which neither is present, although the United States was instrumental in its creation—a point to which I shall return later.

The March 2023 integrated review refresh describes the Indo-Pacific as

“critical to the UK’s economy, security and our interest in an open and stable international order. Developments there will have disproportionate influence on the global economy, supply chains”

—that was mentioned by the right hon. Member for Birmingham, Hodge Hill—

“strategic stability and norms of state behaviour.”

The CPTPP, in turn, is about a contribution to the stability of the global trade and investment system.

Within that debate, what do we perceive China’s security threat to the UK to be? In their reply to a report from the Intelligence and Security Committee, in a section entitled “The Strategic Context”, the Government stated:

“China almost certainly maintains the largest state intelligence apparatus in the world. The nature and scale of the Chinese Intelligence Services are—like many aspects of China’s government—hard to grasp for the outsider, due to the size of the bureaucracy, the blurring of lines of accountability between party and state officials, a partially decentralised system, and a lack of verifiable information.”

They also stated:

“The Chinese Intelligence Services target the UK and its overseas interests prolifically and aggressively. While they seek to obtain classified information, they are willing to utilise intelligence officers and agents to collect open source information indiscriminately—given the vast resources at their disposal…To compound the problem, it is not just the Chinese Intelligence Services: the Chinese Communist Party co-opts every state institution, company and citizen. This ‘whole-of-state’ approach means China can aggressively target the UK”

—and UK interests, wherever those interests are globally. Sadly, we have discovered that to our cost in many of our governmental institutions here.

The question, given all that, is this: could China actually be admitted to the CPTPP, and if it is theoretically possible, how likely is it? I think it instructive to look first at the experience of the World Trade Organisation, a brief that my right hon. Friend the Minister and I shared over several years of my extremely enjoyable time working with him at the Department for International Trade. When China acceded to the WTO in 2001, the west saw it as promising and promoting economic and political reform. It was a time of great optimism that the Chinese communist system could be pulled in a direction that would be advantageous to, and in the interests of, the west. However, Jiang Zemin, the Chinese leader at the time, claimed that the motive of the United States in all this was to

“westernise and divide socialist countries”.

Thus the WTO itself was heading for a stalemate in its direction of travel almost from the point at which China acceded to it.

This has added to other WTO problems—and I mention that because we need to look at the CPTPP within the wider trading framework. The WTO’s problems have been compounded by its adoption of the concept of unanimity, while its rules talk about consensus. If consensus and unanimity meant the same thing, there would not be two different words for it in the founding documents. This has meant that virtually any country in the WTO now exercises a right of veto, which has prevented us from moving forward in what we perceived to be a process of genuine liberalisation of global trade.

[Sir Iain Duncan Smith]

I apologise for interrupting my right hon. Friend’s excellent speech. The key was, we were told at the time, that the move would change China, and that persuaded the Government, but what we have found is that China is now changing the terms of the debate, because it has not changed at all—it has got worse. Is that not a very good reason why we need to debate these issues whenever we can?

[Sir Liam Fox]

My right hon. Friend is entirely right. As I observed at the time, President Clinton took the view that the treaty was the best hope that the west had of pulling China into a much more market-orientated, rules-based economy, where we could gain the benefits of a more liberal, global economy, but that is not how it turned out. We have had only one multilateral treaty since the WTO was created, the 2017 trade facilitation agreement.

There is a hierarchy of agreements that we can secure in terms of liberalisation. A multilateral agreement is the best, but given the effective veto that countries have, that is unlikely, and it is very unlikely to give us the benefits that we would like to see, especially the liberalisation of trade in services. The next best is a plurilateral agreement, the next best after that is a regional agreement, and then we are down to what some people would unkindly describe as the bargain basement of bilateral FTAs. All those are useful in creating a more liberal global trading environment. However, if China were to seek to join the CPTPP, it would need to commit itself to liberalisation in line with CPTPP requirements, which would require a reduced role for the Chinese state. If anyone who keeps an eye on current affairs thinks that the Chinese state is tending in the direction of a smaller influence, they are watching different news outlets from the ones that I am watching.

