That the Bill will be now read a second time.
My Lords, I draw noble Lords’ attention to my interests. They include an investment in a New Zealand-based asset management company, but what they do not include are the important personal references to my New Zealand and Australian heritage. Like so many in this House, and indeed in this nation, I have relations from both sides of my family in both countries. My ancestors on one side were part of the original Christchurch experiment in New Zealand, and on the other were founder architects and designers of Melbourne in Australia—an early example of the professional recognition chapters that we have included in this agreement.
I thank the International Agreements Committee, chaired by the noble Baroness, Lady Hayter. These conversations have been in depth and, I hope, open, and I welcome further discussion with Members of this House over the coming weeks as we progress through the Bill’s stages. I am sure that some noble Lords were delighted to receive my calls over the weekend as I made further inquiries as to their input into this important debate.
There is no doubt that, although the Bill is of a technical and necessary nature, it underpins the very essence of our post-Brexit vision of Britain. We are often asked for a coherent trade strategy and here it is—a global interconnectedness of trade deals, with this nation at the very heart of these new routes. It means opportunity for our businesses and citizens. It will result in new markets for our goods and services, and new ways to travel and share our cultures. But it also means change. We are aware of this, and we welcome the debate around this vision of our nation, which is now at the very centre of global trade.
The Bill will enable delivery of the UK’s first “from scratch” free trade agreements since leaving the European Union. They are modern and cutting-edge deals, including an astonishing level of innovation and flexibility. They are aligned with our values and well reflect our strategic ambitions, as well as our economic ones. I stress the cutting-edge nature of these FTAs and use this opportunity to congratulate the Department for International Trade and Crawford Falconer on the way they have been designed and negotiated.
It is important to note that these agreements were not built from a standing start. That is very relevant, since much of the discussion has seemed to assume this. We already trade with these countries. However, the agreements build significantly further on our already strong relationships with both Australia and New Zealand. The UK was Australia’s fifth-largest trading partner in 2020. That trade was worth £14 billion in 2021. In 2020, 15,300 businesses, employing 3.4 million people, exported goods and services to Australia. The UK was New Zealand’s fifth-largest trading partner in 2020, our trade being worth £2.4 billion, with 6,700 businesses, employing 1.8 million people, exporting goods to New Zealand. That is what we are already doing, so imagine what we can do if we cement these agreements. We expect annual trade to increase by £10.4 billion between the UK and Australia, and between the UK and New Zealand by £1.7 billion. These are not insignificant sums; they are life-changing. This is just the start, and does not include the other benefits of a closer relationship which these deals signify.
The Bill, considering what it entails, is uncontentious. It provides a power to give effect to our procurement commitments in these agreements, and improves three areas of our existing procurement legislation in the UK, to the benefit of our public services and our companies trading in these partner countries. By the way, this will unlock billions in government contracts in a more secure way than ever before.
The powers in the Bill will be used to amend the current set of procurement rules to provide guaranteed legal access to Australian and New Zealand suppliers to the procurement opportunities covered by the FTAs; to streamline the options for local government issuing notices for future procurement opportunities; and to clarify that contracts of undefined value are in scope of the trade agreements, which basically means that international commitments cannot be avoided by not adding values to contracts. Finally, it contains enhanced safeguards to ensure that contracting authorities cannot avoid international commitments by terminating the contract process where an international supplier is likely to win.
I assure the House that these changes to our current procurement rules all sit in line with the proposals in the Procurement Bill. The Bill, except the sections covering Scotland, will be repealed by the Procurement Bill, which has already undergone extensive scrutiny by this House and is currently before the other place. However, the rationale for the Bill is clear: we want to start taking advantage of these free trade agreements as soon as possible for the sake of our economy, and this Bill will allow that.
That is why the Australia and New Zealand free trade agreements deliver a number of important benefits, which are sometimes overlooked, and I think it is important to address them now. On mobility, we have agreed ambitious business mobility commitments. For the first time, UK service suppliers, including scientists, lawyers and accountants, will be able to apply for temporary work visas without being subject to Australia’s changing skilled occupation list. This is important: it is the furthest Australia has ever gone in an FTA. On trade in services, the deal goes further than Australia has ever gone before in giving UK services companies significant and non-discriminatory access to the Australian market, with unprecedented levels of regulatory transparency.
On trade in goods, the deal eliminates tariffs on 100% of UK exports, making it cheaper and easier to trade physical goods between the UK and Australia; and 98% of the estimated tariff reductions on UK exports will be eliminated as soon as the agreements, with noble Lords’ support and assistance, come into force. UK businesses will see duties of up to 5% immediately eliminated on the export of cars, whisky, motors, clothing and—I hope noble Lords have taken them down—even Christmas decorations.
The deal provides more opportunities for UK firms to trade digitally with Australia. For example, the digital chapter goes beyond existing precedent for both the UK and Australia. It contains the first dedicated innovation chapter and establishes a strategic innovation dialogue which will drive the commercialisation of new technology. This agreement also includes an ambitious environment chapter with Australia which goes beyond previous Australian FTAs. It includes a commitment not to derogate from environmental laws and affirms international environment and climate commitments, including the Paris Agreement. It also includes provisions to deepen co-operation in areas ranging from biodiversity, forests and fisheries to ozone-depleting substances. We have also secured the most substantive climate provisions that Australia has ever committed to in an FTA, with stand-alone climate change articles. What is more, this free trade agreement raises the bar globally by introducing the first ever animal welfare chapter of any trade deal. I consider this extremely important. My noble friend Lord Benyon was asked what world leadership we are providing on the environment and animal welfare, and I have just given probably the most sensational list ever released in this House.
With the New Zealand deal, the mobility chapter will make it easier for senior managers, executives and specialists to move on intra-company transfers. They will be eligible for visas to work for a period of three years, and family members will be able to join them. In relation to trade in services, we have agreed a professional services and recognition of professional qualifications annexe which will encourage regulators of all regulated professions towards recognition. Additionally, we have agreed a sectoral annexe on international maritime transport services—unprecedented for New Zealand—that will benefit UK shipping companies and ships flying the UK flag. On customs and rules of origin, we have committed to implementing single window systems, and the environment chapter breaks new ground for the UK and New Zealand in supporting our shared climate and environment goals, clean growth and the transition to a net-zero economy.
On agriculture, I reassure your Lordships that these deals deliver appropriate protections for the industry, including through tariff rate quotas, protecting UK farmers. These deals present enormous opportunities for our consumers and farmers. The Australian High Commissioner gave me a fascinating statistic the other day: UK firms own more than 10 million hectares of land in Australia. I am told that agricultural land in the UK totals about 20 million hectares, so, Britons are some of the biggest farmers in Australia. She also told me that her statistics show we export more agricultural produce in all its forms to Australia than we import. There are production differences between Australia and New Zealand which, frankly, we wish to take advantage of. We should welcome these expanded markets, as many farmers do. I read an interesting article in Farmers Weekly, which stated that these FTAs will
“help ensure UK products expand into new markets, taking advantage of our complimentary seasons, and increase consistency of supply to these markets, contributing towards targets, such as the NFU’s … ambition to grow food exports by 30% by 2030, to at least £30bn.”
I also welcome the Trade and Agriculture Commission’s work on these deals, which was, in my view, very clear about the protections still afforded us. It said that
“it can be concluded that the FTA does not require the UK to change its existing levels of statutory protection in relation to animal or plant life or health, animal welfare, and environmental protection.”
That is a direct quote from the TAC paper. Importantly, we take these issues very seriously and I will try to ensure that I provide further reassurance at the end of the debate in answer to the points raised by noble Lords.
To return to the Bill, I draw noble Lords’ attention to the fact that a number of statutory instruments will need to be laid, in addition to those that will flow from the Bill, to allow entry into force of the deals. These relate to rules of origin and tariffs, intellectual property and technical barriers to trade, specifically in New Zealand. Technical changes to the Immigration Rules have already been made.
As the procurement chapters of these agreements concern devolved matters, this Bill also confers powers on the devolved Administrations so that they can implement the agreements in areas of their competence. As concurrent powers, they also allow the Government to implement the agreements on a UK-wide basis where it makes practical sense to do so. They are entirely reasonable; they ensure that measures contained herein can be applied to all our procurement processes in a consistent manner. In my view, this is desirable. However, I reiterate the reassurance given at every stage of this Bill’s passage through the other place: the Government are committed to not normally using this Bill’s powers without the consent of the devolved Administrations, and we will never use them without consulting the devolved Administrations first.
We have two ground-breaking deals, both opening up new opportunities for Britain’s world-leading industries; an expected £900 million increase in UK household wages as a result of the deal with Australia; an expected £200 million increase in household wages as a result of the deal with New Zealand; ambitious mobility provisions for UK professionals and young people; two trade deals fit for the 21st century, including the first animal welfare chapter in a free trade agreement; modern digital and data provisions, ready for the economy of the future; as a key part of the vision set out in the integrated review, a tilt to the Indo-Pacific, thus building on existing strong ties, including the Five Eyes partnership and recent AUKUS agreement, to deepen our relationships with key allies in the region; and, finally, two values-based deals, which deepen our relationship with like-minded democracies sharing our beliefs in fairness, free enterprise, high standards and the rule of law.
Our Australia and New Zealand trade deals illustrate modern partnerships, and they reflect what the New Zealand Trade Minister said when the New Zealand Parliament was debating the deal—namely, that the partnership between our countries is
“grounded in common traditions, experiences, and values, strengthened and maintained by deep people-to-people links and made relevant by a close cooperation across the entire spectrum of engagement: economic, health, science, sport, defence and security.”
To further showcase this partnership, I believe the Australian High Commissioner has joined us in the Public Gallery today.
Crucially, these agreements are a central element of our work to build a network of trade alliances with the world’s most dynamic economies. These deals represent another step towards our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
This is a modern, flexible agreement, representing not an end point or a stop sign but a template for growth and deeper partnerships with two of our closest allies and key strategic partners. Importantly, it contains a series of important mechanisms to ensure that these agreements remain flexible and contemporary, including a joint committee to implement and operate the agreement and further sub-committees on intellectual property, services and investment, sanitary and phytosanitary measures, technical barriers to trade and trade in goods. It also includes side letters and dialogues on implementing protections around geographic origins, financial services regulations, professional qualifications, telecommunications, legal services and, of course, a detailed series of mechanisms to manage our tariff rate quotas. These are highly flexible agreements. They allow us to build on them and make alterations as deemed appropriate.
This Bill represents a historic step towards realising this Government’s vision for a forward-looking, sovereign trade policy that delivers prosperity to our citizens. I have every confidence that noble Lords will recognise these immense opportunities. I beg to move.
My Lords, I welcome the Minister to his position. It is quite exciting to do your first Bill before any House and he has got off to a good start. I used to have a colleague in the other place who, at the end of a speech, would often say “it says here” because that way they could get out of any problems that had been created. I used to get notes from the civil servants saying, “Please read out paragraph 3 because that is the one that the judges need to hear about,” because I would quite frequently avoid doing that.
I have to announce to the House that I have no relatives in Australia or New Zealand, but I have spent a little time in Australia as British high commissioner. I followed in the footsteps of the noble Lord, Lord Goodlad, who had laid an excellent foundation for me and managed to keep me out of an awful lot of trouble.
Let me see if I have this right about this Bill. This Bill is needed to ensure that the procurement provisions of the trade deals with both Australia and New Zealand can go ahead with no delays. However, this Bill is to be superseded by the Procurement Bill that is starting in the other place in the next couple of days. That Procurement Bill will repeal this Bill, and both Bills have to go on the statute book around the same time. I have lost the plot here. I know that is not something I should admit to. Sometimes, I think I have followed my namesake Alice through the looking-glass, because this is the most bizarre arrangement I have ever come across in relation to a piece of legislation.
We are going to have to pass this Bill when we have been denied the full opportunity for scrutiny. That is a major issue. On both sides of the House, there have been arguments about the need for scrutiny of trade Bills. Furthermore, there is no published trade strategy, so how can we know whether these deals meet the criteria set for the negotiators? It is a very difficult thing to try to do. I am not casting aspersions on the Minister but there can sometimes be an addiction to hyperbole on the part of the Government. Not everything is an absolutely wonderful deal. There are failings in these deals; they are the first we have done since leaving the EU and it is no surprise that there will be difficulties. I can remember, as a Minister, standing at the Bar of the House and suddenly discovering from some of the experts on these Benches that I had completely ignored engineering in an energy Bill. I had to go back and table amendments. It happens; we do not get everything right all the time. I strive to get some things right occasionally, but my family say that I do not.
If we are to take these deals as setting the pace for trade deals around the world, we need to take into account things that are quite controversial, such as the CPTPP. We need more information and, again, more scrutiny, to be able to go down that path because in the CPTPP countries there are a number of examples of trade deals that we would be quite uncomfortable with—on both sides of the House—in this country.
One thing that concerns me about the Bill—it is very narrowly drawn Bill—is whether this is how we are going to be expected to scrutinise other treaties. Are we going to have to do everything by statutory instruments? That is not the right way to properly scrutinise something as significant as a trade Bill. It raises issues about the responsibility of government to Parliament. It is an unfortunate path to go down. I know that the Minister has met the International Agreements Committee, of which I have been a member since its inception, and we are enormously grateful for that, but we want to know: where are the transparency and openness in the debates and advice that have to be put before us? This very constrained Bill is the only opportunity that both Houses have to scrutinise these trade deals. The United States has better provision for the scrutiny of trade deals than we have in this country. That should be a warning to us that we need much better scrutiny.
Obviously, having spent time in Australia, I am going to concentrate on it. People do not seem to realise that Australia is 32 times the size of the United Kingdom. The United Kingdom can fit into the Northern Territory with quite a lot of space left over. When the noble Lord, Lord Goodlad, was trying to get it through to me that this was actually quite a big country, he showed me a postcard that had the United Kingdom in a corner of New South Wales. It is not just the fact that Australia is a big, big country; it also has 25 million people, while we have 67 million—and there are an awful lot of farms in Australia. They are known as properties and some of them can be the size of countries within the United Kingdom because of their scale. No wonder that we end up with a disparity between what the agricultural community says about the Bill and what the Minister has said from the Dispatch Box.
The Australians are delighted with this deal, as well they should be. But our Government gloss over the projected growth in GDP by 2035, which is only 0.08%. We have to bear that in mind and see what we can do to advance it. That could be why the Australian Government’s website is much more helpful to those of us who want to analyse the deal, while the UK Government have been remarkably coy. If you want information about this trade deal, go on to the Australian Government’s site and then you will get it.
I want to make one very particular point, given my Scottish accent. I want to thank the Australians for the deal done on Scotch whisky. That has suffered from what I used to describe as a nuisance tax, which was introduced to protect Bundaberg rum. I know that the noble Lord, Lord Frost, will be speaking in a few minutes’ time. The one problem that I always found with it was that Bundaberg is owned by Diageo, which owns most of the whisky distilleries in Scotland, so I could not quite work that one out. I have to be absolutely honest: Diageo allowed me to have a Scotch whisky evening every month so that we could promote the case for reducing the tariffs on Scotch whisky. Maybe the noble Lord, Lord Frost, knows the answer to that given his background in the Scotch whisky industry, because I have not a clue what it is.
Labour has said in the other place that the Bill will not be opposed. However, there are very real concerns about, for example, animal welfare, agriculture in general, and the lack of any provision for decent work and social goals through procurement. Lots of us know of young people who have gone out on two-year visas; some of them find themselves in pretty appalling circumstances. We need to make sure, as the migration period into Australia is increased to up to three years, that those who go as migrants are protected by the trade union laws and by the social and political goals. The TUC and the Australian Council of Trade Unions have made the same point, but in this country there seems to have been no interchange with the TUC about the difficulties around migrant workers in Australia. I recommend to the Minister that something needs to be done about that. A lot of Members on the other side, particularly in the other place, depend on rural communities, yet the most vociferous criticism of the deal comes from those communities. There is a problem here and it really has to be addressed.
It is significant that there has been a change of Government and now a much more engaged agenda on climate change in Australia. That could create huge opportunities for UK companies which are forging ahead strongly on renewables, carbon capture, storage and use. I refer to my entry in the register of interests as the president of the Carbon Capture and Storage Association. Under the previous Australian Labour Government there was considerable interest in CCS and use, with an experimental operation in Latrobe Valley. What attempts have been made to open the door to environmental businesses in this country in renewables and CCS and use? Under Prime Minister Albanese, who has made it quite clear he takes a completely different view on climate change from Prime Minister Morrison, there are opportunities to extend our success with the industry in Australia. During the passage of the Bill, we will want to know what prospects there are for that kind of improvement and let it be known that the lack of scrutiny afforded to Parliament casts the Government in a poor light. What are the Government frightened of when it comes to scrutiny?
Doing a deal with Australia and New Zealand is very important. Lots of people in Australia—a very high proportion—carry British passports. That is not true of politicians, because they have to resign their British passport when they enter Parliament, but they all take it back up when they leave Parliament; it is quite a nice little side deal for the Home Office to reissue these passports. We have some of our oldest security arrangements with Australia and New Zealand. They are our friends. It is good that our first deal is with them.
I look forward to the processes around this Bill, but I am deeply concerned that we are going to do scrutiny by statutory instruments. It is not the way in which a sophisticated Parliament should scrutinise trade deals.
My Lords, it is a great pleasure to follow the noble Baroness, Lady Liddell, who made such a distinguished contribution to British-Australian relations when she was high commissioner—comprehensively erasing my footprints in the process, not least in bilateral trade and investment promotion, which is an important part of the job. It is a privilege to open the batting with her; I just ask her not to ask for any quick singles.
I look forward to the maiden speech of my noble friend Lord Swire, who also made a great contribution to British-Australasian relations during his period as Minister at the Foreign Office. I have some Australasian relations, descended from two uncles who migrated to New Zealand and Australia from the Shetland Islands when they were very young; those cousins were jolly supportive too. I welcome my noble friend Lord Johnson of Lainston to his new job and congratulate him on a very fine opening innings; I hope that we see many more of them.
