Transatlantic Trade and Investment Partnership

Lord Goldsmith of Richmond Park Excerpts

Thursday 15th January 2015 Commons Chamber

[Zac Goldsmith (Richmond Park) (Con)]

I congratulate the hon. Member for Swansea West (Geraint Davies) on securing the debate.

TTIP, if it goes ahead, will be the biggest and boldest free trade agreement of all time. Like it or hate it, it is huge and it will impact on our constituents in any number of ways. It is therefore welcome that we are discussing it, albeit on the very margins of the parliamentary calendar, but we are nothing like as involved as we should be. If trends continue, we will find ourselves bound into a staggeringly far-reaching agreement without having given it anything like the kind of scrutiny it merits. We should be grateful to the public, both here and abroad, who have understood the significance of TTIP. Well over 1 million European citizens have signed a petition calling for, among other things, greater transparency. In response, the EU has reluctantly agreed to publish some, but not all, the texts relating to the TTIP negotiations. At this stage, no one can talk with any real certainty about the minutiae of TTIP—that is just not possible—but we can see the direction of travel. For my part, I think it is incredibly worrying.

The most obvious concern relates to the investor state dispute settlement mechanism, which has already been discussed. Up until a few days ago, it was an absolutely core component of the proposal. I welcome the fact that public pressure is forcing a rethink on that for now. The ISDS effectively allows foreign businesses to sue Governments for policy decisions that impact on their future profits. That would happen not through our domestic courts, but through new investor tribunals.

The ISDS is not, as many hon. Members have pointed out, a new concept. It exists in other free trade agreements. There are many examples of countries having been sued successfully for policy changes they have made: limiting coal mining in sensitive areas in Indonesia; attempts to raise standards for coal power plants in Germany; attempts to impose oil spill controls in South America and so on. The best known example, which we have already heard about, relates to Australia being sued by tobacco giants for taking measures to dissuade people from smoking. There are many other examples. Canada has been sued 35 times under current ISDS mechanisms. In one appalling case, Canada was sued by Ethyl Corporation for $250 million, via an ISDS mechanism, after it banned the highly toxic chemical MMT, which is an additive for fuel. Despite unequivocal evidence of harm—no one disputes the scientific case—Canada not only had to settle with Ethyl but reverse its ban. I accept that the ISDS has a role to play in limited circumstances. It exists to help companies do business in volatile countries with unreliable judiciaries, but the mechanism being proposed in TTIP will apply here, not in Venezuela or the Democratic Republic of the Congo.

I have asked the Government repeatedly for any examples of EU companies in the US, or US companies in the EU, being discriminated against by the courts of the host nation in the past five years. The answer is always the same:

“The Government does not have access to relevant information.”

If we do not have that information, how on earth can the Government make the case for ISDS? One fundamental problem with ISDS is that its very existence would act as a permanent inhibitor for legislators. Where new evidence emerges, for example, of the dangers of a pesticide, Governments would have to think twice before introducing a new regulation. Essentially, it will give the companies that are big enough to use this system the power to freeze policy evolution and buy what is effectively a risk-free environment.

The power that vests in giant international corporations is hard to exaggerate, but it does not stop there. I understand that massive public pressure has meant that ISDS has been suspended and will not be part of next month’s negotiations. I do not believe that the issue has been resolved but, with or without ISDS, I believe TTIP is still structurally geared towards satisfying the interests of multinational corporations above all else. I do not see this as a question of trade or no trade; this is a question of basic democracy.

Let us consider the so-called regulatory co-operation councils being proposed by the EU as part of TTIP. They involve formally giving stakeholders early opportunities to intervene in the regulatory process; that is, seeing proposed legalisation before it is handled by Parliaments. Hon. Members do not need to be told what kind of stakeholders will end up on that council. It is worth considering what changes we might see under TTIP. What is it that big business wants? Free trade agreements are normally about reducing trade tariffs—taxes on imports and exports. There are very few tariffs between us and the US, so the focus will be on standards. In many respects, it is hard to imagine a harmonisation of standards between the US and EU resulting in better standards for us.

Food is, I think, the best example. Our standards are undeniably higher than the standards that apply in the US on a whole range of issues; hormones in beef, milk and pork, the use of steroids, chlorine-treated chicken meat and the clear labelling of processed food. We have a fundamentally different approach. We are told by our Government that food standards are safe and that nothing will happen. Try telling that to US agribusiness giants who have been engaging in an orgy of lobbying and have very high expectations.

[Mark Durkan]

On food, the hon. Gentleman will know that many in the food sector are very keen to trade significantly but really do worry about the implications of the treaty and the terms under which it is done. They feel that it will potentially undermine them rather than giving them a floor of confidence on which they can trade.

