European Union (Definition of Treaties) (Economic Partnership Agreements and Trade Agreement) (Eastern and Southern Africa States, Southern African Development Community States, Ghana and Ecuador) Order 2018

Lord Stevenson of Balmacara Excerpts

Tuesday 27th November 2018 Lords Chamber

Moved by

[Lord Stevenson of Balmacara]

At end to insert “but that this House regrets that the draft Order does not appear to take into account the substantive issues raised to date about the impacts on local agriculture, industry and commerce, and the well-being of the wider population in the partner states to each agreement; expresses serious concern at the fundamental lack of accountability and parliamentary scrutiny available at present for treaties and trade agreements; and calls on Her Majesty’s Government to come forward as soon as reasonably practicable with a series of proposals on how trade policy is to be determined after the United Kingdom’s withdrawal from the European Union.”

[Lord Stevenson of Balmacara (Lab)]

My Lords, I am placed in rather an unusual situation because I had understood the conventions of the House to be that the Motion in the name of the Minister would be moved, I would speak to my amendment and she would then respond to that, but she has given her response first, which is extremely good—and of course I am completely at a loss as to how to respond. I do not really have much to say because I do not have a speech that will address that way of progressing. It probably comes to the same thing. The Minister is looking a bit panicked about what I have just said but I wanted to explain why what I shall say will be repetitive, although I will try to adapt it. Hansard will have a great job following me in this, but that is the reason for it.

The narrow thrust of the response concerned the wording of the amendment but, with respect to the Minister, I think she has missed the main purpose of the amendment, which is to try to engage with the Government—although she said she would engage in future—on a much deeper question about how we do trade more generally. In a sense, that is where I shall end up.

I make it clear at the start that I am not opposing the ratification of the EPA and its South American extension, in the agreement with Ecuador, because it should go forward. The process may be flawed and we want to raise issues on it but it is not sufficiently problematic for us to oppose it. In saying that, I speak with confidence that I have support around the House. I have a copy of a letter sent to the Minister by the noble Earl, Lord Sandwich, who I think at that stage could not have spoken in the debate but may be tempted to address us later. I have also had correspondence with my noble friend Lord Judd, who is in his place and may want to contribute. Although what I will say is narrowly written, given what I thought I would be saying when I prepared it—this will have to be adapted as I read it—it comes with support from elsewhere around the Chamber.

The key question that we in Parliament have to address is: how do we assess trade, going forward? For almost 50 years, the EU has been negotiating economic partnership agreements on our behalf. We think there are probably about 40 of them involving over 90 countries, although the numbers are difficult to get. We recognise that they vary in scale and scope, as the Minister said, particularly when dealing with developing countries. The EU has developed a mature system for preparing, negotiating and seeking approval for these agreements on behalf of member states. At present, they cannot come into full force without being ratified by every member country. Although the systems are sometimes a bit different, the process we are in now allows the Government to ratify the agreements before us in a definitional way, rather than ratifying the individual wording.

It is a bit ironic that only now, at the very end of the process, is our Parliament—the interests that I have explained range further than this party—given a chance to consider these agreements. It is surely time to think again about why we do this, even if the opportunity that may come from the EU withdrawal Act allows us to put down something more concrete in future.

The amendment that I have tabled to the Government’s Motion expresses regret, but we will not pursue it to a vote. I have tabled it primarily to afford us the chance to debate these trade deals in the one and only time we have to do so; but secondly, in so doing to highlight the lack of proper scrutiny, consultation and debate given to these EPAs and the other agreement; and thirdly, to point out what needs to change if or when we regain control of our trade deals after Brexit day. This is material and important, and time is pressing.

To repeat a little of what the Minister said, the deals before us are a group of trade agreements which, taken together, share the noble aims of enhancing sustainable development and bearing down on poverty. That is to be welcomed. Some aspects of the deals that she mentioned respect the countries we are talking about. They differ from traditional trade agreements by ensuring that there are asymmetries in favour of the developing country, which include, as she said, long liberalisation periods, flexible rules of origin and the exclusion of sensitive products from direct competition. They also strive to increase regional integration, as she mentioned, through regional preference clauses that make countries in the same region provide the same advantages to each other as they will do to the EU.

However, the worry is that these agreements have not lived up to the intentions of the EU negotiators. Many of the least developed countries already had special access to EU markets through the non-reciprocal “Everything But Arms” scheme. But under these EPAs, developing countries are being asked to open up to 80% of their markets to European goods and services within a decade of signing. Opening up domestic producers to EU competition so fast has led some to fear that it will decimate their local domestic industries. Carlos Lopes, the high representative of the African Union, has said:

“Africans have serious concerns about how the EPAs would affect their industrial development and the African Continental Free Trade Area”.