This Bill is narrow and technical in nature. It is appropriate and important to recognise that our first post-Brexit ab initio—as opposed to rollover—trade agreements should be with Australia and New Zealand. They are important trading and investment partners already, as they have been for many years. They are also close intelligence and defence allies. We share a history that has led to the present deep family, cultural, educational, sporting, diplomatic and political relationships, together with legal systems rooted in the common law. The histories and destinies of our three countries are and will remain inextricably intertwined.
My noble friend the Minister has comprehensively and authoritatively set out the provisions and merits of the Bill. I shall address some of the criticisms that have been made. In a forthright speech in the other place last November, the right honourable Member for Camborne and Redruth pointed out that CPTPP negotiations are under way, as are those with Canada, and he sought to draw lessons from our recent negotiations with Australia and New Zealand. He said that the first and most important was that
“we should not set arbitrary timescales for concluding negotiations.”—[Official Report, Commons, 14/11/22; col. 425.]
In this case, that meant the then-forthcoming G7 summit. There is nothing new in that. I remember negotiations with Australia in the early 1990s, when I was a Minister at the Foreign Office, over our respective shares of the cost of cleaning up the Maralinga test site in South Australia. The senior Foreign Office official responsible rejected the Australian suggestion that the negotiations be conducted while watching a test match. Instead, they were conducted in the Foreign Office and concluded in good time for the Australians to be at Lord’s by 11 am, which is what they wanted. The senior official—who went on to be a very senior official—and I believed that the UK was the beneficiary of that tactic but, as in the present case, we shall never know.
The second lesson that the right honourable Member suggested was on changes to the machinery of government. I have no particular view on this, provided that the chains of command are clear and unambiguous.
The third lesson, which the noble Baroness, Lady Liddell, touched on, was on strengthening the role of Parliament in scrutiny and perhaps in agreeing the negotiating mandate. I am in full agreement on this. Other Members also commented on what some saw as defective scrutiny procedures for the Bill. For what it is worth, my experience, both in the other place and here, is that, in the long run, government has everything to gain and nothing to fear from effective parliamentary scrutiny, as other countries—notably Japan and the United States of America—have demonstrably found. But every Government have to learn their lessons in their own time and reinvent the wheel. I have no doubt that your Lordships will not let the side down in repairing any deficiencies in scrutiny of the Bill, as we always do with any legislation.
Reference was made in the other place to the possibility of triggering Article 32.8 and thereby giving six months’ notice of terminating the agreements. I hope it does not come to that; such a move would not bode well for our success in concluding other negotiations. As the noble Lord, Lord Kerr, rightly said in a different context, pacta sunt servanda. Whether or not a better agreement could have been struck we shall never know. Not every match can be a draw—if Ben Stokes has anything to do with it in the summer, there will be no draws at all. Trade agreements are not a zero-sum game; as in the present case, everyone is supposed to benefit. These agreements are popular with business in all three countries and deserve our support. I hope that noble Lords will give a fair wind to the Bill and all who sail in her.
My Lords, first of all, it is a pleasure and honour to follow two such distinguished former high commissioners to Australia: my noble friend Lord Goodlad and the noble Baroness, Lady Liddell. I thank them for their interesting speeches, which provided such a depth of historical perspective on the very important relationship between these countries. I also thank my noble friend the Minister for his comprehensive opening statement. I thank the International Agreements Committee for the work it put into this last year, particularly the work of the noble Baroness, Lady Hayter, as its chair. The Select Committee published a thorough and very important report; it was the first report on a major trade agreement, and it covers all the angles that need to be covered.
As has been said, the Bill covers only the procurement aspects of the agreements that need to be incorporated into our own national law. I will not say too much on the detail of that, other than to note that, when I was conducting negotiations with the EU in 2020, many people advised me that we should simply incorporate into that agreement the EU’s existing procurement rules, as it was said that they were best things for the country. Of course, if we had done that, we would not now have the agreements before us. We worked very hard to ensure that the procurement chapter enabled sufficient flexibility to allow agreements such as these to be made, and I am sure that we will see repeatedly the value of that in future.
I take this opportunity to make a few remarks on the agreements and on our trade policy more generally. I do so because, when I was a Minister in 2021, my responsibilities included establishing cross-government positions on trade agreements in support of the then Prime Minister—a role which, I think, worked well at the time, although, to judge from the subsequent comments from some people involved, it seems that the disagreements within government were suppressed rather than genuinely resolved. However, as those disagreements have come out, I put on record, as indeed my noble friend the Minister has, my support for Crawford Falconer at the DIT, who has been a thoughtful, resilient and extremely important official within that department over the last few years; he was very important for these agreements.
I turn to the substance of the debate. Of course, I support both agreements; that is obvious because they are top-quality and modern agreements, and I particularly welcome the extensive removal of tariffs in both. I am afraid that I cannot quite give the answer that the noble Baroness, Lady Liddell, was perhaps looking for from my professional involvement with Scotch whisky, which is now receding into the dim and distant past. The agreements also include, as has been said already, the liberalisation of services and mobility arrangements for young people, which are all important parts of a modern trade agreement.
I will make three further points in the context of my very strong broad support. First, the aspect of the trade agreements that has been most debated is of course the liberalisation of agriculture, particularly of beef and lamb. As others have felt free to comment on that, again, I want to put on record my view that, in the end, the provisions were not ambitious enough. The very long transitional period of 15 years delays unnecessarily the benefits to our economy of cheaper and high-quality beef and lamb in our market. I have full confidence in the ability of our farming sector to adjust to competition, and we should have pushed for a slightly shorter period in the interests of the UK consumer. I say that while believing that the benefits of trade come primarily from imports and competition in own market, rather than exports to other markets—to think anything else is to take a very mercantilist view of these questions—and therefore I hope that the Government will be more ambitious in the many future agreements that will come forward.
Secondly, as has already been noted, today is part of the parliamentary scrutiny process for the two free trade agreements, and I admit to sharing some of the concerns that have been expressed about the scrutiny of agreements of this sort. I welcome the commitments by the Government in the exchange of letters on 19 May last year and recognise that those commitments on scrutiny go further than we have seen before, but there is more to be done.
Our exit from the EU means that we have repoliticised our trade policy. When I was the UK member of the EU’s Trade Policy Committee, known as the Article 113 committee, 10 years or so ago, I found it very hard to get UK Ministers—they were mostly Lib Dems, under the coalition—interested in trade policy because it was all decided in Brussels and had become depoliticised in our own politics. That is now changing, and I think it is a very good thing that we are having those sorts of debates. Unfortunately, the world has moved on from the early 1970s, when this Parliament and the Government were last fully in control of trade policy. Our arrangements for scrutiny should move on, too.
As I said to the Public Administration Committee in June last year, I think it is desirable that there should be a simple up/down, yes/no vote—at least in the other place—on all substantive trade agreements. As has been noted, there was such a vote when we were a member of the European Union, in the European Parliament, and it seems unsatisfactory to me that we give less scrutiny now that we have brought trade policy back home. Again, I hope that, in the future, the Government will think about this aspect and the value of politicising this and capturing the politics around trade agreements in a useful way.
Thirdly and finally, the Minister noted that the Government are often asked for a trade policy strategy, but we do not yet have one. It would be good to set out a strategy that not only covers trade but goes broader: one big advantage of taking back control of our trade policy is that we are able to integrate it more closely with foreign policy, and indeed development policy. There was a missed opportunity to bring all those departments together in 2020; perhaps that will be looked at again in the future. It would be useful if the Government could set out a trade policy strategy that is really a geopolitical strategy—one that relates to our broader foreign policy ambitions as well as pure trade policy. Our prospective adherence to the CPTPP is of course a major element of that and the Indo-Pacific tilt, but it is only one element and there is room to look at this more systematically, strategically and coherently.
I hope that such a strategy could also usefully set out how the Government see the balance between domestic liberalisation of tariffs—that is, reducing our own tariffs still further to increase competition and reduce prices in our own market—and offensive liberalisation of other countries’ trade arrangements that we seek in free trade agreements. Both are important, as is getting the balance right.
I hope that my noble friend the Minister can comment on these aspects in winding up. Meanwhile, I am of course very happy to support the Government in the Second Reading of this important Bill.
My Lords, I declare my environmental interests, as well as my interest as chair of the Royal Veterinary College. I had not really thought of declaring my Australian and New Zealand relatives until I was reminded by several previous speakers. I have umpteen of them. We were good Scots: we spotted the £10 immigration grant—the Ten Pound Poms scheme, as it was known—and took full advantage of it. I am a frequent visitor to Australia and New Zealand.
Noble Lords have remarked upon the fact that this Bill is very narrow in scope in that it deals only with the power to implement the obligations in the government procurement chapters of the two FTAs, but it is of course an open goal in terms of the opportunity to talk about the wider issues of trade agreements, including the scrutiny process. I would also like to focus on environmental standards. I hope that these broader comments will benefit future agreements.
On the scrutiny process, much of the scrutiny happens far too late. It needs to take place before things are set in concrete. I welcomed the assurances from the noble Lord, Lord Grimstone, about future ground rules and improvements in the processes, but they did not go far enough. We need full parliamentary debate and agreement on negotiating objectives before negotiation starts, and proper opportunity for parliamentary debate in both Houses before the agreement is signed, not after—or, in the case of these two agreements, never at all, as far as the House of Commons was concerned.
As the noble Lord, Lord Frost, said, we used to have such provisions in place for trade and other negotiations within an EU setting. It is slightly bizarre that we do not have such open arrangements now that we are allegedly free to do what we want. Perhaps the Minister will tell us how he intends to reinstitute those processes.
I would also like, in common with other noble Lords, to talk about trade strategy, or the absence thereof. All future agreements need to be set in the context of a proper trade strategy. The International Agreements Committee, the International Trade Committee and the EFRA Committee have all asked for a trade strategy, and I am sure that many noble Lords will today. I hope it will cover such crucial issues as whether the Department for International Trade has a clear role in promoting democratic values and environmental reform through trade.
I turn to some specific areas in relation to environment and agriculture. I was rather taken aback at how almost incandescently messianic the Minister was about the benefits of these two agreements; I thought I might have been reading two different agreements. Let me be a party pooper, perhaps, or diminish the messianic nature of the Minister’s rapture, and talk about some of the issues that some people are not quite so convinced about as he is in terms of the environment and agriculture.
On the process for environmental impact assessments, EIAs happen only after the signing; they take no account of cumulative effects of several trade deals; and they do not really cover such key issues as transport-related emissions and the potential for increased carbon leakage. There are no permanent bilateral safeguards to ensure that imports with lower environmental standards than those we set in the UK do not come into this country. So, the EIAs result in an incomplete picture which can obscure the true risk of offshoring climate and environmental impacts as a result of trade agreements. If we think that was a minor issue in the Australia and New Zealand agreements, we ain’t seen nothing yet—we are going to be dealing with much bigger fish to fry in the future.
I am still monumentally unclear about how environmental standards of imports are monitored on an ongoing basis. During our debate on the Trade Bill, the Minister assured us that systems were in place but gave us no detail. To be honest, at that stage I had almost given up the will to live in dealing with these issues and did not pursue it, but I entirely plan to continue to pursue it now. Will the Minister tell us what the systems are for monitoring environmental standards of imports on an ongoing basis? What review has there been so far of their effectiveness? What remedies are there, apart from the transient remedies in these two agreements, if such standards are infringed?
I turn to agriculture. I was never a great fan of the Trade and Agriculture Commission; it is pretty light on environmental expertise and comes into play only once FTAs are signed, which is a bit like shutting the stable door after the horse has bolted. The Trade and Agriculture Commission reported on the UK-Australia FTA, but this process needs to be strengthened by expanding the remit of the TAC and the scope of the Government’s report required under Section 42 of the Agriculture Act. At present, both are incredibly narrow, and that is compounded by the fact that the TAC also has very limited resources, including limited expertise, to conduct proper scrutiny of larger, more complex negotiations in future. That needs to be addressed before we start playing with the big boys, otherwise the Government will not get proper, early enough and wide enough advice from the TAC. In the Australia agreement, that has resulted in several outstanding questions being left unanswered. For example, how far can Australia’s less stringent regulation of pesticides interplay with and give an unfair competitive advantage to them over UK producers?
We want the TAC to be involved in and comment on how negotiations should be framed rather than only examining agreements once they are signed. I also believe that the TAC should be tasked on an ongoing basis to consider the cumulative impacts of trade deals.
What about the impact of the two agreements on farmers in the UK? It is interesting that the National Farmers’ Union is not so messianic about the benefits for British farming as the Minister is. The flaw in these agreements is that they offer us very small markets which already have only low-tariff barriers, so there is not a huge benefit in the agricultural sphere to this country. On the downside, both of the countries with which we are making free trade agreements are big exporters, which could swamp our smaller-scale UK markets. The temporary bilateral safeguards that are our freight quotas are just that: temporary. They are also bilateral and probably will not persist in the face of WTO arrangements. Can the Minister tell us how swamping UK markets can be prevented in future negotiations with even bigger producing and exporting nations? Or does he really want us to be a niche agricultural product nation?
I hope over the course of this Bill we can tempt the Minister down from his ecstatic heights at these two FTAs to address some very real concerns about these deals and the future processes. With our traditional relationship with, no doubt, hundreds of my relatives in Australia and New Zealand, these agreements were conducted on comparatively friendly terms. We need to sort out these processes before we start playing footsie with some bigger and more aggressive beasts in the trade jungle.
My Lords, I have made a new year’s resolution to try to be more congenial, so I need to start by saying that I warmly welcome the last three substantive points made by the noble Lord, Lord Frost. It has been a very long time since I have been able to say that I entirely agree with the noble Lord, Lord Frost. It is also a great pleasure to see the Minister back on the Front Bench, and I greatly appreciated the balanced and understated analysis he put forward. The noble Baroness, Lady Liddell, spoke of hyperbole. I heard no hyperbole; I heard no geese misclassified as swans. I believe that we will all benefit from such a calm, rational analysis. I think it would be as well that the Minister does not pay any early visits to the hill farmers of Scotland, Wales or Northern Ireland.
I have only two points to make on the substance of the Bill and two points on the agreement. On the Bill, I do not understand its rationale—I am like the noble Baroness, Lady Liddell. It is bizarre. The Procurement Bill—which has gone through this House and will have its Second Reading, I think, today in the other place—overtakes this: it confers on the Government powers to implement procurement provisions in trade agreements. So why do we need a separate and specific Bill, primary legislation, in respect of Australia and New Zealand? I really do not understand. It is not as if the Australian and New Zealand agreements were massive agreements urgently requiring to come into effect, or agreements with momentous procurement provisions. I am not against the Bill, but I did not hear from the Minister any convincing rationale for it. It may be helpful if he could go on record to explain why we are doing what we are doing.
I am a little more concerned about the substance of what the Bill says. It is a skeleton. That came as a surprise because the Explanatory Memorandum on the agreement with Australia told us that primary legislation on procurement would be required. The Bill, however, makes none of the apparently necessary changes to the current statute book and does not tell us what they are. Instead, it asks us at Clause 1 to delegate regulation-making power to an “appropriate authority”—not just power to make the changes required by the Australia and New Zealand agreement but power to make any changes that the appropriate authority deems appropriate. Clause 2 suggests that such appropriateness can be construed liberally. That all seems a little permissive to me. The wording of Clause 1 and, possibly, Clause 2 may need some careful consideration in Committee.
I also note that the regulations making the changes that the appropriate body thinks appropriate would be subject only to the negative procedure. I wonder whether choosing that, rather than the affirmative, procedure is necessary or appropriate. That, too, is a point the House may want to think about in Committee.
My third, more general point is that the Minister might find the House more relaxed about implementing legislation if the Government felt able to be more open—perhaps as open as the Australians and New Zealanders—about the process of negotiating trade agreements. As our EU Committee pointed out in 2019, the Constitutional Reform and Governance Act 2010, CRaG, which defines our role now, is
“poorly designed to facilitate parliamentary scrutiny”
of trade agreements. That did not matter much in 2010 because the EU was then our trade negotiator and the European Parliament was required by treaty to approve the mandate for trade negotiation, to be fully informed at all stages of the negotiation and to approve its eventual outcome. Because the European Parliament was fully in the picture, so were we. However, we now have none of its three means of scrutinising and controlling the process of treaty negotiation. Therefore, we can be taken by surprise, as the Scottish, Welsh and Northern Ireland hill farmers were, by the agricultural elements in the deals with Australia and New Zealand. Those concerns were not entirely justified—again, I am with the noble Lord, Lord Frost, on this—but greater openness would reduce the risk of such surprises and I hope that the Minister will look again at the International Agreements Committee’s proposals on how to mitigate the defects in CRaG and restore effective scrutiny of trade agreements. “Taking back control” did not have to mean slamming down the shutters.
My second-to-last point illustrates why I am one of those who strongly believe that we need a government strategic document setting out the trade policy strategy. Let me try to do that, this time, by giving examples of strategic issues which I am sure the Government and department are greatly concerned about, but about which we have been kept a little in the dark. First, and most urgently, I ask the Minister: where do we, and should we, stand in the debate touched off by the Washington agreement to invest nearly $750 billion in green energy under the Inflation Reduction Act? Over in Brussels, our EU friends still seem to be on their plan A, which is to seek to ensure that more non-US firms benefit from this enormous US investment. That is a rather unlikely outcome, particularly given the change in the composition of the House of Representatives. But if, as I expect, the European Union falls back on its plan B, which is to enact similar national preference provisions on energy investment, I would have thought that this would be rather detrimental to our interests. So, where do we stand in this debate, and what are we trying to do about it?