[Zac Goldsmith]

I very much agree and the same is true of chemical regulation. In Europe, our approach, while being very far from perfect, puts an emphasis on the precautionary principle. Again, we are told that our approach will not be affected, but there is plenty of evidence—including today—that that is not true. For example, the EU proposed in 2013 that endocrine-disrupting chemicals—chemicals that mess with the sexual development of children—should be banned, at least until they are proven to be safe. For the record, there is no scientific doubt at all about the effect of endocrine disruptors; none at all. But on the back of savage lobbying by the chemical industry, the US Government weighed in and pressed the EU to consider the impact of their proposals on fledgling trade negotiations. Bingo; a few months later, the proposals were suspended. The lobby groups had won. Our Government, to their shame, were involved in that process; the first European Government to step forward on the side of the lobby groups and say, “Yes, let’s back off and not jeopardise our trade deals.”

[Geraint Davies]

I agree with the hon. Gentleman about the precautionary principle in the EU. Does he agree that there is a risk to air and water safety from fracking and that we will get sub-standard environmental controls, as there are in the United States, through the back door of TTIP, with ISDS?

[Zac Goldsmith]

I am going to skip the question of fracking as I am running out of time but, for the record, the hon. Gentleman makes a valid point.

So why are we moving heaven and earth for this vast trade deal? We are told that it is about jobs and growth, and that Europe might benefit by £100 billion. But there are any number of reports that say the opposite. But it is all nonsense. We have no idea. The history of these sorts of predictions in relation to big free trade deals is pretty woeful. We were told that the north American free trade agreement, for example, would create a million new jobs. There is more or less a consensus now that it cost America 870,000 jobs.

What specific problems will TTIP resolve that merit ceding our sovereignty in this spectacular fashion? I ask Members of my own party specifically; why is it not okay to hand the reins of our ancient democracy to an unelected EU bureaucracy, but absolutely fine and great to allow those same unelected Eurocrats to delegate our democracy to multinational corporations?

I wonder how much support there would be in my party or on the Opposition Benches for this treaty if people fully and truly understood the implications. I remember interviewing the famous consumer activist Ralph Nader for The Ecologist about NAFTA. He told me that he was reaching the end of the campaign and that Congress was going to give it a green light. He did not believe that anyone in Congress had read the report. He said that he would give a cash reward to anyone who could answer his questions. Months passed. Finally, Senator Brown of Colorado accepted the challenge and got every question right, to everyone’s amazement. He then turned to the cameras and said that having read the report he was going to vote against it as he could see how dangerous it was.

I believe that any self-respecting Member of this House should demand–no, insist—not only transparency and scrutiny by this House, but the right to approve or reject this treaty before our country is bound to it.

--- Later in debate ---

[Ian Murray]

My hon. Friend is absolutely right; we often talk about the zombie Parliament. We seem to have done very little in this House for the past year to 18 months, and we could have used some of that Government time to explore these issues. Perhaps if we had done so, we would not have had some of the misinformation that is perceived to be around, and we would have been able to address some of the concerns of the constituents who have e-mailed us in great numbers. That was rightly emphasised by my hon. Friend the Member for Heywood and Middleton (Liz McInnes), who stressed that a lack of scrutiny and transparency had led to widespread suspicions about TTIP, and those have to be addressed.

The economic impact of TTIP is debated, but it is important to bear it in mind that it will entirely depend on the final scope of the deal. To a certain extent I agree with the hon. Member for Skipton and Ripon (Julian Smith); we have to analyse this on the basis of benefits and we have to make sure that they are actually tangible benefits to our constituents. We know from recent history that balanced trade deals have a positive impact on economic activity and job creation, but people’s concerns mean that we are here to debate them and whether or not those positive impacts are actually real. Until we address those, we cannot get on to what the positive impacts might be—and there should be such impacts, because Europe and the US are our most important markets today.

Indeed, the US is the UK’s biggest export market and TTIP could be transformative, but only if it is allowed to be and only if the deal is good for the UK. It does provide a real opportunity to regulate global trade, and it could benefit the UK. We should not shy away from that, because unregulated trade creates a race to the bottom. Many Members have stated in this debate that it is the race to the bottom that concerns them, and it is this process that is creating that race to the bottom, especially when it comes to standards and the way that the negotiations are perceived to be progressing.

As many Members have mentioned, including my hon. Friend the Member for Sedgefield (Phil Wilson), Labour Governments, going back to the Attlee Administration, have engaged positively in attempting to regulate global trade, making trade agreements to ensure that everyone benefits, and that is an important point to make.

Labour lends its support to the principle of TTIP and trade, but not unqualified support. We should not accept any deal that is not beneficial to the British people, and the benefits from any deal must filter down to consumers and small businesses. That point was made by the Federation of Small Businesses in the submission that it sent to all Members. We are not prepared to accept a deal that does not protect our public services and the NHS, and which does not satisfy the concerns that we have heard this afternoon on safety, food and environmental and labour standards. That was a point that was made quite forcefully by my right hon. Friend the Member for Warley (Mr Spellar). We must have a deal that has transparency and accountability at its heart.

There is widespread interest in these negotiations. Organisations such as Global Justice Now deserve tremendous credit for ensuring that TTIP is in the consciousness of both the public and politicians. It is the topic on which I have received the most correspondence as a Member of Parliament, which shows the thirst that the public has for gaining more information on what this trade deal means for them personally.