Some of the partner states have also complained that tariff reductions have eliminated a crucial source of revenue, which Governments desperately need to provide basic public services and invest for future growth. According to the UN economic commission, Ghana alone could lose about $300 million in revenue if it signs the EPA. Tax collection is notoriously difficult in many of these partner countries, where tariffs were a reliable source of otherwise elusive government funds.

Spio-Garbrah, the former Ghanaian Minister for Trade and Industry, says that as the EPA also requires the Economic Community of West African States to open its markets over a period, it is Ghanaian manufacturers, not exporters, who, if they are not competitive, may face challenges from European imports that may be cheaper, of better quality and more attractive to consumers. Yao Graham, co-ordinator of the Third World Network, said:

“In the manufacturing and other industrial sectors, the EPA will cost about 40,000 jobs in ten years. We also anticipate that there will be a collapse of domestic industry especially in the … manufacturing sector … It will also undermine ECOWAS economic integration and the wider process of intra Africa trade and lead to the loss of government revenue from trade duties”.


There are also claims that EPAs might become a barrier to intra-African trade. Carlos Lopes said:

“In most areas, the EPAs will actually hurt intra-African trade, weakening trade revenues and undermining trade-driven industrialisation in Africa”.


There may be unintended consequences in trying to tailor each EPA to a specific country or region. The EU may have created contradictions in treatment between African countries. It is not surprising that certain African countries have claimed that they agreed to sign the agreements only under duress. It has been said that throughout the negotiations the EU threatened not only to remove the special least-developed country preferences available under the EU-African, Caribbean and Pacific group of states programmes but to withhold generalised system of preferences benefits from more advanced African economies.

Of course, we surely need some idea of how these deals will benefit the UK economy, but when you look for an impact assessment, no figures have been produced. The Department for International Trade recognises that there is no econometric modelling for the impact of some of these EPAs on UK trade and assumes, particularly in respect of the Ghana and ESA agreements, that the same modelling that has been applied to the SADC agreement will apply, while noting that,

“the econometric modelling available does not provide the impact of increased exports on UK GDP, so this cannot be included in the NPV calculation”.

So we are a little blind about where the benefits come from.

So, despite good intentions, these EPAs, some of which have been characterised as having colonial overtones, have come to represent the very worst of international trade policy—at least, so it has been argued. Instead of initiating African growth, we are initiating an African decline. Instead of spreading good will, we are spreading resentment. Instead of creating friends, we may be creating foes. Can the Minister shed some light on how the EU came to promote these deals, despite the concerns expressed by civil society and, more importantly, people in the countries themselves?

Surely the lesson to learn from this debate is that trade matters. It matters because it is so fundamental in shaping the world in which we live. Modern trade deals such as this are no longer simply about tariffs, as they cover services as well as vast areas of public policy. Modern trade deals have to be constructed with proper consideration for the environment, workers’ rights and human rights if we are to live by our principles. At the very least, we must respect our international obligations, be they on climate change, endangered species or the arms trade. We should go further and ensure that trade is used to make the world a better place.

We do not yet know whether the withdrawal agreement with the EU will survive. Certainly, from what the Minister said, we have a few years in which we will be able to see how this works in practice. I hope she will accept that there needs to be preparation for a possible future post-Brexit trade policy. We should also be putting pressure on the Government, while they are still part of the rule-making process, to ensure that any other trade deals struck by the EU are based on enduring principles as well as a foundation of transparency and consultation.

For example, the Trade Justice Movement is proposing some red lines for future EU trade policy, and UK trade policy, should that be independent. The points it makes include that trade deals: should be developed with full democratic scrutiny which provides for the involvement of the public, civil society and Parliament; should not take precedence over other societal priorities; should not lead to a race to the bottom on labour rights; should preserve the right to make policy in the public interest and make sure of the precautionary principle; should exclude public services; should allow Governments to regulate and tax international investment; should exclude ISDS mechanisms; should ensure that e-commerce is properly regulated and taxed; and should not prevent government using public procurement to support local communities to achieve social and environmental goals. That is a very ambitious but rather good list of issues that we think should be addressed by any new policy.

Underlying all that is surely the by-now unanswerable case for Parliament being involved in all stages of trade negotiations. Consultation, with committees being sent information, is not enough. We must have a system that will extend to existing EU trade deals that we might wish to roll over from the EU after exit day and will begin the long and difficult process of preparing for new ones.