A second and equally strategic issue which could be addressed in a government trade strategy document is the trade policy consequence of our hardening attitude to China, given the increased belligerence towards Taiwan and our increased concern about supply chain resilience. I do not know what the agreement between the Foreign Office and the Department for International Trade is on the attitude we should take. I hope that there is an agreement, and I cannot see any reason why public debate should not be enhanced by the position being made known.
Thirdly, to what extent should our approach in trade relations with friendly third countries such as India take account of their compliance or non-compliance with our and our friends’ sanctions on Russia over the invasion of Ukraine? I do not think trade can be regarded just as a watertight compartment. As we try to negotiate a trade agreement with India, we need to know the Government’s view on how watertight that compartment is.
Fourthly, how does trade policy interact with environmental policy? To me, the surprise in the agreement with Australia was not the agricultural provisions—we clearly decided to give the Australians what they wanted, perhaps for good reason—but the weakness of the environmental provisions. We knew that the Australian Government were determined to protect their coal industry. We remember Alok Sharma’s tears at the COP in Glasgow; the Australians drove him into that corner. However, we knew that the then Australian Government were behind in the polls and likely to lose the imminent election, and that the incoming Government would take a much more constructive line on global warming. Since we were giving the Australians what they wanted on agriculture, why were we not trying to extract a price on environmental policy commitments? In addition, why the rush? Why were we not waiting for a Government whose views on global warming, like those of the New Zealand Government, were closer to ours—a Government like the one we have in Australia now? I do not know the answer to that question. Maybe Mr Lynton Crosby is part of the answer; I do not know. I think it would be easier for the Government to maintain a credible position in public debate if they set out the principles they see as governing the interaction between trade policy and environmental policy.
I have a final example of the sort of issue which should be covered in a trade strategy. By the way, I think that the trade strategy should be submitted for debate in Parliament on a regular basis. It should be renewed year on year and provide the basis for this kind of debate, but on a wider stage than just that of Australia and New Zealand. The elephant in the room for trade policy is how we can reduce the non-tariff barriers to trade with our biggest and closest market. If you look at the queue on the Dover road, you must think that this is a strategic issue with direct daily consequences to the detriment of British business.
One of my more poignant memories of 2019 is of the then Prime Minister proudly announcing that his trade and co-operation agreement contained not a single non-tariff barrier. I cannot remember any trade agreement that set up a non-tariff barrier. The purpose of trade agreements tends to be to take barriers down; on the other hand, leaving a customs union, a single market and an area of free trade and free movement is bound to erect barriers—it certainly did, and the treaty did nothing to mitigate them. However, there will be a review in a couple of years’ time and, in my view, mitigations are possible if trust can be restored.
So it is not too late—or, indeed, too early—to start thinking about a plan. I hope that the Government are thinking one up. I do not know whether this has been entrusted to the Department for International Trade; I fear that the matter may be being handled by the Foreign Office, which, in my view, would be unwise. The Government would do well to produce some inkling of what they think is the best way to reduce the barriers that have now made the channel so wide.
With that, I had better stop. If I do not, the House may think that I have forgotten my resolution to be congenial.
My Lords, over the recent Christmas Recess, I spent some time—not all the time—reading some maiden speeches made by those coming into this place. It strikes me that there is an accepted formula in being uncontroversial while paying tribute to the friendliness, efficiency and tolerance exhibited by all the staff in this place, from the Lord Speaker and his office to Black Rod and her office, the clerks, the Vote Office and the doorkeepers, who are of course the people who run this place. I had thought that the kindness exhibited to me was exceptional but, clearly, it is a common experience; none the less, I wish to add my gratitude to them.
Having spent almost two decades in the other place, I am acutely aware that nothing must be more irksome to your Lordships than somebody coming here from there and thinking that they know everything. This place is different and all the better for it. I am therefore hugely indebted to my noble friend Lord Lindsay for helping me to avoid the many potholes and pitfalls. I am also indebted to my noble friends Lord Strathclyde and Lord Marland, of Odstock, who were kind enough to be my supporters and guided me what looked to be so effortlessly into place—no mean achievement as I am not very good at these things. I think I am the only living former Guards officer who went the wrong way in the Changing of the Guard on the forecourt of Buckingham Palace some 40 years ago, to the consternation and delight of hundreds of Japanese tourists.
It was never really my intention to make my maiden speech so soon, having come into this House only recently. I am still reminded of my maiden speech in the other place in July 2001, which, while perfectly workable, is never likely to be studied or quoted from. I remember on that occasion having to follow on, in a not ideal fashion, from the then new Member of Parliament for Henley, one Boris Johnson. While no such threat confronts me this afternoon, following on from not one but two former high commissioners to Australia, a PUS at the Foreign Office and the Government’s main trade negotiator presents challenges to me in themselves.
Having thought about this, I feel that I can no longer continue with my role as a Trappist monk, since there are so many issues before us that I wish to share my views on and hopefully contribute something useful to. Having served as a Minister of State at the Northern Ireland Office, I maintain a deep appreciation and understanding for Northern Ireland and the problems that it has confronted, and which confront it at the moment, not least with the protocol. I very much welcome the recent noise coming from Dublin, given the utterances from Leo Varadkar the new Taoiseach—obviously, he was Taoiseach before and is Taoiseach once more—which will hopefully go some way towards resolving what has become a stalemate.
Also, having spent almost four years as a Minister of State in the Foreign and Commonwealth Office, with responsibility for the Commonwealth as an institution but also with responsibility for Asia as part of my portfolio, I wanted to take part in this debate, since this trade deal is of great interest to me. In that role, I had the opportunity of visiting both Australia and New Zealand, and I am very grateful to my noble friend Lord Goodlad for his kind remarks about that.
As we have heard, the devil of these trade agreements is in the detail, and I have no doubt that there will be plenty of conflicting views about this one. It is of course right that we should debate it thoroughly and scrutinise it in detail, but for my part I very much welcome this trade deal. I am not quite 74, which is what my introductory biography in this place said—that was amazing, and there was a certain amount of squinting at me on my first day. However, I am old enough to remember the sense of abandonment that our cousins in Australia and New Zealand felt when the United Kingdom joined the EEC in 1973. Their consensus was that this represented imperial preference in reverse and threatened particularly their exports of beef and lamb. Therefore, it is somewhat ironic that one of the criticisms levelled at this deal is that it will disadvantage our own agriculture sector, particularly in beef and lamb, although this ignores the fact that Australia and New Zealand’s main export markets are now heavily weighted towards Asia. The sense of betrayal at the time was understandable, so I am pleased that half a century later, we can put this to rest and look forwards, not back. Australia and New Zealand are, and have always been, more than just allies and friends. We have so much in common, and no one should underestimate the importance of the Five Eyes agreement and the AUKUS partnership, not least at a time of rising belligerence and influence in the region from China.
I also applaud this Bill because it is the first post-Brexit trade deal to have been negotiated from scratch and, moreover, it is with two fellow members of the Commonwealth. I should at this point draw your Lordships’ attention to the register of interests and my role as deputy chairman of the Commonwealth Enterprise and Investment Council, a not-for-profit organisation revitalised and chaired so dynamically by my noble friend Lord Marland, which promotes intra-Commonwealth trade.
For too long, we have behaved as if the Commonwealth is an embarrassment and not an asset. During my time in government, it sometimes felt as if I was pushing water uphill whenever there was anything to do relating to the Commonwealth. Here I pay tribute to my noble friend Lord Howell of Guildford and the now retired Lord Luce, who at times appeared to be the only two parliamentarians keeping the Commonwealth flame alive. I intend to join them and all those who feel similarly in promoting the Commonwealth, which provides a unique and ready market for British business.
In a recent, not uncontroversial Netflix documentary, which some of us may just have seen—and others may not admit to having seen—one of the contributors labelled the Commonwealth “Empire 2.0”. Either this was deliberate mischief-making, or it displayed astonishing ignorance; perhaps it was both. What it was not was in any way an accurate description of what today’s Commonwealth is: a voluntary grouping of now 56 countries, some of which, not least the two most recent countries to join, namely, Togo and Gabon, owe nothing in their history to the United Kingdom, having fallen historically within the francophone sphere of influence. Of course, your Lordships will remember that the last Commonwealth Heads of Government Meeting in June was held in Rwanda, another country with nothing to do with the British Empire or colonialism historically.
This afternoon, we heard a call for the Government to come up with a comprehensive trade strategy, which I would welcome. If the Government do that, I would remind them that the modern Commonwealth is one such opportunity—a Commonwealth that has a population of 2.5 billion people, 60% of whom, critically, are under the age of 30. It represents a third of the world’s population—a billion middle-class consumers. The combined GDP of Commonwealth countries is estimated to reach $19.5 trillion in 2027, almost doubling in 10 years from $10.4 trillion in 2017. It also represents 40% of the global workforce and half of the top 20 global emerging cities. I am sure we will hear from other speakers about the Commonwealth advantage, whereby it is cheaper for one company in a Commonwealth country to trade with another company in another Commonwealth country, with a saving of 21%, based on a common language and legal system.
The opportunities for trade with Australia, New Zealand and the wider Commonwealth are clear. I welcome this trade agreement, which will increase the United Kingdom’s chances of joining the trans-pacific partnership, which is the bigger goal. I hope that the new Minister, my noble friend Lord Johnson of Lainston, will take this opportunity to reaffirm this Government’s commitment to the Commonwealth and everything it represents, and that we can rely on him to be a passionate advocate for it.
My Lords, I am delighted to follow my noble friend Lord Swire’s excellent maiden speech. He was my second successor—or was it the third?—in the job of Commonwealth Minister in recent times, and he made a great fist of it and a great success. He continues to do so in working with my noble friend Lord Marland, whom he mentioned, in the highly successful Commonwealth Enterprise and Investment Council. Together, they and their brilliant team have opened Whitehall eyes—although not nearly wide enough yet—to the vast trade and other advantageous linkages that the modern Commonwealth offers. My noble friend Lord Swire’s wisdom and experience will be hugely valuable here. Whatever he may have done on the parade ground, I do not think he will lead us the wrong way; on the contrary, he will lead us the right way, to a better understanding of what is happening in world trade.
I come to the Bill. Although the impact assessment tries to do so, it is difficult to predict how this agreement will affect trade flows, because it depends on whether or not opportunities are seized and on a range of technological developments, some of which we cannot even foresee, which will affect the pattern of trade as they have done for the last two or three decades. Despite the challenges and difficulties for our farmers, which I recognise, we should see the Bill in a very positive light.
The Bill is welcome too because it is part of the new jigsaw of an utterly transformed world trade system and, as the excellent report from the International Agreements Committee observes, it gives us a glimpse into the Government’s longer-term vision for trade expansion. This inevitably means not just trade but, inseparably, political and security expansion. All these matters are intertwined and involved. It may also tell us something about the Government’s policies to develop their role in the Commonwealth, which embraces about a third of the human race and is the biggest network on the planet by far. The modern expanding Commonwealth is, in the late Queen’s words, “an entirely new conception”, and Australia is key to that new and fast-growing Commonwealth world. Whether Australia’s status is as a realm or a republic does not matter at all; it does not affect things. This is good on both fronts, because we do not hear nearly as much as we should in this House or in Parliament about either of these major areas of policy, despite their outcomes being central to our security and future prosperity, and to the welfare of the world.
On my first point, about our involvement in new trade patterns that are booming, with countless new networks in Asia, with this Bill and these agreements we are obviously stepping further into a world dominated by the Chinese giant—far too dominated, many feel, especially in Australia but here as well. I find the consultants Dezan Shira, which has offices all over Asia and Africa, to be one of the best pan-Asian interpreters of what is really happening in the region. It estimates that the total current value of belt and road projects put forward by China is $4 trillion. Of course, there is in fact a whole spread of belts and roads winding through the developing world.
The belt and road initiative is not just loans and eye-catching projects; it is creating a major value chain for services, engineering consultancy, legal and advisory services, all professional services, and of course much more investment opportunities. It is very good that the Bill covers the same sort of ground and opens the door to better professional services access both ways—although of course that is just a small start on one front in countering China’s remorseless BRI advance. I am very glad that the Minister, who I welcome to his job, mentioned that when he introduced the Bill.
Incidentally, when it comes to bilateral investment treaties, which are just as important and are the key to more trade, China is miles ahead of the United Kingdom, with 145 treaties with developing countries against 20 UK treaties, mostly with Commonwealth countries. In effect, through past inattention we have let the Chinese take the lead in financing and getting the benefits from Commonwealth countries, which ought to be our asset, not theirs.
It could be that this Chinese ascendancy is now being checked, as Australia in particular finds its export routes to China closed down and rightly seeks other outlets for its burgeoning modern economy, which is based still largely on raw materials and food products but increasingly on very advanced technology and services. That is a far cry from the image of the past trade pattern.
London’s own past neglect has let the Chinese in too far. Our financial sector is supposed to be the kingpin area of worldwide development finance. It is incredible that we have let this aspect slide and allowed the Chinese to make the running. Admittedly, during Liz Truss’s short-lived premiership a new British International Investment body was announced, intended to mobilise £9 billion of funds as a counter to strings-attached Chinese loans, but frankly this is small beer compared with the size of the BRI advance.
At the G7 summit last summer, President Biden revived his Build Back Better World plan from 2017, which had not gone too well, and his Blue Dot Network initiative with Australia and Japan, all hopefully designed to counter the BRI juggernaut. But what remains is an enormous cat’s-cradle of trade expansion and criss-cross deals throughout Asia, all steaming ahead under a Chinese aegis and generating enormous potential world growth, from Australia to Japan, from the UAE to Russia, and through the so-called middle corridor that links the Caucasus to the Chinese sphere.
So here we are just putting a toe into the world of high-technology trade expansion. I am frankly amazed that our policymakers have not made infinitely more of the modern Commonwealth network in getting deep into this new world. Important though it is to get on and build the best possible relations with all our European neighbours, it may surprise some that the Commonwealth has been outstripping the EU in three aspects: population size, economy size, and economic growth rate.
It is good that this UK-Australia agreement gives major access for UK professionals—lawyers, auditors, scientists, architects and so on—to the Australian and New Zealand markets and allows us to join freely in procurement bids for Australian and New Zealand government contracts and, I presume, vice versa. Will the Minister say whether that we are completely released from having to consider bids from EU suppliers first as a priority, as we used to?
Then there is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—a clumsy name—which we are trying to enter and which has already been mentioned. I am glad that we are getting strong support from Japan, but again I have no idea what use we have made of our Commonwealth ties. I hope we will hear more about that. The unhappy appearance, which I hope the Minister will dispel, is that we do not really have a policy for steady development of our relations with the rest of the gigantic Commonwealth network. What we need is a patiently executed plan to keep pace with Commonwealth and Asian expansion and new alliances growing up, which I hope that the provisions in the Bill will allow, at least for Australia and New Zealand as a start. Many people today feel acutely this lack of purpose and unifying narrative in Britain’s world direction, and therefore in what should be the focus of their loyalties.
As has just been observed, the Commonwealth may not be treaty-based, may not be a trade bloc or an alliance, and may have members back-sliding from its central commitment to liberal values and the ways of freedom, yet is clearly a major asset for us—or ought to be, as we struggle to compete in a hypercompetitive world, as my noble friend Lord Swire reminded us. What is more—this is widely missed—the new Commonwealth tableau opening out and growing meshes thoroughly with the entirely new pattern of international relations in which the UK is still working hard to find a place. Beyond all economic considerations, the security dimension of the Commonwealth has swollen dramatically in significance. Our military links with individual Commonwealth countries are growing daily—with Australia through the latest AUKUS submarine project, with India through cyber co-operation, and with African allies through military training links and weapons—and we are at last beginning to perceive what the Chinese have long seen and we have not: that many of the small island states in the Commonwealth, especially in the South Seas around Australia, have a major strategic significance in the new high-technology patterns of warfare and maritime security.
From the British point of view, the modern Commonwealth has evolved from a liability into a series of major trading, investment and market opportunities, as well as an ideally tailored transmission channel for the projection of British soft and smart power, and into a vital part of the UK’s safety and security. The entire enormous network needs to be brought much nearer to the heart of British foreign policy and strategy considerations. Please will the Minister assure us at the end of this debate that this is beginning to happen, and that this trade agreement and its provisions are all part of a bigger and more determined and focused UK strategy for access to the great new markets of the future and for our national safety and security?
My Lords, I congratulate the noble Lord, Lord Swire, on a most charming maiden speech. Of course on these Benches we welcome the fact that these agreements with our Commonwealth allies in Australia and New Zealand have been concluded.
I mention right at the start one positive aspect of these agreements, which does not have much to do with trade directly but which I think is important: the mobility provisions for young people. The idea that they can spend up to three years as under-35 year-olds, and working at the same time—not just as students—seems a welcome approach to mobility and a very good thing. I hope that this kind of agreement will be matched in future in relations between the UK and the European Union.
I would also like to welcome the noble Lord, Lord Johnson, to his place. I greatly admired the bravado with which he spoke in favour of his Government’s negotiation of these agreements. There is, however, one obvious and, I am afraid, difficult question that I have to ask him. If these benefits are as overwhelming as he described—if billions of pounds of opportunities are being created—why did the impact assessment that went along with the parliamentary papers on these agreements suggest that the Australian agreement would increase our GDP by 0.08% and the New Zealand agreement by 0.03%?
I do not understand this obvious contradiction; I wonder whether the Minister will explain it to us in his reply. Is it because the benefits of these agreements are, in the Australian case, overwhelmingly on the Australian side? I read a lot of gossip about what is going on in the Conservative Party; it is said by some people that the reason why these agreements were concluded so quickly, and at such obvious disadvantage to UK interests overall, was because Liz Truss wanted to be able to claim to Conservative members that she was successfully getting trade agreements in order to be a champion of Brexit. I do not know about that but, if it is what lies behind this contradiction, it is an absolute disgrace.