China could, of course, seek a bespoke agreement to join the CPTPP, but the UK has already set the precedent by joining on current terms. Even if China could join the CPTPP, could it be trusted to meet any of the conditions of accession? Although Chinese leaders have declared their willingness to meet the conditions, many countries are extremely sceptical, given China’s behaviour as a WTO member. China has a poor record when it comes to complying with WTO rules and observing the fundamental principles of non-discrimination, openness, reciprocity, fairness and transparency on which the WTO agreements are based. China’s subsidies over capacity, intellectual property theft and protectionist non-market policies exacerbate distortions in the global economy, and—even more worryingly—China’s use of trade as a tool of coercive diplomacy has raised concerns further, especially given its behaviour towards Australia and Japan. This is not the sort of partner we should be wishing to join us in the CPTPP, unless there are previously unimagined changes in behaviour.

Finally, a word, if I may, beyond this Chamber to our US colleagues: I believe that the decision to leave the CPTPP by the United States was a mistake. It removed from United States policymakers a tool in its strategic ability to shape events in the region. UK accession provides an opportunity for the United States to seek to join this new grouping and gain greater direct influence over China trade relations with the fastest growing economic zone in the world. These are all reasons why we must keep a very close eye on what happens with China and our new membership of the CPTPP. We have gained a great deal; we cannot afford to have it thrown away, by ourselves or by others.

Trade Bill

Debate between Iain Duncan Smith and Liam Fox

Consideration of Lords amendments & Ping Pong & Ping Pong: House of Commons
Tuesday 19th January 2021 Commons Chamber

[Dr Fox]

My hon. Friend should ask the Government; I am not the Government. My view is that we want to ensure that the powers are exercised exclusively by Parliament. I do not want any outside body, including the courts, to have a say on what we should or should not do. But I agree that we could have had a mechanism that allowed the House to do that in a way that satisfied all the reservations that have been put forward.

My second reason for objecting to the amendment is that I think it is the thin end of the wedge. If we set a precedent that says that the courts can make a judgment on genocide, where does it stop? In future trade Bills, we may get amendments on the use of torture or on other human rights violations. Valid though those points may be, once we have set a precedent that the court can make a judgment and tell Parliament what it can and cannot do, I wonder how we can reverse that trend.

Thirdly, I think the amendment is not good for our judges. It is difficult to know what the evidential base would be upon which judges would make such a decision, and therefore we bring judges into the territory that many of us saw and were uncomfortable with in the last Parliament, where judges are dragged into making political decisions; that is an uncomfortable place for them and us.

Finally, I do not think this amendment would make any difference whatever to the behaviour of the Chinese Government in relation to the Uyghurs or anyone else. It would not affect our trade with China in any way, shape or form. It would not even deal, for example, with dual-use materials when it comes to the Chinese state security apparatus. For that reason, it is an impotent tool when it comes to dealing with the Chinese Government.

If we believe in this Parliament that the behaviour of the Chinese Government warrants sanctions, we have sanctions available to us. The British Government, if enough pressure is applied by Parliament, can use those sanctions—whether the Magnitsky sanctions that come from our more recent legislation, or wider sanctions. We do not have to wait for an international agreement to be able apply sanctions that we are bringing forward on the grounds of the high bar of genocide. So it is up to Parliament to make such decisions.

We talk about taking back control, but Parliament has got to stop giving its decision-making powers away. If we want to be respected in this Parliament, we have to be the ultimate arbiters of the decisions and direction of travel of our country. We can have those powers. I say to the Minister for Trade Policy that we have had these discussions. I hope that the Government will bring forward mechanisms that allow the House to have much greater scrutiny at the outset of a trade negotiation to set those ethical parameters.