The Government keep insisting that now is not the time to bring forward new plans, but I see no reason not to use the stranded Trade Bill to establish a new system for considering trade. Indeed, if we ever get to Committee, we have tabled a number of probing amendments on this and related issues that are available from the Printed Paper Office. On procedures, for example, we are proposing a new Joint Committee of both Houses of Parliament, modelled loosely on the Intelligence and Security Joint Committee. It would be charged with agreeing the mandate for future trade negotiations, overseeing the progress of negotiations and producing reports on how the agreements would work for the benefit of our national interest as well as that of the partner state. Such a committee could be responsible for recommending trade agreements to both Houses of Parliament for approval and reviewing the success or otherwise of existing deals.

--- Later in debate ---

[Baroness Fairhead]

We are trying to make these countries long-term trading partners. We provide support to help build and encourage investment, and it is likely that that will increase the processing capability of some of their plants, and will, therefore, potentially create competition for some of our companies. In a sense, however, that is what we are trying to do: to bring up trade. As the noble Lord, Lord Stevenson, said, trade matters and can lift up nations. It is not about a single point in time; we are trying to encourage investment to help these nations move up and become long-term, mature trading partners that we can continue to deal with in the future.

I turn now to another area raised by the noble Lord, Lord Stevenson of Balmacara, the noble Earl and the noble Baroness, Lady Sheehan: the question of regional integration. The EU has been one of the biggest supporters of African integration and efforts to deliver a continent-wide agreement. The EU has aligned the EPAs with the existing economic and customs union, seeing that as the best way, according to the preferences of EPA partners. It is clear that they are numerous and overlapping, not by the design of the EU but because we have worked with the flow of what it has done. To try to support regional integration, we are encouraging the African states to extend to each other the same level of liberalisation. This is to make sure that they aim to prevent increased imports from the EU displacing imports from neighbouring countries.

The issue has not been raised—I can hear it coming—but the most-favoured nation clause that might result from that is specifically designed to ensure that it applies only to major economies, and that excludes most of the African nations. We are genuinely trying to work with the flow of regional integration.

On the point raised about the AfCFTA by the noble Baroness, Lady Sheehan, it is a cross- African CTA that is being worked on and, as she will know, it has taken a while. We will continue to support the efforts to do that but in the meantime we believe that EPAs are a way of allowing those countries to progress.

As to the economic benefits, because these are EPAs they are asymmetric in favour of the developing nations and that is why we are seeing limited benefits in the short and medium term to the EU countries, including the UK.

The noble Lords, Lord Haskel, Lord Judd and Lord Stevenson, the noble Earl, Lord Sandwich, and the noble Baroness, Lady Sheehan, raised the issue of parliamentary scrutiny. The noble Lord, Lord Haskel, was helpful in laying out what the current scrutiny is under the EU system. In taking forward the existing trade agreements, we have said that we will try to replicate them to provide as much continuity as possible. In the interests of providing parliamentary scrutiny, we will make sure that a report is prepared outlining any changes that have been made and provide opportunities for debates in both Houses to allow Members to comment on those change before ratification under the normal procedure. So we have tried to address the issue of trade continuity agreements.

This SI is not about future trade policy nor about our future scrutiny arrangements. As I said in my opening remarks, an Oral Statement was made in the other place by the Secretary of State, who laid out some of the ways in which we will engage. There will be a 14-week engagement across civil society, with unions and businesses, and that consultation is taking place on four potential free trade agreements. We will then create an outline approach which, again, will be made public and available to Parliament. Through that process, reports and accounts will be laid before both Houses.

In this House there are a number of Lords committees but none with a specific remit on trade policy. It is not for me to determine for the House of Lords what committee would be appropriate but, as I said, I am keen to talk to noble Lords and hear their ideas. At the moment we are working out our proposals but, ultimately, if any new committee were established it would be for the House of Lords to make its own decision on what that would be.

On the question of involving civil society on these existing EPAs, as I have said, we are continuing to engage actively with civil society. However, under the existing EU approach, there is a joint civil society engagement which takes place under the existing SADC EPA to allow those states’ approach to an effective implementation of the EPA, and it is on the implementation side where that civil society involvement is continuing.

I agree wholeheartedly with the noble Lord, Lord Stevenson of Balmacara—trade matters. We need to get that right. We remain committed to engaging further with Parliament as we develop an independent trade policy. We will continue to work with stakeholders across the UK to ensure that our policy delivers for this great nation.