The noble Lord, Lord Frost, who is no longer in his place, possibly has an explanation for the low economic benefits: that, because of agricultural interests in this country, we have put a brake on the potential for achieving the benefits of agricultural liberalisation. We need a national debate about this; it is a very important issue. I come from Cumberland and I know that its hill farmers earn very little: £10,000 to £15,000 per year. They are among the most hard-working, low-paid workers in the country. The noble Lord, Lord Frost—I wish he were still here—talked of how they would have to adjust. In what ways would they have to adjust and what would be the social and environmental costs, as well as the costs to the traditions that they have pursued for generations? We would like to hear answers from the Government on that question.
I support very strongly what my noble friend Lady Liddell said in her excellent opening contribution about how we are weaker as a result of not having subjected these agreements to proper parliamentary scrutiny. If we want a proper debate about how much we are prepared to liberalise, the Government will have to be much more open with the public about the trade-offs in this situation. Yet, particularly with the Australia agreement, what we saw instead was an attempt to hide from Parliament what it was all about.
When we had the discussions on the Trade Bill post Brexit, we were made promises. I remember David Davis coming along to our Select Committee and saying, “Of course, the UK Parliament will have the same rights as the European Parliament to scrutiny”. What a joke. I worked in Brussels in the Trade Commissioner’s cabinet when Peter Mandelson was Commissioner. One of my jobs was to maintain close relations with the trade committee of the European Parliament. These were very expert people who understood the issues properly, they had to approve a mandate for every negotiation, they had to be kept informed at every stage of negotiation, and the European Parliament as a whole had a vote on whether what had been agreed should go ahead. We have none of those provisions. Is it not absurd that trade agreements should be ratified on the basis of a resolution procedure, rather than something that offers the possibility of serious debate, in which amendments might be moved and different positions taken? If the Government are serious about trade and the difficult choices in trade, they have to be much more forward in their willingness to open these matters to scrutiny.
Finally, I very much agree with the remarks from noble Lord, Lord Kerr, about the absence of a credible trade strategy. We now know that we have lost considerably as a result of leaving the single market: something like a 14% trade loss—we know that is a fact. The Government cannot argue with that; the statistics are all there and obvious. How will we make up for that loss? We know the United States is not interested in an agreement. We know that with China, if anything, our economic relations are becoming more distant, not closer, and that is likely to be a trend. Indeed, one of the reasons farmers worry about the implications of these agreements is that if New Zealand was no longer able to export its lamb to China—Australia has already had difficulties—then it would find its way to the United Kingdom, flood the market and cause immense difficulties for our own farmers. Where are we on that question?
Where are we on India? Is there really any serious prospect of an India trade deal? If the Government regard as one of their top priorities stopping small boats, they are never going to agree to the thousands of visas that the Indians will want in return for trade concessions for us. That is, basically, the basis of the deal. If immigration matters to the extent that the Government make it their top priority, I am afraid we will never have a trade deal with India.
I do not know what the strategy is, and I think it is high time that the Government produced one. I hope the Minister, whom I greatly welcome to his place, will provide us with some answers in his summing up.
My Lords, I greatly welcome my noble friend the Minister to his place—or the return to his place, as it has appropriately been said. He will bring great vigour and energy to this job as he done in his business life beforehand. The thing that has impressed me most about him is that he is always open to suggestions and ideas, and I hope he will take my suggestion and idea on board when I have finished.
I declare my interest, which has of course been declared by my noble friend Lord Howell. He is my PR assistant, as he always says nice things about me. I am incredibly grateful to him for that because he has been the godfather of the Commonwealth, as my noble friend Lord Swire said—and what an excellent maiden speech we had from him earlier. My noble friend Lord Swire was particularly kind about me, which made it even more excellent. I think he will find his job as deputy chairman of the Commonwealth council is assured for quite a long time for that reason alone. Naturally, we want to hear more from him for that reason.
I should congratulate the Government on doing this trade deal, which is a first. All these things are difficult because it is a new process. It is very good that something has happened and that we are having traction. Of course, any deal will have criticism, as we have heard from a number of people today. There will always be noises off but the idea, as some noble Lords have proposed, that you should bring the suggestion of how a deal should be negotiated to Parliament so that we, as parliamentarians, can ensure that it is negotiated properly is, frankly, not practical or reasonable.
However, I am taken by what the noble Lord, Lord Kerr, said—unfortunately, he is not in his place, which is what normally happens when I make speeches—supported by the noble Lord, Lord Liddle. We must understand the process which the Government are going through when negotiating these trade deals. If they do not have a process, then how on earth can they have a direction of travel? I would love to hear what my noble friend the Minister will say about that.
These two deals are of course quick tricks, as they would say in the bridge world, in that they are with reliable and trustworthy nations with which we have had long associations, not least because we share the same sovereign. Their markets are open and free; we share the same rule of law; and they are the easiest people in the world with whom you could choose to do trade deals. Having been the Prime Minister’s trade envoy and set up the trade envoy network, I am delighted to think that our trade envoy to Australia is someone who is no doubt in the good books of the noble Lord, Lord Goodlad, because, to go back to his cricketing analogy, the noble Lord, Lord Botham, scored lots of runs. I am delighted that the noble Lord is doing such good work within the trade envoy network.
However, having travelled the world and travelling it now with my Commonwealth hat on, I know that trade deals are going to be very difficult to do, particularly with the bigger markets such as America. We have known for years that the US FDA is the biggest protectionists of American interests; I am sure that India will share the same views. These will be very difficult trade deals to do, and it is therefore important that the Government understand the process, because if they do not, they will get a very good kicking when they come to this place, not least in the other Chamber.
The noble Lord, Lord Kerr, is now back so he could have heard the kind things I said about him, but the noble Lord, Lord Frost—another man who is not in his place—also said that there is a lack of trade policy, and we need that. It will be fundamental when dealing with those two markets.
As has been mentioned, the Commonwealth gives an incredible opportunity to the Government, not just to do trade deals but to show leadership within the world as to how they can be done with free-market nations, a number of which are of course Commonwealth countries. This is no substitute for the trade deal that we do with the European Union; it is an adjunct. The Government should therefore consider embarking upon a trade deal with the Commonwealth. It will not embrace every country, because not every country embraces free trade, rule of law, transparency and a lack of corruption, et cetera, as we supposedly do, and as Australia and New Zealand clearly do.
If we were to start a Christmas tree, for want of a better phrase, we could start a free trade deal with those countries which embrace that—we can already mention Australia, New Zealand, Canada, Singapore, Rwanda, Botswana and Ghana; they are all free trading, open countries. We could then build upon it as other countries embrace those fundamental points, which in many ways underpin the Commonwealth but are not necessarily practiced: the rule of law, a common language, transparency and openness to business.
What better opportunity have the Government got than with the current, and new, Chair-in-Office of the Commonwealth, His Majesty the King? He has worked tirelessly for the Commonwealth and will do in the future, because it is in the DNA of the Royal Family to ensure that it is an effective organisation. It goes without saying that our organisation stands ready to help the Government in this way if they choose to grasp this fantastic opportunity. We would be only too delighted to work with them for the betterment of this country, the Commonwealth and 40% of the world’s population as a whole.
My Lords, I perhaps do not really need to declare my interest—my accent makes my Australian origins obvious. Your Lordships’ House has heard before that my academic origins are in an agricultural science degree in Australia. The noble Baroness, Lady Liddell, spoke with some surprise about the nature of Australian farming, with its huge, extensive properties, half the size of an English county. I have worked on those properties and can talk at some length—I will not today—about mustering the bull paddock; we trucked the horses down to the end of the bull paddock before dawn, mustered the 500 bulls in that paddock and got them into the yard at 3 pm.
We have heard from the noble Lord, Lord Liddle, about Cumbrian hill farmers. I invite your Lordships’ House to think about the difference in production methods between Australia, which I have just been speaking about, where livestock are not seen by human eyes from one month to the next, and the kind of care and attention that livestock get on your average British farm. Think about that difference if you are trading between those two production models.
I have written extensively, particularly for the Yorkshire Post, on the atrocious animal welfare and environmental standards in Australian farming. I will not repeat all of that now, but I will tell your Lordships’ House that I bore in mind when writing such articles that many people would be reading them over their morning bacon and eggs, and so toned down significantly the tales I could have told about the things I have seen in Australian agriculture.
I note that the Minister in his introduction, which many have remarked on, spoke proudly of the animal welfare chapter in this Bill. I have a very specific question for the Minister. I am sure he is aware of the practice of mulesing, where large pieces of skin are cut off the rear of merino sheep without anaesthetic or pain relief. Those large, gaping wounds typically remain open for seven or eight weeks, and for many weeks veterinary observation reveals that those animals display, unsurprisingly, the impact of considerable pain and suffering. This is a Bill about government procurement. Will it enable the British Government to make sure that any British procurement is done in a way that ensures that no wool products which are the products of mulesing will be brought in under this Bill? If the Government wish to act on animal welfare in Australia, mulesing would be a very good place to start.
As I am speaking some distance into your Lordships’ debate, I am going to attempt not to repeat what others have said. Somewhat to my surprise, I agree with the noble Lord, Lord Frost, about the need for democratic scrutiny in trade policy. Many other noble Lords have covered that ground. It is very obvious that we have gone greatly backwards in democratic control over trade since we left the European Union. That is simply unarguable. It is in the Government’s hands to ameliorate that situation.
I thank the noble Baroness, Lady Young of Old Scone, who is not in her place, for setting out the many great environmental concerns. I associate myself with all of those, rather than repeating them.
In his initial speech, the Minister described the Bill as the “very essence” of government strategy. In a way, this demonstrates the fact that Conservative views of trade are directly opposite, by 180 degrees, to Green ideas of what trade should be. The Bill says trade at any cost, for reasons that I will get to later, but the Green vision of trade is fair trade, rather than free trade: trade in necessary goods where this benefits all sides—both communities, both societies and both economies. In our current free trade model, huge amounts of environmental costs and costs to workers’ rights are borne by the many, while a few gain financial profit from these deals.
There is also the problem of resilience. I note that, with remarkably little fanfare, the Government finally released their national resilience strategy on 21 December. If we are to base our Government’s economic strategy on long-distance trade, I would point your Lordships to the fact that, in just the last 24 hours, yet another vessel ran aground in the Suez Canal. This time they managed to refloat it after a couple of hours, so it was not the six-day blockage that we saw with the “Ever Given”, but this is none the less a reminder of the lack of resilience of an economy built on trade in this age of environmental, geopolitical and broadly political shocks.
We have talked a great deal about food in this debate, but if we are thinking about a policy for food security for the UK, I put it to your Lordships’ House that Australia and New Zealand are not part of a secure food supply that will feed the people of Britain under whatever circumstances might arise in the future.
I will raise some more specific points about the Bill. The Minister outlined the rather strange situation where we expect to see the Bill enacted for a few months and then replaced by the Procurement Bill. Like quite a number of people in your Lordships’ House today, I spent many hours grinding through that Bill in Committee and on Report. We heard then from the Government, and from all sides of your Lordships’ House, the desire to support small and medium-sized enterprises in government procurement. It is great to see that change: we did not hear this from the Government a few years ago, but we now see the idea that government procurement should look at social benefit—although the Bill still does not deliver what we desire from this. But what is the social benefit and the benefit to small and medium-sized enterprises of trade with Australia? Is it really they that will benefit, or is it the big multinational alcohol companies, for example, which one noble Lord referred to?
I am sure that most noble Lords received the detailed report from the National Farmers’ Union on the Bill and its concerns. In his introduction, the Minister suggested that farmers welcome the Bill, but that does not reflect the overall view that we hear from many quarters of the farming community. The NFU points out that the trade deal is not balanced: the main tariff reduction is on the UK side, and UK farmers have been pushed by government policies towards types of production with high input costs, which are very different from the extensive Australian production, and they are likely to suffer. The NFU points out that the trade deal has no safeguard mechanisms if imports reach a certain level. This comes in over various periods of years: there are no safeguards for sugar after eight years and none for dairy after six.
We again come to the question of government policy being joined up. We have a huge problem with massive over-consumption of sugar in the UK, particularly among young people. Do we really want a trade deal that potentially opens up a flood of more sugar into the UK? Where is the benefit of that?
On dairy, I was reminded, in my reading for the debate, of some figures from a few years ago, before Brexit, that showed that British exports of ice cream to the European Union were going up, as were imports of ice cream from the EU. So we were swapping over a manufactured product and using huge amounts of energy to do so. Let us imagine that we export cheese to Australia all that distance away, and Australia exports cheese to us. What would be the point of that?
I hear calls from the other side of the House saying, “Better cheese”. Would the trade of different cheeses be truly worth the environmental cost? That cost is not included on the price tag, as it is the externalised cost.
In the briefing from the TUC, concerns are expressed about workers’ rights and protecting public services. I again draw on my experiences of an Australian childhood to note that, if the UK is one of the worst places for workers’ rights in Europe, Australia is, broadly speaking, even worse and one of the worst places in the developed world. As others have referred to, there is a new Government in Australia, so that situation may change, but that is the starting point we are beginning from with this trade deal.
Finally, I must come back to the tone of the Minister’s introductory remarks, to which many noble Lords have referred. I will offer the Government some constructive advice: if they really want to convince the House, the country and the world of the benefits of what they think they are achieving, they really need to tone down the rhetoric. The trade deal, we hear, means immense opportunities. Is that really so? As the crow flies, Australia is 15,000 kilometres away and New Zealand is 18,000 kilometres away. Port to port, the freight time is 50 days or more. They have absolutely opposite time zones. We have heard some reference to trade in services, but, as I speak now, it is 5.17 pm in the UK and 4.17 am in eastern Australia. As the UK finishes its working day, Australia and New Zealand are sleeping. That is not an ideal circumstance in which to conduct trade in services—I say that as someone who occasionally needs to make calls to Australia, because calculating the time to do so is thoroughly inconvenient. Australia has a population of 25.6 million and New Zealand a population of 5 million. How can the Government say that there will be immense opportunities? Let’s get real.
My Lords, it is a real pleasure to speak in support of the Bill. It will enable the Government to get on with the job of implementing the FTAs that have been secured with both Australia and New Zealand, two of our closest historical allies. I draw the House’s attention to my declared interests in the register.
I take this opportunity to thank my noble friend the Minister for his introduction, in which he set out clearly the benefits of the Bill. I also thank my noble friend Lord Swire for his maiden speech.
It is important to note, and to underline, that the agreements are the first the UK has negotiated from scratch in almost 50 years. That demonstrates that, at long last, the UK has started to unshackle itself from the restraints of the single market and to embark on its own independent trade policy, which will develop growth right across these islands in time.
As a member of the International Agreements Committee, I have followed both trade deals with much interest as they have passed through the long-established and thorough scrutiny processes of our parliamentary system. On that point, there has been much commentary already this afternoon about whether the Government have fulfilled their scrutiny obligations. Having been involved, playing a very small part, in the scrutiny of these deals, I for one am satisfied that the Government have gone above and beyond in providing this Parliament with a plethora of opportunities to examine the details and to get involved in the process of making sure that our free trade deals deliver for all. Indeed, if we compare the passage of these deals with that of the Japan FTA back in 2020, it is evident that the Government have not only exceeded their statutory obligations on the sharing of materials but are continually putting in place more and more opportunities for Parliament to provide effective scrutiny. When it comes to assessing the future impact of these FTAs, can my noble friend the Minister reassure the House of the Government’s commitment to publishing both a monitoring report and a compressive evaluation report at the appropriate time?
Throughout the passage of these FTAs, much has been propagated on the topic of agriculture. Last year, when your Lordships took note of the fourth report from the International Agreements Committee, I warned the House that the National Farmers’ Union, among others, had repeatedly tried to peddle the myth that these agreements would fail to deliver for British farmers and that our standards would somehow be eroded over time. Like my noble friend Lord Frost, I am concerned that the long lead times before we get true trade running in agriculture will slow down the benefits of cheaper food. Although I acknowledge that there are challenges for our hill farmers, these two things have to be resolved; we need a solution.
I put it to your Lordships’ House, as I did in July last year, that the Government have been highly successful in achieving significant safeguards for British farmers, namely through tariff rate quotas, product-specific safeguards and bilateral safeguard measures. The Government should be commended for securing these safeguards for the most vulnerable parts of the UK farming community.
That said, it is important to note, however, that both Australia and New Zealand have systems similar to our own. With that comes the ease of upholding the UK’s long-established and globally renowned standards. As we progress additional trade agreements with countries such as India and Mexico, and when we eventually start going into South America, it will become increasingly hard for us to secure such safeguards. I therefore hope that we can use the experience gained in these negotiations to uphold our standards in the future, and I wish the Government well with that endeavour.
Importantly, the implementation of these deals will be an important stepping-stone in our accession to the CPTPP, the benefits of which for the UK are well known: joining one of the largest trading blocs in the world and having access to a vast network of modern deals spanning the Americas and Indo-Pacific. With Australia and New Zealand as leading members of the CPTPP, supporting the UK’s bid for membership, we should not be looking at this Bill as simply the ratification and implementation of two well-negotiated deals, but as a fundamental component in the UK gaining future access to a free trade area encompassing 11 strategically important states, with a combined GDP of £8.4 trillion.
When evaluating the impact these deals will have on the UK’s nations and regions, I am filled with optimism and excitement, especially for our SMEs. It is evident that the Government have worked hard to ensure that both London’s and Scotland’s financial service industries will directly benefit from these deals, while also ensuring that thousands of jobs are set to be created in the north-east and that tariffs are reduced for textile exports in Northern Ireland.
On examining the details of both deals, I am convinced that there will be a UK-wide benefit, and I call on our regional mayors and the Ministers of the devolved Administrations to stand ready to build on the benefits that these deals will deliver. With this in mind, could my noble friend in his summary inform the House of how the Department for International Trade is supporting the nations and regions to make the most of these deals? Does he agree that it is now time for some of these officeholders to put aside their Brexit-bashing views so that their constituents may fully embrace the opportunities to come?