[Sir Iain Duncan Smith]

I will be quick, because I know that my right hon. Friend has to be quick. When it comes to genocide, it is different, because genocide has to be decided by the courts. We have no right to make that decision. So how is he going to allow that we would affect anything on trade, unless a court makes that decision? Why not the UK courts, so that then we can decide if we implement it or not?

[Dr Fox]

Because I believe that the high court of Parliament is the appropriate place to do that. Parliament can apply sanctions where it believes they are justified. Our new legislation allows us to do that.

I believe that setting a political precedent to make a political case is bad practice. If Parliament wants to take action against China or any other country, on behalf of those who they believe have been partially, unfairly or violently dealt with, the best route is to try to pressure the UK Government to take those measures. The Lords amendments being put forward today for the very best reasons are the very worst practice. That is a good reason for Parliament to reject them.

European Union (Withdrawal Agreement) Bill

Debate between Iain Duncan Smith and Liam Fox

2nd reading & 2nd reading: House of Commons & Money resolution: House of Commons & Programme motion: House of Commons & Ways and Means resolution: House of Commons & Money resolution & Programme motion & Ways and Means resolution
Friday 20th December 2019 Commons Chamber

[Dr Fox]

My hon. Friend puts his finger on the most important point. We will face not a technical issue, but a political issue. Indeed, the political declaration sets out that we will have no tariffs, no fees and no quotas in the economic relationship. That is what normally takes up the time in trading agreements, so it is entirely possible that this agreement can be done. The debate we will embark on is not about tariffs, fees and quotas, but regulatory alignment. That will be the central debate in our negotiations with the European Union.

We need to see the issue in a wider global context. At the World Trade Organisation meeting in Buenos Aires, it became clear that there are two ways forward in the global trading system. One is the concept of harmonisation —a highly legalistic regulatory means of doing business, which says, “This is the way we do it today, so this is the way we will always do it in the future.” Against that, there is the wider concept of outcome-based equivalence, which says, “Yes, we know what standards we need to meet, but we want to find our own ways, our own rules and our own efficiencies in achieving them.” The EU is now in a real minority, as it is virtually only the EU that takes the route of harmonisation.

There are those in the forthcoming negotiations who will say that, to have access to the single market, Britain must accept dynamic alignment—in other words, we must automatically change our rules in line with the EU. The Prime Minister will have 100% support from the Conservative party if he rules out any concept of dynamic alignment, which would leave Britain in a worse place in terms of taking back control than we are in as a member of the European Union.

The debate we are embarking on is about a clear choice. At no point in the European debate was there the option of maintaining the status quo: we either had to embark on our own course, controlling our own borders, our funds and our future; or we remained tied to an economic and political model of the European Union that is utterly dependent on ever-closer union. I have never believed that ever-closer union is in Britain’s national interests, and if the bus has the wrong destination on the front, the best thing to do is to get off, which was what the British people decided to do.

[Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)]

I agree with my right hon. Friend. Does he recall that the Leader of the Opposition spent his time sneering at the standards in the United States—a democratic and advanced economy? However, if we look at its standards on campylobacter infection and salmonella, it has fewer deaths per capita than the UK or the European Union. It gets there by different methods, and it gets there better than we do, so we should stop sneering.

[Dr Fox]

I hope that my right hon. Friend will forgive me if I do not take too much notice of the anti-wealth, anti-American, anti-trade, tired old leftie rhetoric we get from the soon-to-be-forgotten Leader of the Opposition.

The debate before us is clear. The Prime Minister is leading Britain in a direction that will produce a confident, outward-looking country. For many of us, we were leaving the European Union not because it was foreign, but because, in an era of globalisation, it was not foreign enough—it spent too much time gazing at its own navel and worrying about political integration. We are embarked on an historic and correct course for our nation.

I return to where I began: the question of trust. In the spirit of the season, let me say that I hope that even Hugh Grant will watch our seasonal offering this year—“Democracy Actually”.