I encourage noble Lords to support the UK’s ratification of these agreements, which will demonstrate to these countries the importance to the UK of agreements with them, as well as our commitment to development and global prosperity.

[Lord Stevenson of Balmacara]

It would be conventional for the Minister to persuade me to withdraw my amendment, if she could. Otherwise, the implication is that the Minister is quite happy for it to be moved.

[Baroness Fairhead]

I would be grateful if the noble Lord would withdraw his amendment.

[Lord Stevenson of Balmacara]

I am sorry about that bit of theatre. It just makes the point that the structure has to be right or we cannot get to where we want to be: a mutually agreeable situation.

I thank all speakers for participating in the debate. As I said, the aim all along was to have a debate on issues on which we agree. More about this issue unites than divides us, and it is good to have a chance of an open debate on issues of such importance. In fact, it was a special treat to have such expertise and experience represented by the noble Lords who spoke; we were able to pick up on some important points that I am sure we will want to take away and think about when we come to read Hansard.

In her contribution, the noble Baroness, Lady Sheehan, used the examples of Kenya and Tanzania. She made all the points that had been picked up elsewhere about the difficulties for two countries with common boundaries yet completely different profiles on where they want to get to as societies with different experiences and opportunities. As she said, the present arrangements are unlikely to result in regional harmony, let alone the growth in economic activity that we all want.

I will read the Minister’s second speech in Hansard quite closely. She used “we” quite a lot in relation to the way in which these treaties have developed. It is quite unusual these days to find Ministers of Her Majesty’s Government talking as if they were speaking on behalf of the organisation with which we are all involved—the EU—but I take it that she used that word in the sense of the EU trying to achieve certain aims and objectives. That may be a small point, but I enjoyed it. The EU has done some good work in this area; despite the criticisms we have all heard, there is something of value at the end of this process. We should recognise that.

However, the points made by my noble friend Lord Judd are very important. We must not fall into the trap of assuming that some sort of “Made in Brussels”—I do not mean that in a negative sense—mode of liberalisation is the right one for the range of countries we have to deal with. It must be a question of fitting what is appropriate to where the various areas and countries are. I take the point that, by working with the existing arrangements in Africa and South America, there is a better chance of those arrangements working and bringing us the benefits that we are looking for. On the other hand, it is clear from the comments I read out, which other noble Lords have mentioned, that there is some dispute about that. Again, that makes the point that this issue is important and we must not let it go by default; we must engage with it in some way. Even if we go down the routes being offered to us, the question of who assesses that and under what terms of reference—for example, what success looks like—is uncomfortable for those who spoke tonight. Perhaps the Minister could take that away.

Moving on to the future, I do not want to sound too critical but, although there was a welcome sense that engagement with Parliament is an important aspect of the work going on in the department, I did not get the impression that any of the proposals made by either myself or other noble Lords—such as my noble friend Lord Haskel on behalf of the committees he is involved in—reached out in a way that fits with the purpose of the amendment. We may need to go through the Trade Bill and pick up the points there, because there are amendments down that would certainly open up that opportunity. To make the point more fully, if all we are being offered is a bit more information, a bit more consultation at arm’s length, a bit more engagement with civic society, but no real sharing of the process of agreeing and moving forward the agenda, I do not think that fits where we are in terms of where people want to be on trade. Trade is important because it matters, and if it matters then people need to find an echo of that.

Although I mentioned them in my speech, I did not hear the Minister talk about the devolved Administrations. Clearly, it is not her departmental brief to do that, but if we do not get that right, we will all just go into a brick wall at great speed and it will not work. These matters will be devolved to these Administrations and they will have their own views. There has to be some structure, some constitutional arrangement, which gives them confidence that their justifiable and important issues will be raised as part of the process.

It may be that a Lords committee is the right solution, but I do not think that takes the trick. I will argue very forcibly in the Trade Bill that we need to think harder about what powers are given, to whom, and for what purpose, and what process will help to engage the country thereafter. There is a frustration that the lack of information and movement on this will build up. If I can leave the Minister with this, my feeling is that you cannot leave this too long. It may be that, if everything goes smoothly with the Prime Minister’s proposals, there will be a period of two years, or possibly longer, in which we can work these things out, but there is a lot of interest and expectation now and I think it would be a mistake not to recognise that going forward.

With that, and with the Minister’s strong request that I withdraw my amendment ringing in my ears, I beg leave to withdraw.

Amendment to the Motion withdrawn.