Throughout the progress of the Bill, both here and in another place, the Government have been quick to address any concerns raised. I therefore find myself drawn back to the essence and scope of the Bill, which is the ratification and implementation of two highly scrutinised and beneficial free trade agreements with two of our oldest and most important allies. With the businesses and citizens of this country facing the challenges of the cost of living crisis, we need the growth and job creation that will be delivered only by agreements such as these. I conclude by welcoming the Bill, as we need to allow His Majesty’s Government to get on with the job of delivery, so that businesses and citizens all around the UK can start to feel the benefits of these historic deals and many more deals that I hope will come.
My Lords, I shall start with enthusiasm, but I may not be able to keep it up. The Australia and New Zealand agreements have been trailblazers among the FTAs post Brexit and I am glad that the Minister and the International Agreements Committee, to which I belong, have helped to see them through government as well as Parliament. They are, in general, excellent and productive agreements with two old friends and allies which bring undoubted benefits to this country across the whole spectrum of goods and services.
We should also acknowledge the co-operative attitude of the Government, or the various Governments, to our committee and our various reports. I thank successive Ministers for recognising the critical role of Parliament in scrutinising these agreements—the new Secretary of State’s response to our Australia report has confirmed this—but the CRaG process itself is inadequate, as the noble Lord, Lord Kerr, and the noble Baroness, Lady Young, have said so well already. The committee itself has pointed out several times, over nearly three years, that to have any useful role we have to assess the negotiation objectives of an agreement right at the start. The noble Lord, Lord Goodlad, said that the Government have everything to gain by this. We also need to discuss the outlines of the agreement, without of course giving away any of its content, in which case the NDA process would be involved. I am not convinced that Ministers have gone far enough to meet these requirements but, since we have had more than one change of personality, maybe we will be better understood in future. Our relationship is still being developed. We have not yet received the response to our New Zealand report, and when we do, the horse will have long bolted.
I recognise that this is a somewhat artificial procurement Bill due for instant repeal, but it seems appropriate to make concluding remarks on the FTAs themselves, as others have. On the content, we were concerned about three issues on Australia in particular: agriculture, the environment, and the role of the DAs in both these agreements. I suspect that none of us was wholly satisfied with the way these three issues were handled. I shall use the helpful “Myth” and “Reality” sections in the DIT explainer accompanying the Bill. On agriculture, HMG persist in saying that 15 years of TRQs and safeguards provide sufficient protection for UK sheepmeat and beef producers, simply on the grounds that “it is unlikely” that Asian and Pacific countries will cease importing Australian meat. The noble Lord, Lord Frost, for example, said this was much too long and that we need adjustment and competition. On the contrary, it is just the sort of thing that could happen given an unfavourable political climate in China or elsewhere in Asia. It remains unsettling for farmers planning ahead. Here I also speak as an NFU member.
On animal welfare, it is quite true that standards are going up and the TAC did provide convincing reassurance, as the Minister said, that Australia was raising its animal welfare performance. However, the Government admit that they are raising standards only to the level of many other countries. The noble Baroness, Lady Bennett, mentioned the procedure of mulesing, for example, and she should know. It seems that higher standards apply only to RSPCA-approved farms, so there is still a way to go.
On pesticides, Defra says that the results of monitoring are published after consideration by its Expert Committee on Pesticide Residues in Food. Public concern about residue levels seems to us to justify a more specific monitoring exercise relating to Australia, and perhaps the Minister could say if this will be undertaken. Apart from this, the side letter on GIs and the chapter on SMEs are both to be welcomed as promising support for small businesses, including farmers. The noble Baroness, Lady Liddell, mentioned migrant workers which was extremely helpful because it has not been covered.
Moving to the environment, I say that the new Government in Sydney are likely to prove much more positive about climate change, although it is too late for the FDA itself. Our Government claim that illegal logging will be tackled under the agreement, but there are no policy statements or details as to what happens in the separate states of Australia. It is another case of wait and see and further monitoring. Australia’s reliance on coal remains a major issue, but the Government have promised that the committee will receive reports and updates over time. This is welcome, and perhaps the Minister will confirm it. The noble Baroness, Lady Young, who is no longer in her place, pressed the Government on monitoring, so I hope the Minister will be able to respond fully.
I need say only one word about the devolved Administrations. This has been said time and again and I am surprised it has not come up today: devolved matters are not just matters for consultation. They are integral to the national policy of each of our member nations. This means that agriculture in the DAs comes right at the front of negotiations. This did not happen in the case of these agreements. I believe the Government still claim that the DAs have been fully engaged. Of course, the overlap of policy in different departments does make life more difficult for them.
I have touched on only three issues, and I have left New Zealand to last. On agriculture, environment and climate, New Zealand is and has been a model country. We can learn a lot from her. I recognise the other benefits that have come in, such as extending copyright—another thing not mentioned—and the growing importance of motor vehicles and machinery in UK exports by value under this agreement. New Zealand has been a model in one other respect: it has published an exemplary policy document summarising its aims and objectives in trade agreements, including more difficult issues such as human rights. I could spend some time on this, but I will not. The noble Lord, Lord Kerr, has said that trade is not a watertight department. It is surely natural to discuss wider policies with friends who are also our trading partners. The Minister knows from our recent meeting that most of us in the committee have strong views on this. As we have heard today, we are hoping that the Government will take them seriously.
Finally, I should add that our application to the CPTPP will be greatly assisted by these two FTAs, while providing access to new markets in Asia and standing up to China, as the noble Lord, Lord Howell, given all his experience, fluently reminded us. But that will be a subject for another day.
My Lords, I am glad to follow my noble friend for these purposes, the noble Earl, Lord Sandwich, as we are fellow members of the International Agreements Committee. I ask noble Lords to bear with me, as I am the fifth member of that committee to speak in this debate. I hope not to repeat too much of what my colleagues have said but, in so far as the scrutiny of these two agreements is concerned, the committee in this place was able to produce a report in June last year, which was debated here on 11 July. To that extent, I think that many of the criticisms of the scrutiny of these deals were of the other place, rather than here. They have been scrutinised here, as was demonstrated by that debate, in a timely fashion under CRaG.
My friend the noble Earl, Lord Sandwich, referred again to the importance of the Government having a trade policy document, and referenced the New Zealand Trade for All strategy. This was the first agreement entered into by New Zealand after the publication of that policy document. That demonstrates the benefits of a high-quality document. I was rather struck that noble Lords have been quoting George Eustice, the former Secretary of State at Defra, who I will refer to later. It was important when he said that we should look at strengthening the role of Parliament in scrutiny and perhaps even agreeing the negotiating mandate. My noble friend Lord Frost referred to that. As he said, countries such as Japan and the US, and the European Union, all use their parliamentary processes to their advantage. As my noble friend said, we do not want disagreements to be suppressed within government and then erupt afterwards, with Ministers saying, as George Eustice did, that we gave away far too much for far too little in return. I do not happen to agree with him but that is not the point. We should be able to see what the Government’s objectives are in trade policy—not necessarily the detailed negotiating trade-offs but certainly the objectives. As the noble Lord, Lord Kerr of Kinlochard, said, we can illustrate that by reference to examples. We ask about matters such as the Government’s approach to investor-state dispute settlements but all we get in reply is, essentially, the conclusion that they have reached on any individual negotiation, not what the Government’s approach is in general.
The result was different in different agreements, depending upon the approach of the other counterparties. There are a number of illustrations of that. The noble Earl, Lord Kinnoull, chair of the EU Affairs Committee, was here a moment ago. That committee and the International Agreements Committee have a right to expect that we are consulted soon about what the Government’s policy is in relation to carbon border adjustment mechanisms and the implementation of emissions trading schemes, not only between ourselves and the European Union but on the impact that the policy will have on our trading policy more generally. If we do not do that, we will find that, as a consequence, it is potentially one of the largest non-tariff barriers being erected across the globe, alongside the issue that the noble Earl raised about the Inflation Reduction Act in America.
This has been an interesting and wide-ranging debate. In the rest of what I have to say, I want to focus on the Bill itself. This has been a great debate, and I have much enjoyed it, not least the maiden speech of my noble friend Lord Swire. We overlapped for only 14 years in the other place. I hope that perhaps we will overlap a little longer in this place—who knows, as he is not 74? It is a great pleasure to have him here and the benefit of his experience in our debates.
It is not in my register of interests, but I should say that my sister-in-law is a sheep farmer in north Wales. Even over Christmas, she did not raise the question of the Australia or New Zealand trade agreements with me at all, so I do not know what her view on these may be—just as well, perhaps.
Those of us on the International Agreements Committee welcomed these agreements as being of high quality and demonstrating what can be achieved; that is also my personal view. There is a feeling that some of the 32 chapters were included without sufficient substance and that the substance will have to be added over time. For example, I thought that the innovation chapter in the agreement with Australia was a very good thing, but we will not know what it is going to mean for some time to come. I hope it will mean something pretty substantial.
This Bill simply provides the power to implement the procurement chapters—chapter 16 in each of the two agreements—and it is necessary because the powers are not there already. Once the Procurement Bill passes, the powers will be available in that legislation to do this by statutory instrument in the future; the noble Baroness, Lady Liddell, made this point earlier. The Procurement Bill means that we will not see primary legislation for purposes such as this in the future. I think that is probably correct, because the changes in our domestic legislation are relatively modest. In future, this kind of thing should be done by statutory instrument, as long as—taking the point made by the noble Lord, Lord Kerr—it is done by an affirmative procedure, because there will be a whole range of changes. The other place implements the tariff changes, and this place looks at things such as the procurement changes and a whole raft of others, but we should be doing such things by affirmative procedures wherever possible. That will enable us to exercise some control if need be—if there is a serious problem—at each stage. I hope that the ratification process will be under way by then; we will have seen it under CRaG. If there are serious problems associated with an agreement, we should know beforehand.
I said I wanted to refer to George Eustice again; I am going to mark the card of the noble Lord, Lord Purvis of Tweed, in advance of his speech, because he referred to George Eustice’s speech at Oral Questions. The point that George Eustice was making was that he believed a problem with the agreements was that they could lead to hormone-fed beef coming to this country but that this would also be possible under the CPTPP. I do not think he is right about that. In any case, it is not a problem associated with the Australia and New Zealand free trade agreements; it is an issue we need to address in the CPTPP. That is when it comes up. What is the dispute resolution mechanism under the CPTPP? If necessary, that would need to be addressed by our Government in the context of that agreement itself.
I took part in the passage of the Procurement Bill and tabled amendments which would have limited the nature of the repeal of this Bill by that one in due course. The problem is not that the Procurement Bill will take future powers instead of this Bill but the way it repeals it. The Procurement Bill will repeal:
“An Act of Parliament resulting from the Trade (Australia and New Zealand) Bill that was introduced into the House of Commons on 11 May 2022.”
So if we amend this Bill, it will be repealed by the Procurement Bill in due course. This is not a satisfactory procedure. The assurances that we received in this House from my noble friend Lady Neville-Rolfe during the passage of the Procurement Bill were that, if we amend this Bill, the Government will look to ensure that any necessary changes might be made to the nature of the repeal during the passage of the Procurement Bill in the other place. I ask my noble friend Lord Johnson of Lainston simply to reiterate, if he may, that same reassurance.
I am not aware of a necessity for amendment. In the other place, the Official Opposition supported the Bill, and the amendment they were looking for was for further impact assessments. As my noble friend Lord Udny-Lister rightly said, the Government have committed themselves—and I hope my noble friend will further commit the Government—to two-year monitoring reports and a five-year comprehensive evaluation of both agreements. Frankly, that should be sufficient for this purpose, so I do not think we need to amend the Bill to make that happen.
From my point of view, there are issues that we have raised and issues that I feel strongly about in the agreement. For example, there is the fact that we managed to get an agreement with Australia before the European Union did; perhaps that is one of the benefits of Brexit. However, is it not ironic that, for example, the geographical indications element of our agreement is wholly dependent on the European Union securing changes in the Australian geographical indicators regime so that we might take advantage of it? It is ironic and regrettable. It is just one more of the many illustrations of how we want to see what our trade policy should be and, in future, to see that we scrutinise not only the deal that the Government return with but the negotiating mandate that they take with them in the first place. In those circumstances, I think we would find our overall scrutiny and the support we were able to give to the Government’s trade policy all the better, all the stronger and probably all the more effective internationally.
I welcome this opportunity to speak at Second Reading. I am delighted to follow my noble friend Lord Lansley and add my congratulations to my ever-youthful noble friend Lord Swire on his maiden speech. We look forward to many such contributions in future.
I have no known relatives in Australia or New Zealand, but I have close friends there who are, bizarrely, of Danish heritage. The House will remember that I am half-Danish; obviously, I took great interest in the fact that, 50 years ago last week, Denmark, Great Britain and Ireland joined the European Union, on 1 January 1973.
On a general note, I accept that no one can deny the importance of our relationships with Australia, New Zealand and other Commonwealth countries in relation to trade, security and other aspects. However, as noble Lords who have referred to the importance of those relationships will accept, those countries are a very long way away. Historically, geographically and perhaps more normally, our natural trading partners over the past 50 years—notably the European Union—have been closer.
Although I welcome the Bill before us, it seems to lend itself to being fairly asymmetrical, favouring foreign imports over domestic producers here. While we are told that the Bill is necessarily largely technical in nature, it is thin in substance; the Minister used the word “flexible”. I echo the sentiments of others who have spoken—notably our two august former trade commissioners to Australia, both of whom spoke very eloquently—about the impact of the lack of scrutiny on trade deals, such as is enjoyed in large measure in the US legislatures and the European Union, which we left only recently. I also support the comments made by the noble Baroness, Lady Young, and others on the key role to be played in this Bill and others by the Trade and Agriculture Commission; we must ensure that it has all available resources and expertise.
If one is in any doubt about the perhaps limited nature of the agreement before us, let me refer to the Government’s own impact assessment estimates. The impact assessment in relation to the New Zealand deal states that the UK’s
“agriculture, forestry and fishing and semi-processed foods sectors are expected to experience a reduction”
in gross value added
“of around 0.35% (£48 million) and 1.16% (£97 million) respectively.”
As regards Australia, that impact assessment states that the UK’s
“primary agriculture and semi-processed foods sectors are expected to experience a reduction”
in gross value added
“of around 0.7% (£94m) and 2.65% (£225m) respectively relative to baseline growth in the sectors.”
The Government estimate that as a result of the Australian deal we will see a reduction in gross output of around 3% for beef and 5% for sheepmeat due to liberalisation. This is equivalent to wiping £87 million off the output of UK sheep production and £67 million off the UK beef sector and does not take into regard the cumulative effect of agreeing similar liberalisation terms with New Zealand.
The trade figures for October show a decline in trade with non-EU countries, which obviously is a source of concern in the context of the Bill before us. I had the honour of representing for 18 years in the other place a deeply rural constituency in North Yorkshire with a proud tradition of producing spring lambs and fatstock beef. I fear that with the potentially asymmetry in this Bill, they will be damaged in the long term by the lack of a permanent safeguard clause. I will revert to that as one of my asks of my noble friend and his department in the context of the Bill this afternoon. I echo my noble friends Lord Frost and Lord Udny-Lister, who recognise the concerns to be faced by sheep farmers and particularly by hill farmers and fatstock producers across the UK and that those concerns must be addressed sooner rather than later.
In terms of Commonwealth trade, once Britain, Ireland and Denmark acceded to the European Economic Community on 1 January 1973, I understand that a trade deal was done with Australia, New Zealand and other members of the Commonwealth through the African, Caribbean and Pacific agreement. This has been updated periodically, most recently in European partnership agreements. As the noble Baroness, Lady Bennett, said, initially mention was made of the importance of sugar in trade and obviously the vital importance of trade to certain Commonwealth countries. Initially, a stable price was set for sugar, which was replicated in other products.
I again pay tribute to my mentor, the late great Lord Plumb, who was president of the NFU, the first and last British President of the European Parliament, and co-president of the assembly for the African, Caribbean and Pacific countries. He played a central and crucial role in these negotiations. Can my noble friend clarify the position under the Bill, which was raised in Oral Questions this afternoon, regarding products emanating from Australia, New Zealand and other Commonwealth and, now we have left the EU, third countries? Will those products meet the same standards of production, particularly in terms of animal welfare and environmental protection, as our home-produced foods?
I take great comfort from the commitment in the Conservative Party manifesto of 2019 that British high standards of animal welfare and environment would be maintained and that they would be replicated in imported food and food products. Can my noble friend the Minister take this opportunity to reconfirm and echo the comments made by our noble friend Lord Benyon, who, answering at Oral Questions, assured us that our free trade agreements, such as those before us in this Bill, will never conflict with stated UK policy in this regard?
The promise of open trade was, as I said, mentioned in the manifesto. It was repeated during the Conservative Party leadership contest in summer 2022 by my right honourable friend Rishi Sunak, now the Prime Minister. He made a commitment at that time that 50% of all publicly procured foods supplying local authorities, our schools, hospitals, prisons and defence establishments would be locally sourced. He went further, and I will quote his letter following his meeting with the NFU during that leadership contest in terms of international trade:
“I know that farmers are concerned by some of the trade deals that have been struck, including with Australia. I will make farmers a priority in all future trade deals. On my watch, we will not rush through trade deals at the expense of farmers. They will take as long as they take, and we will not water down our standards. We will also build on existing support mechanisms to help farmers export to the world’s emerging markets. We will maintain the high standards of animal welfare, environmental protection, and food safety.”
I support those desires and wishes of my right honourable friend the Prime Minister. I hope that my noble friend the Minister will also support them when winding up this debate.