What is clear is that this cannot be a backroom trade deal done between Brussels and Washington. In a debate last February, my right hon. Friend the Member for Wentworth and Dearne (John Healey) said:

“Like justice, good trade policy must not only be done but must now be seen to be done.” —[Official Report, 25 February 2014; Vol. 576, c. 189.]

Any legitimate agreement must command broad-based confidence that it will deliver on the benefits that it has claimed.

Pressure from interested politicians and the public through some of the campaigns has led to advancements in the deal. Let me start by mentioning the NHS and public services. We have said all along that unless the NHS and public services are fully protected we cannot and will not support any TTIP deal. It was Labour and my right hon. Friend the Member for Wentworth and Dearne who were the first to insist on full protection for the NHS. With Labour colleagues in the UK and European Parliaments, we have been campaigning hard for this guarantee, and it is that campaigning that has secured the commitment from the EU chief negotiator that the NHS can and will be fully protected. He said that

“full policy space has been reserved for publicly funded health services”

and, further, that any provision will have

“no impact on the UK’s sovereign right to make changes to the NHS.”

However, Labour will not support a deal unless that commitment is totally honoured. It will take a strong UK Government in the EU to ensure that that is delivered, but Government Ministers have done nothing to secure that commitment at EU level. What is clear is that the biggest threat to the NHS and public services in the UK—this has been said by many of my hon. Friends—is not this or any trade agreement, but the re-election of a Conservative Government in May. Of course EU negotiators need the agreement of member state Governments to be able to take these things forward. Will the Minister confirm that the Government will not support any TTIP treaty that includes the NHS and public services? He can give that commitment at the Dispatch Box this afternoon and take the matter off the table.

As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said, if the Government are so convinced that the NHS and other public services are not to be included in the deal, why do they not take a belt and braces approach and put it into the negative list to give everyone the comfort that they seek? This is important not just for the NHS and public services but because Labour will repeal the Health and Social Care Act 2012 in May 2015 without impediment. The failure to put public services, including the NHS, on the negative list might, as my hon. Friend the Member for Sedgefield said, undermine the assurances we have been given. So it would be very good to get the Minister’s response to that.

The second area that many Members have focused on is ISDS. There is a case for saying that private arbitration mechanisms are best used among partners with uneven levels of protection and where a due process of law cannot be guaranteed, but that is not the case in either the US or the EU, and many Members have said that in those particular advanced jurisdictions, contract law should suffice. There are huge concerns that ISDS would prevent Governments from legislating for the benefit of the country. TTIP must not challenge the ability of this House, and of elected Members, to adopt and implement laws and regulations as we see fit and as we are elected to do.

[Zac Goldsmith]

If the Labour party were given an opportunity and were in charge of these negotiations at any point in the near future, would they insist on the removal of ISDS from TTIP? Is that a red line for them?

[Ian Murray]

We have said clearly that ISDS in its current form is not desirable in this trade deal, and the Government have said they do not think that ISDS will ever be used in the context of an EU-US trade deal, so my question would be, if it will not be used, why have it in that deal? We very much welcome the European Commission’s consultation. We very much welcome yesterday’s announcement that ISDS has been suspended, but we are unconvinced at this stage that ISDS in its current form is either necessary or desirable in the agreement, and we would have to see what its pausing would do.

On the basis of that intervention, my question to the Minister would be: how will he respond to the pausing and suspension of the ISDS negotiations in the trade deal yesterday, and what will the UK Government be doing to express the serious concerns on those issues expressed in the House today?

I shall mention some of the views expressed by my hon. Friends. My hon. Friend the Member for Blaydon (Mr Anderson) emphasised that we want free trade but that it is important to engage to ensure that it is fair and regulated. He was right to talk about the power of trade agreements to drive up standards, and to say that that should be the goal, and that we should not support the dilution of standards. He gave personal examples of where that has happened. I absolutely agree with the hon. Member for Banff and Buchan (Dr Whiteford), who highlighted the potential benefits for the Scottish agricultural industry, but spoke about what the impact would be, in that particular economy, on food standards.

I was slightly confused by the hon. Member for Totnes (Dr Wollaston), who seemed to say that the NHS was completely and utterly secure, but then argued that the tobacco industry should be removed from the deal in case it could use ISDS provisions to sue the UK Government for acting on public health grounds. That was a slightly contradictory response. That highlights the fact that ISDS is a real problem as regards what TTIP is intended to deliver.

As time is running out, I shall pose some questions to the Minister, who may be able to answer them in his reply. What plans do the Government have to ensure that this House is kept fully informed as to the content of those negotiations and the Government’s response to them? Will he keep the public informed and engaged, because it is clear from this afternoon’s debate that the public are not engaged in this process directly by the Government but by other organisations? Will he outline how the business community will stay engaged in this debate and how he will respond to what looks as though it will be the unanimous passing of the motion moved by my hon. Friend from Cardiff West?