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Canada-UK Trade Deal

Volume 807: debated on Tuesday 17 November 2020


Asked by

To ask Her Majesty’s Government what assessment they have made of the comments by the Prime Minister of Canada on 11 November about the United Kingdom’s prospects of a trade deal with Canada.

My Lords, both the UK and Canada remain committed to a seamless transition of our trading relationship at the end of the transition period, so that British and Canadian businesses and consumers can continue to benefit. Officials have been in regular contact to discuss this and the Government are hopeful of securing agreement by the end of this year.

My Lords, in August 2018, the Canadian Prime Minister said that the Canadians would be ready to start negotiations on what he thought would be a very easy roll-on agreement the day that Britain left the European Union—which was last January. He also offered to second Canadian officials to help us if that would improve matters. Here we are, six weeks before the end of the transition, and the agreement has not yet been fixed. Can the Minister explain why?

My Lords, I can explain exactly why. Agreement was almost reached with Canada in March 2019, but Canada did not like the temporary tariff reductions that we brought in and decided to walk away from the negotiating table, returning only in July this year.

My Lords, the UK is Canada’s fifth-largest trading partner, but Canada ranks only 18th in terms of importance for the UK. Will the Minister agree that, while rolling over the Canada free trade agreement is highly desirable for both countries’ interests, the Government were absolutely right to prioritise the excellent agreement with Japan, which is much more important to us in trade terms?

I thank the noble Baroness for her comments on the Japan agreement, but I am pleased to be able to assure her that the Department of Trade has the capacity and bandwidth to do a number of these agreements simultaneously.

Securing continuity of the CETA deal before 1 January is absolutely crucial; in fact, UK exports to Canada increased by 14% in the first year of implementation. Will the Minister agree that, assuming we secure this and roll it over, we can then have a brand new, bespoke, super-duper new trade deal to strengthen both economies, in their best interests and best of class, including issues such as climate change? Would he also agree that we can see the CPTPP as a future opportunity for the UK’s trading future and to broaden investment ties between the UK and Canada?

The noble Lord is completely right. The focus of our present discussions with Canada has been on continuity of trade and I am very confident that an agreement will be continued. The next priority will be to use that as a launchpad from which we can then deepen and strengthen our very important relationship with Canada in the future.

My Lords, it is helpful that Prime Minister Trudeau is enthusiastic about starting and sharing a trade deal with us. However, it is deeply worrying that he doubts our capacity and expertise. It is hard to see why Liz Truss feels such grounds for optimism. Given the capacity issues, will the Minister set out the Government’s strategy in respect of the Regional Comprehensive Economic Partnership, concluded last weekend between China and 14 of its neighbours? This agreement covers 30% of global economic output. It makes no mention of the United Kingdom, despite the Government’s assertion that this region affords the greatest global opportunities for free trade deals and future growth.

I encourage the noble Lord to distinguish between comments of substance and those that are made purely as a negotiating tactic. We have closely observed the recent agreement in Asia. Our priority is negotiating to join the Trans-Pacific Partnership next year, which is a much deeper and richer agreement.

My Lords, it could be suggested that “walking away” from negotiations could be a government tactic, given that it was the no-deal temporary tariff published by the UK that prompted the Canadians to further consider our intentions. The UK has now published its permanent tariff regime. If we are hopeful of a deal, we may have to scrutinise this in short order. How many of these tariffs is Canada currently disputing?

It would not be appropriate for me to go into the detail of ongoing negotiations. But I assure noble Lords that talks are at an advanced stage and I am confident that they will be concluded satisfactorily.

My Lords, the Government promised that 40 rollover agreements would be in place by the end of the transition period. Only 20 have been considered so far under the CRaG procedure. We have fewer than 21 sitting days before 31 December, so it is not physically possible to ratify the remaining trade agreements under normal procedures. What advice can the Minister offer the country’s importers and exporters about what they should be doing if their trade engages with, for example, Canada, Singapore, Mexico or Vietnam?

My Lords, first, I must correct the noble Lord: 23 agreements have now been signed. This is a moving target. I encourage British businesses to watch this space. I assure the House that all agreements will be put through the CRaG process. Some may need to be provisionally applied, but they will all be ratified by our standard agreements in due course.

My Lords, does my noble friend agree that the new trade agreement signed with Japan and the continuity agreements reached with a number of other countries show that the department is well aware of the pressures and the desire of industry for these agreements, and is working flat out to ensure that they are brought to a conclusion as quickly as possible?

I thank my noble friend for his comments and for what he said about my department. My officials have worked extraordinarily hard in difficult circumstances during Covid. They are doing a marvellous job. I am sure we will see this progress continue.

My Lords, early this morning, I had breakfast on Zoom, hosted by my colleague the Bishop of Sherborne, along with people from the Dorset churches and community. A farmer and local businessman said that his greatest fear for the future was uncertainty. How will this uncertainty be ended so that he will not be left just watching this space but will know what opportunities there are? How will the House assess these both in relation to the economy and to the environment?

The right reverend Prelate makes a good point. I assure him that these matters are at the front of our mind. Uncertainty is being progressively eliminated. I am looking forward to the time when there is no uncertainty whatever.

Following my noble friend Lord Stevenson’s question, why, if the Minister says we have no bandwidth issues, will all future continuity agreements fall outside the full, proper CRaG procedure and be dealt with through a partial cover? This will eliminate a lot of the parliamentary scrutiny we talked about in the Trade Bill.

My Lords, I can confirm that every single agreement will go through the comprehensive CRaG procedure. There may be issues of timing because these negotiations often go to the wire. But I assure the House that, even if they need to be provisionally implemented, every single agreement will be subject to appropriate parliamentary scrutiny.

My Lords, about an hour and a half ago, the International Trade Secretary, Liz Truss, tweeted that later today, at a conference of the trade body, TheCityUK, she would

“set out how the UK can become a global hub for services and tech trade … Services sits at the heart of my vision for values-driven and value-generating trade policy.”

We have heard hardly a squeak from the Brexit talks about services, which represent 80% of our economy, or about the quest for a data adequacy decision, which is essential to the tech trade. We are six weeks out from the end of the transition period. Can the Minister tell us where we are on services and data?

I congratulate the noble Baroness on monitoring the International Trade Secretary’s Twitter feed so carefully. I agree about the importance of services. I hope the noble Baroness will understand that it would not be appropriate for me to comment on ongoing negotiations.

Sitting suspended.