There is disappointment—as my noble friend Lord Lansley, other noble Lords and I discussed at length during the proceedings on the Trade Act, and more recently the Procurement Bill, during this Parliament—that the wishes of my right honourable friend the Prime Minister seem to have met insurmountable obstacles in meeting our domestic public procurement target for 50% locally sourced food. I hope that I can rely on my noble friend’s good offices to ensure that that target is met going forward.
I conclude by seeking assurances from the Minister today that, for the wine and spirit producers—who welcome this Bill, as do I—a separate chapter will be opened and the Government will vigorously apply for export opportunities for UK wines and spirits to both Australia and New Zealand. I understand that the New Zealand agreement is preferable, as it allows for a committee to improve trade in UK products without reopening the agreement. I would be very interested to learn why that same provision was not available for the Australia agreement.
I seek the further assurance for UK farmers and consumers that our high levels of food production will be maintained and that inferior products will not be allowed entry. We heard earlier from the noble Lord, Lord Purvis, that hormone-produced beef and pesticide-induced crops may form part of the produce to be imported under the procurement provisions of the Bill before us. Neither would be acceptable to UK home production.
I also ask for the assurance that local authorities and military establishments will have the opportunity to source locally produced food to at least 50%, as previously sought by our Prime Minister.
Finally, I seek the assurance that an adequate and permanent safeguard clause will be introduced and that all the relevant statutory instruments, flowing directly or indirectly from this Bill, will be adopted under the affirmative procedure.
My Lords, I have enjoyed listening to this debate, with its splendid opening from the Minister and the maiden speech of the noble Lord, Lord Swire. I have learned a lot about things I did not know much about before. But, since we are declaring interests rather like throwing confetti at a wedding, I ought to say that my cousin is married to a very senior New Zealand diplomat. I assure your Lordships that, when we meet on social occasions, we do not talk about the Trade (Australia and New Zealand) Bill but plenty of other more amusing topics. I should also declare that I am a Cumbrian farmer and we have a hill farming enterprise. I am also patron of the United Kingdom Livestock Auctioneers’ Association, president of the National Sheep Association and chairman of the Cumbria local enterprise partnership.
I will divide my comments into three parts: scrutiny; free trade agreements; and the impact on farming. I am not sure that I have a lot more to say about Parliament’s role and the wider public scrutiny of trade deals. In the world we are in now, even if the letter of the law is followed, the wider process is inadequate and needs root and branch reform. The royal prerogative should not be used as a fig leaf to cover up important political and legislative initiatives, which have far-reaching domestic implications. In many ways, the process is worse than the criticisms of the workings of the EU. We need to revisit the whole thing, from the basis of not what happened in the past but what is necessary in the future.
On free trade agreements, which I understand are being proposed as a replacement for the EU single market, the underlying problem is that they may be a replacement but they are not a complete substitute. Much of the criticism of the single market and its rules came from those who do not have supply chains of the kind many businesses have, in particular much advanced manufacturing. These supply chains are extremely complicated and often very long. Physical proximity is, on many occasions, very important. For example, someone in London must be more likely from choice to do business in Newcastle upon Tyne than with Newcastle, New South Wales. It is a reality. In this context, geography matters. Fine-tuning and dispute resolution are much easier when you are close to hand.
Indeed, I had an example of this kind of problem only this autumn. My farm is replacing its dairy parlour. For the new system we are adopting, we decided that the best product was a New Zealand parlour, which we organised. It was due to be in the boat for three months—this is the kind of point that the noble Baroness, Lady Bennett, made. Bad weather got in the way and after about four months we were getting really very worried about the whole progress of our contract.
In any event, free trade areas and single markets are distinctly different. Free trade areas do not of themselves permit goods allowed through the tariff wall of another country to be traded on an equivalent basis as domestically produced goods. Non-tariff barriers can be and are at least as significant as tariffs in inhibiting trade, as has been pointed out. In short, the point of a single market is frictionless trade. The purpose of the European single market, devised, as we know, principally by Lord Cockfield, a Conservative Cabinet Minister and European Commissioner, through the 1992 programme, was to achieve that. That was the purpose of the whole exercise, because the then European internal market was not delivering the benefits to the public which were hoped for and which it was felt capable of delivering, which had been advocated in perhaps too sanguine and hyperbolic terms—possibly, dare I say it, slightly along the lines of some of the Minister’s opening remarks.
The evidence of trade in the 1990s clearly showed that this worked, which was endorsed by the Government’s helpful The UK and the Single Market topic paper of 2011, which predicted a similar trajectory along the lines of household income gains of 2% to 6% per annum. Clearly, this has gone into reverse. Interestingly, the recent statistics that I have seen for the Cumbrian economy, where, as I said, I chair the local enterprise partnership, suggest the general accuracy of that assessment from 2011. The new good things—let us not overlook the fact that there are good things—do not begin to off-set the damage that has been done.
Clearly, although any free trade agreement with our friends—as has been said, Australia and New Zealand are our friends—is unlikely to damage our prosperity, it cannot recapture all that is lost. We have now left the European Union. There is a tabula rasa in front of us. The single market is not the same as the European Union, be it in whole or in part. As a matter of urgency, we have to try to seek a better trading relationship with our neighbours for the reasons that I have touched on.
Finally, I turn to farming. As I explained, I am a farmer in the red wall area. I am a hill farmer; part of my business is hill sheep. I have done that for a lot of years—if I am allowed to give people some financial advice, if you want to make money, do not try that. The crucial point from the Cumbrian perspective is that farming is an important and significant part of the local economy, which together in harness with the visitor economy becomes a very important part of our economy, which is struggling under all the obvious and various difficulties these things face. This sector has to be a focus of the levelling-up agenda. It is just as important as some of those that have been specifically targeted. I am afraid that the Government have been extremely quiet about their approach to this important sector of the economy in a part of the country that is in need of all the help it can get at present. That is not to say that nothing good is happening; good things are happening, but there are still enormous problems.
Against that background, I ask myself: what then are the Government doing even contemplating allowing agricultural products into our market which are produced to lower welfare and environmental standards than those stipulated here? I am not complaining, and I do not think anyone else can complain, about competition on a fair and even-handed basis in the marketplace, but this is not. It looks potentially positively discriminatory against the UK producer. I do not think we should forget quite how clear it was made in the debates in this Chamber on the then Agriculture Bill how strongly the country as a whole wants high environmental and welfare standards. The noble Baroness, Lady Bennett, made a point about mulesing. I just do not think it is an acceptable practice for farmers selling meat into this country. The public would not entertain it.
What is more, there is the question of extraterritoriality. Here we are trying to stipulate certain conditions on trade which will have a direct impact on another country. That is something that is completely accepted. If we look back at the Ivory Bill, which we discussed in this Chamber not that long ago, we will recall that its whole point was to change a series of environmental activities and actions somewhere completely outside the jurisdiction. That is something that we are familiar with, and I do not think we should be concerned about taking steps to do so if it is right in the circumstances.
The Government have said that all these animal welfare and environmental things are basically de minimis and we do not need to worry about them, but we all know that this is what Governments always say when they are skating on thin ice and cannot think of anything better. However, if that really is the case, why are the provisions there at all? If they actually do not matter, surely the counterparties will be only too happy to clarify things and to agree. I say to the Government: reassure the public and the farming community about this because if you do not, given what I am afraid to say is the mess of the current agricultural policy, it is kicking a man while he is down. I was told many years ago that one of the significant differences between France and Britain was that in France the ministry of agriculture was on the side of farmers and rural communities. Does this state of affairs not suggest that this may still be the case now? Like a number of other speakers in this debate, I have real reservations about a number of aspects of the Bill. However it is achieved, the outcome should be not as projected by the Government. Amendments are necessary, be they in this Bill or in the Procurement Bill.
My Lords, I refer to my declaration in the register of interests as president of the Institute for Free Trade and an adviser to the UK Board of Trade. I had not been aware prior to this debate that we were also expected to make familial or genetic declarations of interest, but for the record I have a large family in New Zealand, a lot of whom are Labour voters. We are about as distant as we could be geographically, but about as close as we could be in every other respect. Actually, some of them have moved to Australia, as many Kiwis have done, where they can very easily work under the terms of the ANZCERTA deal between the countries. I hope that we will work towards the long-term goal of going deeper than we have with these treaties and try lateralising ANZCERTA. We share extraordinary closeness and interoperability economically.
It is also a huge pleasure to welcome the maiden speech of my noble friend Lord Swire, whose wit, effervescence and largeness of spirit will delight our debates and elevate our counsels.
I am asked on occasion whether I have any regrets about Brexit. My chief regret is very easily stated: it is that it was followed by an unpleasant culture war through which prism we still judge almost everything. It is extraordinary that six and a half years after the debate, questions such as this are still being approached fundamentally by where people stood on the original referendum. I am not talking about people who are against trade in general. I am not talking about the Trumpsters or the Corbynites or those such as the noble Baroness, Lady Bennett of Manor Castle, who has always been very clear that she does not much like free trade. She wants self-sufficient communities, and she sees the exchange of goods as a contingent necessity and a necessary evil—fine. She has been completely consistent in that position in all the interventions she has made in your Lordships’ Chamber.
I would, however, address those who see themselves as generally supporting the liberal order and the free exchange of goods and services. I put this general question to them: would you judge the Bill in the same way if it were a trade deal between the EU and Australia and New Zealand? Would you still be talking about getting swamped by cheap food and so on, or would you be celebrating its provisions?
When my right honourable friend Liam Fox was at the Department for International Trade, he did a series of opinion polls and focus groups and found a fascinating switch in opinion—a polar switch if you like. The kinds of people who had previously been the most in favour—the most open and liberal—in their attitude to commerce had now begun to associate global Britain with people and arguments that they did not like, and were therefore falling back into these protectionist and mercantilist arguments about standing up for our producers. Happily, the opposite was also true: a certain type of UKIP voter who, 10 years ago, would have been grumbling about whether the French should be able to own our energy companies had become much more in favour of international trade.
Let me address the people who are in favour of trade in general; let us leave aside the people who think it is a bad idea. Is there anything in the Bill that you would seriously object to were it not for this ongoing culture war? I will not rehearse in full all its advantages; we have already heard them from my noble friend the Minister, who really knows his onions, as well as his Australian iron ore, his New Zealand lamb and his trade and tariff quotas—rarely has someone been so fitted to the ministerial office by their interests and enthusiasms. The fact that we have the removal of 100% of tariffs is, of course, a very good thing and has attracted more comment than almost everything else, but I would say it is virtually the least important aspect of the Bill.
We are not in the 19th century, when we were mainly interested in foodstuffs and manufactured goods. We could look at the provisions of these treaties on mobility, which the noble Lord, Lord Liddle, was generous enough to acknowledge as a major positive: the ability of people who speak the same languages and have similar qualifications from, often, the same educational institutions to work without hindrance in each other’s economies. We could look at the provisions on services; we always think of financial services, but there is also shipping, architecture, and the audio-visual sector. We could look at the rules on cross-border data, on investment and, indeed, on procurement; it is extraordinary that the British companies will effectively be treated as if they were Australian or New Zealand companies for large measures of procurement in those countries. This is an extraordinarily successful negotiation. Yes, of course it could go further, and we will all find one or two aspects with which to disagree, but there is no world in which we are worse off after the Bill than before it.
I would like to address some of the criticism that we have heard in this Chamber and outside its walls. Something that we heard from a number of noble Lords was the mercantilist objection. People have said that this is an asymmetric Bill; that we are lowering tariffs faster on this side than on the other side. Good—that is the advantage of trade; it means that you can buy stuff cheaper. I am amazed by how many people think of themselves as free marketeers but, in the post-EU context, struggle or affect to struggle with this point.
I think of the number of times I have been asked, “We are letting in all this Australian beef—what are we getting in return?” The answer is that we are getting the beef: high-quality, nutritious and excellent beef. If you do not want it, do not buy it; that is the basis of how a market system works. The idea that you judge a country by its trade surpluses—that exports are the only thing that matter—was debunked by Adam Smith, but it continues to come back as a zombie argument in every generation.
I have big trade deficits with all the pubs around me in the Hampshire-Berkshire borders—with the Watership Down, Bel and the Dragon, and the White Hart in Overton. Sometimes they engage in dumping; they will say, “Have a free glass of wine if you have a meal on a Monday,” or whatever. Who gets the better end of that deal? There is nothing wrong with getting cheaper imports; that is what drives the economy. It means that people spend less money on the basics so they have more resources to spend on everything else; that is what drives growth.
That brings us, rather neatly, on to the farming or NFU objection. The NFU is in this curious position now where it opposes trade deals with everyone except the European Union. It does not phrase it like that, but that is the practical position it has taken. It does it by deliberately conflating what is allowed in other countries for domestic purposes, and trade deals. We have had a bit of that in the Chamber today: “Australia permits x or y and we do not like it”. Yes, but that does not affect our own standards of what is permissible and may be sold here. No country has ever tried to insist on exporting its own production standards, as opposed to its own food standards. The EU has never done so and, by the way, if we did so—if we consistently said we would not import food unless the production standards were identical—we would not have a free trade agreement with the European Union because we diverge in a number of areas from the EU. No one has ever done that, and it is mischievous to suggest that somehow, that could be done in this case. We are talking about countries with high welfare standards, countries very similar to our own.
I ought to address the hill farms question because it is important. The people who are stewards of our upland areas perform a service for the rest of us that goes well beyond food production. They are looking after a common resource: a beautiful countryside. It is a difficult thing to monetise. We drive past it and it looks very nice. It is what economists would call an externality. If we regard that as an important service, then we should reward them directly for doing so, and that has nothing to do with the levels of tariffs on New Zealand lamb. In some cases, these hill farmers will be getting more than 50%—significantly more in one or two cases—of their income from the Government in direct grants. There is an argument for being more generous, but their income will not be affected by the levels of tariffs we have on Australia and New Zealand. Indeed, when it comes to beef, the beef currently being imported from Ireland and France will instead be imported from the Commonwealth. It will have almost no impact on our domestic producers.
On food miles, the point was made by the noble Baroness, Lady Bennett, and others that we should not be trading with distant places, other things being equal, and we should try to do everything as locally as possible. We live in an age where geographical proximity has never mattered less. When the European Union was founded, there was an argument for regional blocs, but advances in refrigeration, the internet and cheap air travel have completely revolutionised the situation. There have been studies of the environmental impact of importing New Zealand lamb. Astonishingly, it turns out that New Zealand lamb eaten in London has a smaller carbon footprint than Welsh lamb eaten in London.
That may seem counterintuitive, but think about it. First, the overwhelming preponderance of carbon production is in the food production phase—on the farm. The things that make the Kiwi farmers efficient, the economies of scale and so on, tend also to mean they use less fertiliser, less heating and so on. By being cheap, they also make themselves more environmentally friendly. The very same thing that noble Lords were complaining about—the imbalance—tends to make things cheaper. In terms of transport, if we think about the size of one of those tankers, the tiny proportion of it take up by one lamb chop, and the efficient route it takes it straight from port to port and then to distribution, that is a very different thing from driving a small number of bits of frozen meat from a remote hill farm. So, even in the transport phase, often, there is no difference. I wonder how much of the argument about food miles is results driven or based on resentment of the fact that we are in this situation at all.
Finally, on the point raised by the noble Baroness, Lady Young of Old Scone—whether trade deals should be about the environment and democratisation—we all share her concern about those things. Who does not want a cleaner environment and the spread of democracy? But we should be careful of a category error: these are not things to be squeezed into a trade deal as a coda. The more important they are, the more they should be dealt with in their own right with an international treaty. In fact, if I have a criticism of these two deals and of the DfIT’s approach so far, it is that it has been too ready to get into areas that have nothing to do with the removal of trade barriers and to have chapters on indigenous rights in New Zealand, or whatever. That is a perfectly valid and important issue but it does not belong in a trade agreement.
Let us not lose sight of what we stand to gain. Your Lordships’ Chamber is, in a sense, our national institutional memory and it is our duty to recall the things that worked and that raised this country to success. Few things are more clearly in that category than free commerce and free exchange. We invented in theory with the writings of Adam Smith and David Ricardo; we then invented in practice as the first country to remove tariffs, from the 1840s. We did so unilaterally because we understood that the biggest advantage in trade was allowing prices to fall, so that our people were better off and would have more wherewithal to drive economic growth. Let us be worthy of the deeds of our ancestors. Let us pass on their success to our descendants.
My Lords, I think I followed the first eight minutes of the interesting speech of the noble Lord, Lord Hannan, which were against government intervention, followed by four minutes of supporting state subsidies, but I will read Hansard tomorrow to see if I have got that wrong. I am also keen to find out how long the new year’s resolution of the noble Lord, Lord Kerr, lasts. With all this optimistic chat about scotch whisky, my one for dry January will not be lasting very long.
I thank the Minister for engaging with me and others before this debate. I note that he said in his opening remarks that he has a continuing financial interest in New Zealand. I wonder if he could provide some more information on what that is and place it in the Library. That would be useful to know, since he is the Minister for Investment implementing this series of agreements. I also welcome the maiden speech of the noble Lord, Lord Swire. I can reassure him that if he marches in the wrong direction towards a different Lobby from that of his Government, he will not be roundly condemned by all sides. I welcome him to this House and look forward to his contributions.
Last week was going to be a momentous week for us regarding trade. It was to be the week in which we secured, according to the promise in the 2019 Conservative manifesto, that 80% of our trade would be conducted through trade agreements, but that has been missed by a very large margin. Instead, we have seen new barriers and burdens on businesses trading with our nearest neighbours repeatedly increase, while trade with and imports from less free countries, such as China, also continue to increase. But we should take solace that this agreement, representing 0.08% over 15 years, will edge us that little bit closer to the 80% mark.
I also welcome the Minister’s enthusiasm for these debates. He was giving full-throated support for FTAs, but I noted that just a few days ago it was reported that the Secretary of State, Kemi Badenoch, told MPs that she
“wanted us to move away from the DIT being seen as the Department for free trade agreements and back to the Department for International Trade”.
I am not sure how it can go back to being that department, given that there has been list after list of boosterism with regard to FTAs. I understand that her favourite quote refers to trade deals being like motorways. She has said that if cars are not going back and forth, then you might as well not have built them in the first place. The problem is that we are building one lane for exporters from the UK to their markets, and three lanes from theirs to us. As George Eustice highlighted in the debate, on this agreement we
“gave away far too much for far too little in return”—[Official Report, Commons, 14/11/22; col. 424.]
Agreeing with the Conservative former Secretary of State for Defra does not necessarily make you anti-free trade. It just means that you are concerned about poor negotiations in free trade agreements. They are not necessarily inconsistent. It is interesting that George Eustice, Liam Fox and others now say that it would strengthen their hand in these negotiations if Parliament approved negotiating mandates. I disagree with the noble Lord, Lord Marland, on this. At the time, Ministers say that it will weaken their hand in negotiations. But when they are no longer Ministers, all of a sudden, they say, “I wish Parliament had approved my negotiating mandate because it would have been stronger”. How much precedent do we need to be persuaded about this?
I have a collection of press releases on my desk in the Lords because I have been covering international trade for a wee while. Those press releases relate to agreements. There could be a quiz at the end of the year on which press releases relate to which trade agreements. “Gold standard” is one; “world leading” is another; “Brexit bonanza” is a third; “most advanced ever signed” is a fourth and
“a major moment in our national history”—[Official Report, Commons, 14/9/20; col. 25.]
is a fifth. If boosterism was a commodity, then we would be world leading. That does not necessarily bring about any extra GDP growth. My favourite one was from Anne-Marie Trevelyan, the former Secretary of State, when she was in Australia last year. She said that this agreement would bring down UK inflation. She said it as a Minister on a visit to Australia. I would be grateful if the Minister could write and say how much it is going to contribute to this and how.
The Australians, probably quite rightly, referred from their perspective to this as a “once in a generation” agreement. It is not a good deal for us, as George Eustice has said, but the Australians, to give them credit, have negotiated a good deal. The noble Lord, Lord Liddle, is absolutely right that there was a degree of suspicion among government that extra scrutiny would not help the Government’s case on the agreement they signed.
On the Grimstone rule, I would say to the noble Lord, Lord Lansley, that he is right. We debated the Australia agreement in Grand Committee, but the Commons did not have an opportunity to do it and had to call for an Urgent Question to have time to discuss it. What had then been the Grimstone rule—on cue, the noble Lord is soon to resume his place as I refer to him—no longer applies. When he gave that commitment with great sincerity in debate on 23 February 2021, he replied to the noble Lord, Lord Lansley, and me:
“What have we done? It includes committing to allow time for the relevant Select Committees to report on a concluded FTA before the start of the CRaG process.”—[Official Report, 23/2/21; col. 729.]
It is not before the conclusion, or during the scrutiny period, but before the start of the CRaG process. That is no longer in place, which is to be regretted.
I asked the Minister a Question before Christmas on a separate agreement to incorporate human rights in all FTAs, which has now been reneged upon. The noble Lord, Lord Udny-Lister—I was interested in his contribution today—asked a follow-up question and said that he hoped FTAs would not be “Christmas trees”. The Minister agreed with him. However, he is supporting a bauble of a Bill, because procurement is not trade but public finance policy. How Governments choose to spend taxpayer money is not like businesses doing business with others or the consumer. It is about public taxpayers’ money being spent; it is extra. If it is okay to have procurement, then it is also okay to look at labour standards, human rights, sustainability and indigenous communities. That is what makes these deep and comprehensive agreements about the trading relationship—and, critically, fair trade.
I have to warn the Minister that his comment on setting aside trade and human rights, which I hope he will reflect on, will concern those in Northern Ireland, because human rights is hard-wired into both trade agreements and procurement rules within the United Kingdom. Moving dramatically away from that will mean that we will also have to change our development policy and strategy, because trade, human rights and trading with free nations with human rights standards is an integral part of the development strategy published by this Government. If that is no longer the case, we need a new development policy as well to remove this utter incoherence.
A ridiculous element raised in this debate is that we are almost going through the last rites of a Bill before it is made deceased by the Procurement Bill, which is receiving its Second Reading in the Commons today. This is simply not the way we should properly legislate—but we will do our job and scrutinise it properly. But, yet again, we are debating a Bill that has a significant impact in devolved areas and that is introducing new concurrent powers. I remind the House that concurrent powers are the invention of this Government, where they say that, if a devolved Government do not make a decision to act in their areas of competence, the UK Government will do so if they want. This is not consistent with the principle of devolution, and it is therefore no surprise that there is significant concern in the Welsh Senedd and the Scottish Parliament. Due to the fact that statutory instruments will likely be brought forward to directly act on devolved policy—without LCMs themselves—we need to know what they are before the conclusion of the Bill in this House. So I hope that the Minister will be able to publish draft instruments expected from the Bill.
As we have heard today, a question then arises about the impact the Bill will have overall. We know that it is likely to cause 0.08% to 0.1% GDP growth over 15 years, but I note what the former Secretary of State said about giving away “too much” for “too little in return”. From the contributions of the noble Baroness, Lady McIntosh, and others, we know that some of these critical sectors—beef and lamb—will decline by 5% and 3%. This will disproportionately impact areas such as those in the lowlands of Scotland that I was elected to represent. The noble Lord, Lord Hannan, made the point, which I referred to, that that is okay because you can give state subsidies to those areas, presumably as long as it is consistent with WTO subsidy rules. But, as the noble Baroness indicated, what is the point of having a procurement policy that proactively supports purchasing from a sector of the economy that the Government know is being reduced by an agreement that they negotiated? This is utterly contradictory and pointless.
On the procurement side, the Government’s press release indicated that the agreement
“gives UK firms guaranteed access to bid for an additional £10 billion worth of Australian public sector contracts per year.”
I was interested in this because, according to the Australian finance ministry, total public procurement spend in Australia was £46 billion. The UK equivalent is £379 billion, so there is no dispute about who is more attracted to getting access to a bigger market. But from that 81 billion Australian dollars, you deduct 10 billion for thresholds differences, 12 billion for things already procured by overseas interests and another 11 billion for defence. You are therefore left with a total market of £27 billion, which is already governed by the GPA. So I simply do not know where this extra £10 billion-worth of opportunity, which we were not able to access through global procurement, comes from. I would be grateful if the Minister could give a detailed breakdown, because I am interested in how we are able to get another £10 billion—which does not exist—from that £27 billion. Perhaps this is boosterism, but I will allow the Minister to write to me with a detailed breakdown.
I would be grateful to know, because it has not been mentioned so far, why there is no detail in the Government’s impact assessment on the fact that the Australian approach is to allocate at least 20% of all their procurement to their SMEs, which means that that element of the market is still closed. I would also be grateful to know if the Government could say why we acquiesced to Australia’s carve-out for local government to be excluded from the agreement—we only found out about that in a side letter which confirmed it. Why is local government procurement, which the Minister did not mention, not included in the agreement?
There is a very interesting contradiction between this Bill and the Procurement Bill, which the Commons is discussing at the moment: unique to the agreement on procurement with Australia, and to satisfy the Australians, we have increased the threshold for procurement. We did not receive any information on this from either the noble Lord, Lord True, or the noble Baroness, Lady Neville-Rolfe, during the many debates on the Procurement Bill. All procurement for subcentral government levels in the UK is £213,477, but for Australia that figure has gone up to over £350,000. I do not know why the threshold for procurement, as it stands in the UK across all areas of procurement, is different for the Australians. That is deeply confusing for all those procurement bodies, because they will likely need to state whether a source of procurement is from an Australian enterprise and therefore operating under a different threshold from all other procurement within the UK. I simply do not know how that will operate, but I would be grateful if the Minister could put us right on that or if we could pursue it in Committee.
I will make two final points in drawing to a conclusion, one of which is a point of principle on some of the differences on agriculture we have heard in the debate. We have heard from some noble Lords—including the noble Lord, Lord Frost, and others—that the elements of agriculture should have been accelerated. It should not have been over a 15-year period, because consumers, as the noble Lord, Lord Hannan, indicated, should receive sooner the bounty of what this agreement was intended to give. Theoretically, that is an interesting argument for full liberalisation, but, as George Eustice has said, we already had full liberalisation from us to them; what we have done is given them full liberalisation to us with nothing in return.
I checked the impact assessment during the debate, and paragraph 5.2 states that the total sum impact on UK consumers of the agreement with Australia is, in the long run, over 15 years, £2.4 million annually—thruppence per person a year in year 15. So what are the consumer bounty benefits that will come at the cost of our hill farmers losing 5% and our beef manufacturers losing 3% of procurement? I do not see the benefit for consumers; the benefits which have been presented today are mythical. But the Bill will go into Committee and there will be ample opportunity for us to learn more about the benefit of 3p a year per consumer while seeing our hill farmers being reduced.
In conclusion, this leads us to a very clear case for a comprehensive trade policy which links to our rural economy sector and the need for parliamentary scrutiny. How many former Ministers in the Cabinet does it take for the Government to realise that Parliament approving negotiation mandates will strengthen the UK, not weaken it? We have FTAs that were a priority, but now they are not. Deadlines, which were previously vital for the agreements, are now not helpful. Human rights were integral to the agreements, but now they are not a priority. Data policy was consistent with the EU and then not, and now might be; we do not know where that stands. Dispute resolution mechanisms are different in Canada, Japan, New Zealand and Australia; they are utterly inconsistent. There is labour mobility in Australia, but the Home Office warns against it for India. There are other contradictory areas in what we are asked to approve by the Government. We need a government trade strategy with a policy that is approved by Parliament; that will help us do our job in this Parliament.
My Lords, I begin by declaring my interests in Australia. They are not about having relations who vote Labour in New Zealand, having the accent or being born with the accent, having been the high commissioner in Australia or having relatives in Australia. I was simply born there and, aged nine months, I was removed by my parents, brought to the UK, and have stayed here ever since. So there is no declaration of interest other than that.
I welcome the noble Lord, Lord Johnson, to his first Bill as a new Minister for trade. I wish him not a long period in office but a reasonable time in office to get used to the seat and so on before the next election. I also congratulate the noble Lord, Lord Swire, on his maiden speech. He has much experience in Northern Ireland, the Foreign Office and elsewhere, and he will bring much to bear in this debate and others in this House. I welcome him. I also thank all other noble Lords for their contributions to the debate.
It seems to me that we have identified two key issues: one is about strategy, or the lack of strategy, and the second is about scrutiny, or the lack of scrutiny. That seemed to be a running theme whichever side of the House, or none, people were speaking from.
I am grateful for this opportunity to add my own remarks to the debate, which presents an opportunity to scrutinise the deals covered by this Bill, as short as it may be, with only four clauses and two schedules. But these are the first trade agreements made from scratch, as others have said, since the UK left the EU, and in the absence of a published government trade policy, this Bill, and the FTAs it helps to implement, represents the premier evidence available of the Government’s post-Brexit approach to trade. This is what we will be judged on. These deals set a precedent both for what the rest of the world will expect from us in this era and, to a certain extent, for the process that we can expect in parliamentary scrutiny of these and other trade deals that will follow. This is a proper precedent. This particular Bill may not have much life, and may be replaced by the Procurement Bill in a matter of weeks, but at least it sets a precedent. I have more to say on that point later.
Before that, let me express our welcome that these trade deals have been secured, with the deepening of links with two old friends—Australia and New Zealand—and the elements of both deals which will be beneficial for our country. The Government have of course highlighted some of the key benefits of the trade agreements—indeed, the noble Lord, Lord Johnson, has not just highlighted them but been vociferous in his welcoming of their benefits, which we also welcome, such as the elimination of tariffs on all UK exports to Australia and New Zealand, creating new opportunities for UK professionals and businesses in both countries, and more. However, while they are welcome, it is impossible to ignore—as referred to by a number of noble Lords—that the financial impact of both deals is insignificant and, we might say, wrapped in a degree of uncertainty. As we have heard, the Government’s own assessment estimates that the Australia deal will increase UK GDP by only 0.08% by 2035 and the New Zealand deal by only 0.03% by 2035. So they are not a big deal for our economy, even though they are a big deal given the precedent that they set for deals that we might negotiate in the future.
Given the significant uncertainty that the impact assessment openly admits, when paired with what is missing it is hard to disagree with the assessments of the Prime Minister, who called them “one sided”, or of the former Environment Secretary, who has been referred to, when he said that the best clause in our treaty with Australia is the one that allows us to rip it up with six months’ notice. They both also suggested that the UK
“shouldn’t be rushing to sign trade deals as quickly as possible”.
Given the lack of progress in deals with the USA and India—we had a Written Statement today on India, which says that there is no deal yet and that the seventh round of negotiations is under way, but nothing like a deal is in sight—that does not seem to be the issue, but may certainly explain the continuing stasis.
These deals were supposed to pave the way for easier CPTPP membership. The Government have said that they hoped to conclude joining by the end of 2022. After 15 months of negotiations, that date has been and gone. What has happened to our purported membership of the CPTPP? Are we waiting to sign individual deals with as many countries as possible before that negotiation can be concluded? Which way is it? Are we trying to join the CPTPP or are we awaiting further deals before we push that attempt?
As for what is missing from the deals, where do we start? Where is the leadership on tackling climate change, as the noble Baroness, Lady Bennett, the noble Lord, Lord Inglewood, and others asked? The Australia agreement fails to set out specific commitments on climate change, with no sign of the reaffirmation of commitments under the Paris Agreement that was promised by the Government. Properly addressing this would enhance all our trade deals, not least because this is a key and growing market for international trade. This was the first opportunity to set the important precedent, and we missed it.
An absence of engagement with workers’ representatives is clearly shown by the lack of a gold standard of workers’ rights found in these agreements. The TUC highlighted the lack of
“commitments to ILO core conventions and an obligation for both parties to ratify and respect those agreements.”
As I said, these deals set a precedent. When we turn to negotiations with countries with inferior worker protections to those of Australia and New Zealand, this will certainly not set a positive foundation for ensuring that workers’ rights are protected there.
The hit to the agriculture sector has been well documented: the noble Lord, Lord Inglewood, and others made this point. The Government’s own impact assessment shows a £94 million hit to farming, forestry and fishing and a £225 million hit to our semi-processed food industry from the agreement with Australia. This has rightly been criticised for both lowering standards and hurting British farmers, as others have said. The procurement provisions in the Bill, while certainly welcome, lack a requirement for the specific support that UK firms could benefit from in order to take advantage of the opportunities created by the agreements in both Australia and New Zealand.
Turning to scrutiny, the elephant in the room is that both of the agreements which form the basis of this legislation are long overdue and have already been signed between the respective Governments. As a result, the scope for changes to the agreements at this time is extremely limited, and we anticipate that our amendments at future stages will show this, through a focus on better assessing the impact of the agreements. In that regard, I particularly thank my noble friend Lady Hayter. She is not in her place today, but I think five members of the International Agreement Committee have spoken in this debate. We are grateful to that committee for its excellent work in scrutinising the agreements themselves through two reports last year, both of which have been very helpful in examining these agreements. The Australia report also presented an additional opportunity for a very useful debate last July, and I understand we are expecting a response to the report on the New Zealand agreement from the Government, probably tomorrow: I await that with keen interest.
This work has given us something of an advantage over the other place, where opportunities have been particularly lacking. It was deeply concerning that the Government limited the time available for scrutiny of the Australian agreement by tabling it late in the day and by the Trade Secretary delaying an evidence session. I understand that provisions in the Procurement Bill, currently in the other place—it has its Second Reading today—will also make Bills such as this one unnecessary for future trade agreements, further curbing available opportunities for scrutiny. I hope the Government will learn from this and not continue to avoid scrutiny in this manner. Ministers have been granted significant powers in trade negotiations and they can expect that we will continue to push for more scrutiny, so parliamentarians and wider groups can properly impact on the process.
I thank noble Lords for taking part in today’s debate and for the contributions from all sides of the House: it has been absolutely fascinating. I am extremely grateful also that the Australian and New Zealand high commissioners made themselves available to watch part of the debate: I am grateful to them for their support, morally, in the Galleries. I also extend warm gratitude to the IAC and say how much I appreciate its involvement both before this debate and, I very much hope, in the next few weeks, as we go through Committee and Report.
I join the long line of people congratulating my noble friend Lord Swire on his first-class maiden speech. He was certainly a better speaker and politician than he was a soldier, by the sounds of things, and I am very glad to have him behind me, as a result. Both he and the noble Lords, Lord Marland and Lord Howell, raised the Commonwealth. I totally agree with the importance we place on our links with the Commonwealth and the opportunities that our post-Brexit vision brings us in relation to the Commonwealth. I reassure my noble friends that the Government will and are making the most of the Commonwealth within our trade agenda. We have done 33 trade deals with Commonwealth members and we have a newly launched developing countries trading scheme, which I know my noble friend Lord Swire has discussed with me in the past. Total trade in goods and services between the UK and the Commonwealth was £121 billion in 2021, which I am delighted to report is an increase of 12% on 2020.
I will answer some of the questions that have been raised and I will try to do so in as much detail as possible given the time available to me. I think this is a very important debate.
The first point I would like to turn to is the question of why we are presenting this Bill to you today given that, in theory, there is a Procurement Bill that is being debated in the other place that will cancel this Bill. Well, actually, that is not completely true. All the provisions relating to Scotland are not in the Procurement Bill, so if we are to have consistency then we need to have this Bill relating to Scotland to follow through on top of the Procurement Bill, even when the Procurement Bill cancels this Bill—if that does not sound too bizarre.
There is also an important point on timing. The Procurement Bill, rather than this procurement Bill called the Trade (Australia and New Zealand) Bill, will take many months to get on to our statute books. Following that, there will be a further six-month waiting period before the provisions in the Procurement Bill come into effect; that could be a year, or a year and a half, or it could be longer than that. Who would want to stand in the way of this opportunity to allow our traders and our citizens to benefit from this free trade deal when we are able to present to you today a very uncontentious tidying-up Bill around procurement that, as I say, will have to follow through in any event on the Scottish measures? The noble Lords, Lord Kerr and Lord Purvis, my noble friend Lord Lansley and the noble Baroness, Lady Liddell, all covered this point and I hope I have answered the reason for the logic of this Bill and the importance of it.
I will also cover the issues surrounding negative versus affirmative statutory instruments. It is important to point out that, if you read the Bill, you will see that the powers therein are very specific—they are not intended to relate to procurement beyond the Australia and New Zealand trade Bill. The measures that we are considering that will be brought through as negative statutory instruments will be very procedural; they relate to things like the changing of names of government departments, so to assume—forgive my newness to this place and to Parliament in general—that we need to go through an affirmative process would be extremely cumbersome, time-consuming and really not relevant in this at all. As far as I am aware, the majority of the measures in this procurement Bill are effectively all being employed by procuring agents today anyway, so I am sure this brings much needed consistency, but in terms of changes it would not be significant. As a result, to have an impact assessment around this Bill would be unnecessary because the impact is to ensure that we can do our free trade agreement; it is not necessarily on the procurement processes that we are reforming. In fact, all the reforms seem eminently logical, and we should do them even if we were not doing a free trade deal.
I was criticised for my tone. I am sorry if people think I am too optimistic about what free trade agreements can give us, but I am excited by what we have before us. I am excited by our post-Brexit vision of Britain, I am excited about the wealth that we can create for our citizens, I am excited about the opportunities that we are going to have for our businesses, and I am excited about enhancing our cultural, societal and citizenly relations with our sister nations in Australia and New Zealand. So, yes, I am excited, and I am frankly amazed that people are not more excited than me.
Yes, every trade deal has give and take and it does revolve around change; I am aware of that and we should have a debate about it. I think what my noble friends Lord Hannan of Kingsclere, Lord Frost and Lord Udny-Lister, said about what great opportunities these are for us was right. I am a bit frustrated to some extent that we seem to think we are at a standing start with Australia and New Zealand when we are not and that this is the end of the road for our trade deals. We already trade with Australia and New Zealand; this is an improvement or enhancement; this is future-proofing our relationship and building it stronger. If we did not have this agreement, we could not deal with and look at in detail all the issues that people have purported to raise, like animal welfare, agriculture and the environment.
We can provide the leadership through this process that we could not do without it. That is why it is so wonderful. It is everything that noble Lords opposite should want—the opportunity to encourage trade and wealth creation while showing leadership in our values. That is what this free trade agreement does. We talk about the engagement and scrutiny process. I have great sympathy with that. I am in two minds about the level of scrutiny that is useful when negotiating a free trade deal. It is useful for our counterparts to understand what our citizenry feels about certain important issues, and I know that the Australians and New Zealanders—certainly the Australians—are effective in engaging with their industry base.
I was involved as a board director of the DIT in encouraging greater engagement with industry in the negotiating process and, frankly, we could continue to do more. I am not averse to suggestions. This is an iterative process and is the first of many deals, I hope. This is the simplest and most straightforward deal that we could have presented to the House, but we want to learn as much as possible from it. Therefore, while I would not look to change the process around the constitutional review that this House and the other place bring to bear on treaties in a specific and formalised sense, I am aware of and indeed desire greater engagement with business and the body politic. We otherwise end up with what we have today, a debate about any of the potential negatives of the deal, rather than people rejoicing in the huge opportunities that it presents to us.
I am, to some extent, frustrated that not enough businesses have come out to say how much they are going to benefit from these deals when, in fact, they have spoken to me directly about the huge opportunities that there are. I want to try to build a bow-wave around our free trade agenda. I therefore take to heart the views that noble Lords have expressed today about engagement and scrutiny. As I say, while the processes should not change, there could certainly be more forward footedness in engagement. That is a good process, which helps to spread the power of these agreements and makes them more successful.
I should make one important point. We are looking at these free trade agreements in the wrong way—through the wrong end of the telescope. We are used to trade agreements whereby one does a deal—some 1950s steel-type treaty on tariff allowances or whatever, such as allowing certain amounts of steel into the economy over a certain number of years—and that is it; one is stuck. The reason why the Ponsonby rule came into action was that Parliament was concerned that secret deals were being made that we could not get out of and that we did not know anything about.
This is different. There has been a huge degree of scrutiny and discussion around these agreements—and this is not the end but just the beginning. They are structured to enable us to have intensive debate around each section, whereby all the key points that we have been discussing have committee and dialogue structures built into their mechanisms, to allow us to change and evolve these treaties. Scrutiny starts on day one. We will be able to make changes to these treaties if they do not suit us in the way in which they were intended to suit our economy and people. That is important. This is completely different from how conceptual treaties worked in the past. I congratulated the negotiators because flexibilities are built into this process to allow us not to be fearful of the outcomes of the treaties, because we can change them. That is at the core of the Government’s negotiating strategy and is why I am so enthusiastic about these treaties. Not only do they give us so much and allow us to lead the world in our value offerings but they are entirely flexible. If they do not work as we intend—it is hard to forecast everything—they can be altered through mutual agreement. That is enormously powerful.
As to my final point on the impact assessment, we have a review at two and five years and of course I should be delighted to engage further with the House at those points. That is important; we have to assess the impact of these treaties because we want to learn how we can improve them. I very much support that process.
I conclude on the scrutiny point by saying that I am sorry if noble Lords think that I am too optimistic about what these trade deals offer us. However, the reality is that, because of the way in which they have been structured, one has a high degree of scrutiny over the future of these trade deals and the Government have been forward footed in making sure that Parliament was part of the process, as it was always intended to be.
I will cover three other points, one of which is the environment. These FTAs include environment chapters which recognise our right to regulate to meet net zero and reaffirm our commitments to the Paris Agreement. This is very important: at no point and in no area do these FTAs derogate our ability to control our own destiny. In fact, by having the negotiations with Australia, particularly before the Government changed, we were able to bring to bear on them the pressure to accord with our climate change ambitions. That is amazing. If the Greens want change in this area politically, this is a very powerful way of doing it—and we have done it. We were the first major economy to pass a legislative target to reach net zero by 2050. That was done by the Conservative Government, not by any other party. We lead the world in this area, and these trade agreements reflect that. In my view, this is another matter for us to rejoice in.
The deal commits the UK and Australia to work together on climate change; that is very important. In other areas that have come up in the past—not necessarily in this debate—people have raised concerns about deforestation with regards to the FTA. I have mentioned my gratitude to the TAC for the work it has done in this whole process. It reports that, on a net basis, Australia has been reforesting rather than deforesting. Nothing in this agreement stops the Government taking domestic action on our side to deliver on our commitments to meet our climate objectives. I know there is some head shaking opposite me, but I can only go on the facts; I am slightly beholden by that.
There is a view that Australia and New Zealand are far away, which they are. I like the idea that we are starting at the other end of the world and then working backwards. If you look at overall greenhouse gas emissions associated with UK-based production—largely unchanged from the agreement—you will see that there is a possibility of some increase in transport-related emissions associated with increased trade flows, but, according to the TAC, these impacts are likely to be negligible. This idea that we are going to have huge greenhouse emissions on account of transport increases is simply not being predicted. As my noble friend Lord Hannan pointed out, having a New Zealand lamb chop on your plate in the House of Lords restaurant is better for the environment than having one that comes from another part of the UK. Why can we not ask other parties to celebrate where we see environmental benefits from these trade deals? The assumption is that all trade deals are somehow negative for the environment; how can that possibly be the case? As my noble friend Lord Hannan said—I back up his point; it came from a Board of Trade report—the environmental impact of the production of New Zealand lamb is lower than ours in many cases, even if you include transport costs.
My final point is very important: this agreement provides huge opportunities to boost trade in environmental goods which can speed the development and uptake of environmentally friendly production techniques. I think the noble Baroness, Lady Liddell, also raised this. Again, what are we trying to do with Australia and New Zealand? We are trying to sell them our technology on net zero, where we are global leaders, thus generating wealth for this country and improving our environment. If anyone thinks my tone is too rejoicing at the astonishing benefits that, factually, we bring through this agreement, I apologise again.
I am very sensitive to the issue of agriculture, and I do not want there to be any sense of triumphalism about this trade agreement in that sense. The fact is that there is change and people are affected. However, it is important to note, first, that this agreement will have relatively limited negative impacts on certain agricultural sectors of the economy. That really is a fact, and I will go through that in a moment. The positives are also significant. We export more agricultural produce, in its broadest sense, to Australia than we import from it, so the gain is in our favour. We believe that the amount of meats which are competitive for us being imported from Australia into the UK will increase by very small amounts.
As I have repeated, and repeat again, this is not an agreement starting from scratch. We already import New Zealand and Australian meats, and they are not using the quotas that we already have. Yes, we are liberalising our trade, and I think it is right to do that, but the fears that are being created among the body politic and the press are entirely unreasonable and, if I may say so, slightly disingenuous. There is no reason to fear this trade deal. If we did not have it, it would not make any difference in a negative sense on farmers. That is important for people to understand. This is actually an opportunity, because it unlocks—
Is the Minister saying that the impact assessment is wrong about the 5% and 3% reductions? The Minister has just said at the Dispatch Box that, if this agreement were not in place, there would be no negative impact. However, the impact assessment says that this agreement is bringing a negative impact. Will the Minister commit to revising the impact assessment before we reach Committee, because either he has just misled the House or the impact assessment is wrong? They cannot both be right.
I am grateful for that point and would be happy to clarify. I will certainly work closely with the noble Lord in Committee.
My point is that Australian imports already operate below the existing quotas. Even if we said that we were not going to have a trade deal with Australia and decided that we did not want to go ahead with a deal that I think will be hugely beneficial, we already have a quota system where the Australians are importing less. If we go to a new arrangement where, over 10 or 15 years, we gradually liberalise our agricultural imports, the very fact that we are increasing that higher level does not necessitate that we are going to put ourselves in a more disadvantaged position. I am not trying to suggest that the impact assessments are not correct. I have been sensitive about that; I said at the beginning that there are impacts and there will be change. We must be sensitive to that. However, I am saying that the claims that we are going to have a significant tsunami of Australian beef coming into the UK simply do not make logical sense when we are already importing less than the quotas imply. It is important to mention that.
We have also touched on another relevant point. There are production differences between Australia and New Zealand; my noble friend Lord Hannan of Kingsclere mentioned this earlier. It is important that we take advantage of that fact. I will not be too much longer but let me quote the TAC, which states that
“different production practices between countries are a function of different climatic, geographical, agronomic, environmental, economic and cultural conditions. Australian cattle and sheep live their lives outdoors, mainly on very large stations, which is different in the UK. It can never be assumed that what is normal in one country needs to be normal in another … Moreover, the international trading system, of which free trade agreements form a part, is predicated upon the understanding that countries should be able to benefit from advantages which they enjoy over their trading partners. Trade law, in principle, prohibits countries from restricting imports of products simply based on how they are made, whether this is by using their more abundant sunshine, land, educational skills or lower labour costs.”
This is important. We are trying to do a trade deal where we have, enjoy and appreciate comparative advantage while at the same time being extremely firm on the controls that we will put in place to make sure that, if there is a significant increase in imports into the UK, we can restrict those imports and ensure that our farmers are protected. Following the 15-year point, we will still have WTO restrictions that we can fall back on.
Before the Minister finishes, I hope that he will give way for a microsecond. During my contribution, I asked whether he could let us have some detail of the systems that are in place to keep under surveillance the environmental, animal welfare and other standards on which he is giving us assurances, including how effectively they are operating. Will he agree to do that before we reach Committee?
I thank the noble Baroness. I am about to go on to that exact chapter in making my final point on standards, which are important. I take this issue to heart.
It is absolutely essential for everyone to realise that nothing has really changed in terms of our standards. In fact, we believe that, in some instances, we have increased our ability to protect ourselves. I want to quote from some of the important chapters in the Trade and Agriculture Commission’s report, if noble Lords will indulge me; I know that my noble friend Lady McIntosh wanted me to touch on these matters as well. The report states:
“Importantly, all of these trade liberalisation obligations are fully covered by general exceptions, taken from WTO law, ensuring that the UK can regulate to protect animal or plant life or health … In addition, the FTA contains several rules in its environment and animal welfare chapters that expand on these rights to regulate, which gives the UK more leeway to override its trade liberalisation obligations—
that goes to the whole friction between these points—
“than it would have under WTO law.”
This is very important. We are ironclad in our ability to control our standards.
The concept of mulesing was raised. The TCA sees an increase in imports of mutton from mulesed sheep as negligible, and the FTA does not restrict the UK’s WTO rights to prohibit imports of products from Australia produced using the practice of mulesing without pain relief. I was told that 90% of all mulesing is done with pain relief. Yes, there are different practices and clearly, mulesing is not relevant in the UK because of flystrike and other conditions, but we have the ability to protect ourselves and we still have the ability to ensure that the food and goods we import conform to our standards.
Also, in terms of animal welfare, these chapters are ground-breaking. It is worth using those words, which are appropriate. We have driven change there, and it reflects our values. New Zealand and Australia have a very strong commitment to raising animal welfare standards. It is also very important to point out that we still have complete control over pesticides and other such matters. Our approval process involves audit and assessment of a country’s system. Products entering the UK must be accompanied by certificates and a percentage are subject to physical checks to ensure that standards are maintained. We have worked very closely with the Food Standards Agency and Food Standards Scotland. This is very important and—
My noble friend will be aware of a briefing from the Food Standards Agency, which is concerned about the increase in what is required of it. He might like to consider that.
On a slightly separate point, my noble friend said that the purpose of the Bill is that the procurement provisions will apply in Scotland. My understanding is that the Scottish Government have withheld consent to the Procurement Bill so I am not quite sure how, constitutionally, we could not be seen to be circumventing the will of the Scottish Government and the Scottish people in this regard.
I thank my noble friend for both her points, the first of which is heard. The assumption is that these agencies can police our borders. Clearly, if there are different requirements on account of this trade deal—although I cannot see why—certainly, we should look into that. We covered her second point in the debate. These are concurrent powers. We have consulted consistently and continually with all the devolved nations, and we are not requiring a legislative consent Motion to run those concurrent powers.
I thank all noble Lords for their contributions to today’s debate. I reiterate my willingness to meet noble Lords and discuss this Bill further. Those who have spent time with me over the last month know that I am fully available to ensure that this Bill is a success. I am transparent and open to you and want to ensure that we learn in this iterative process to create even more effective trade deals into the future with different economies. This is not a “one size fits all” process. Just because we have an agreement with Australia and New Zealand does not mean that this agreement will be cut and pasted across to another country. Every country and economy is different and should be treated as such.
Underpinning this Bill are two extraordinarily far-sighted trade deals between our sister nations, resulting in an estimated £10 billion increase in trade with Australia and £1.7 billion increase in trade with New Zealand. There have been discussions about how we get to those figures. Professor Minford suggested a £60 billion benefit for trade with Australia; our government forecasts gave us a figure of £10 billion. I am happy to discuss with the noble Lord, Lord Purvis, how to assess these trade deals more accurately. The impact assessment and the look back will help us in that regard.
As I said to my noble friend Lady McIntosh, we have engaged with the devolved Governments at every stage of the process and have also allowed for greater parliamentary scrutiny than is prescribed in statute. We have shone the torch of the Trade and Agriculture Commission on these issues, and we have built two-year and five-year assessment breaks into the agreement. If we decide that we do not like these agreements, we can cancel them within a six-month notice period. These deals demonstrate our values and leadership on standards—that is very important and has come up in the debate today—how we operate with developing nations, labour rights, gender equality, the treatment of animals and the environment. These deals absolutely protect our agriculture industry and our standards in line with our values, while ensuring that we bring essential benefit to our consumers.
These trade agreements are designed to be flexible, with a whole range of structures established to ensure proper dialogue and recourse. As I have said, they are not some post-war steel treaties. They are, thanks to our leadership and position as the new driver of our unique free trade mission, modern, future-proofed concepts which allow our nations to grow together in commerce and trade.
These deals are being made between us and two allied Commonwealth nations, as has also been said, with the same Head of State and with those who died for our values in two world wars. We are their brothers, sisters, fathers, mothers and cousins. We already live and travel and own properties, businesses and farms in each other’s countries.
As came up earlier, our levelling-up agenda plays an important part in how we will work together in the future. I ask Members of the House to talk to some of the firms and people positively affected by these deals. Your Lordships will see the palpable excitement, as I have shown, from chapters such as the ground-breaking one on SMEs welcomed by the FSB. All that is within a consumer protection section that will ensure that our consumers benefit from greater choice and lower prices in our shops.
Contrary to critics’ view, the Government have thought out our trade strategy well. We want to ensure that our free trade agenda is indeed the framework that launches us on the path to give our citizens the choices and power to reach the ends of the earth. We should be proud of the decisions we have recently taken over our trading destiny and focus on creating a new world order, where we sit at the very centre of a series of geostrategic relationships and prosper from this network of trade and investment, shared culture and values, and build the wealth that gives us security and ultimately control over our destinies, which is at the very heart of our free, liberal and democratic-minded nation.
The Government have taken the first major step on our journey. We are proud of the modern and comprehensive deals that we have negotiated, and I look forward to the passage of the Bill through your Lordships’ House.
Bill read a second time.
That the Bill be committed to a Committee of the Whole House, and that it be an instruction to the Committee that they consider the Bill in the following order: Clauses 1 and 2, Schedules 1 and 2, Clauses 3 and 4, Title.
House adjourned at 7.16 pm.