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Free Trade Agreement: New Zealand

Volume 701: debated on Thursday 21 October 2021

Let me first thank the right hon. Member for Islington South and Finsbury (Emily Thornberry) for what I am sure were, as always, wise words in her point of order, and for the opportunity to set out to the House some of the key issues that we will be discussing. I take absolute note of the points that have been raised.

With permission, Madam Deputy Speaker, I would like to make a statement on the new agreement in principle between the UK and New Zealand on our free trade agreement, which we are working towards delivering.

Yesterday, the UK agreed in principle the main details of a trade deal. A UK-New Zealand free trade agreement will be another major trade deal, like our agreement with Australia. This marks a significant step towards the UK’s aim to join the £8.4 trillion comprehensive and progressive agreement for trans-Pacific partnership free trade area. The UK-New Zealand trade relationship was worth £2.3 billion last year and is set to grow under the deal. Both Prime Ministers have heralded the new partnership, which will take on some of the biggest global challenges, from climate change to gender equality, respect for indigenous communities and the future of digital trade.

This deal is part of the Government’s commitment to building back better, bringing the benefits of trade to level up all parts of the country. Our shared history with New Zealand, common values and commitment to free trade is matched by a dedication to high standards and the rule of law. It makes complete sense to do a trade deal with New Zealand, and it will continue to strengthen our long-standing relationships as key allies and friends.

We have laid out the core benefits of a deal as per the agreement in principle. A comprehensive trade agreement with New Zealand will slash red tape and deepen access for our advanced tech and services companies, while making it easier for smaller businesses to break into the New Zealand market. UK workers will benefit from better business travel arrangements to New Zealand, and UK professionals such as lawyers and architects will be able to work in New Zealand more easily, allowing UK companies to set up shop in New Zealand and bring the best British talent with them.

High-quality New Zealand products that British consumers love will become more affordable, from Marlborough sauvignon blanc to manuka honey and kiwi fruit. The new agreement in principle means that existing tariffs as high as 10% will be removed on a huge range of UK goods, from shoes to ships and from buses to bulldozers, giving British exporters an advantage over international rivals in the New Zealand import market, which is expected to grow by 30% by 2030.

Throughout negotiations, we have remained in close contact with businesses, farmers and other stakeholders. We will back British farmers in opening up new export opportunities, such as to the CPTPP markets, which are expected to account for a quarter of global import demand for meat by 2030. The agreement in principle adds momentum for accession to CPTPP, of which New Zealand is a key member. CPTPP had a joint GDP of £8.4 trillion in 2020 and includes some of the biggest economies of the present and the future, from Japan and Mexico to Malaysia and Singapore. By 2030, two thirds of the world’s middle classes will be in Asia, creating unparalleled opportunities for UK businesses. Britain needs to be positioned in the coming decades to trade freely with these high-growth parts of the world.

The Governments of New Zealand and the United Kingdom now intend to finalise the free trade agreement text before signature and subsequent entry into force of the deal. Once signed, the deal will be presented to Parliament and published on, alongside an independently scrutinised impact assessment. There will be full and robust scrutiny of the deal, including time for the relevant parliamentary Committees to produce a report on the deal before it is ratified. In addition, the new Trade and Agriculture Commission, chaired by Professor Lorand Bartels, will provide expert and independent advice to the Government and Parliament once the deal has reached signature stage. The new commission will look specifically at how the deal is consistent with relevant domestic statutory protections, ensuring that world-leading British agricultural standards are upheld. This agreement will strengthen ties between two nations committed to free and fair trade, delivering strategic and economic benefits to the United Kingdom.

This agreement in principle on a free trade deal is a win-win for two natural trading partners. It is tailored to the UK’s strengths, slashes tariffs on our exports and deepens access for British businesses. Our like-minded democracies will now unite to take on great global challenges such as climate change while harnessing opportunities such as digital trade. A UK-New Zealand free trade agreement will show what global Britain can achieve as a sovereign trading nation.

This agreement in principle is just one part of our ambitious strategy to deepen trade ties with like-minded partners and ensure that these alliances create a more predictable, free and fair framework for British businesses. Free trade is not something to be frightened of or to run away from. We want to be working with allies to influence the rules of the game and, in today’s world, FTAs are the vehicles by which those rules are shaped.

This deal will be a modern partnership for the 21st century: two staunch democracies working together to meet global challenges from climate change to the future of digital trade. Together we will embrace the opportunities of the global marketplace to support jobs, enterprise and wealth creation. We will fuel our recovery from the covid crisis through free trade and demonstrate that it is part of the solution to the greatest challenges of our time. That is what this agreement in principle represents, and I commend this statement to the House.

I thank the Secretary of State for advance sight of her statement. While there is much to digest from last night’s agreement, I hope she will forgive me if, in the short time that I have, I focus on the impact of the deal on our farming communities.

As I have already mentioned today, according to the Government’s own forecasts, this deal will lead to reductions in growth and jobs in the UK’s farming sector because, as the scoping paper says,

“New Zealand producers may be able to supply UK retailers and UK producers at lower cost relative to domestic producers.”

In those circumstances, any other Government would normally keep in place quotas to stop their farmers from being undercut, but, just like with the Australia deal, our Government have set those quotas so high as to be utterly meaningless. In year 1 of this new deal, New Zealand can export four times as much lamb as it did last year before any tariffs kick in; it can export more butter to Britain than it has done in the past six years put together before facing a single tariff; and it can export 25 times more beef, entirely tariff-free, as it can right now with a 20% tariff. For all practical purposes, this deal therefore gives us unlimited, tariff-free trade from New Zealand to go with unlimited, tariff-free trade already agreed with Australia, confirming this as the precedent that every other major exporter will now expect to follow. Not just that, but we are eliminating the tariffs on dozens of products from Australia and New Zealand that fall well short of our domestic welfare standards. This includes our domestic restrictions on antibiotics, whose production is doing huge damage to the environment.

These are bad deals for our farming industry. They will undermine the competitiveness of our farmers and the standards that they are required to maintain. In other words, these deals are exactly what the Trade and Agriculture Commission was established to prevent. That brings me to the appointment of the new TAC members confirmed by the Secretary of State earlier and to the written ministerial statement, which the House has just received, containing her response to the TAC report, seven and a half months after it was submitted.

There are two crucial issues at stake in those announcements, and they are inextricably linked to the deals with Australia and New Zealand. The first concerns the TAC’s recommendations to establish a national framework of standards covering food safety, animal welfare and the environment, and to use that framework to determine which imports from Australia and New Zealand should benefit from the elimination of tariffs. We know that that recommendation is entirely feasible and entirely practical, because DEFRA Ministers are currently consulting on applying exactly the same principle when it comes to labelling food products for their impact on animal welfare. Their consultation proposes a clear distinction between

“baseline UK welfare regulations which UK farmers are required to meet”

and “imports of lower welfare” that are undercutting our farmers.

May I ask the Secretary of State three questions? Why has she rejected the recommendation on the use of a standards framework to determine the scope of tariff reductions? Can she confirm that, as a result, a number of products described by DEFRA as “imports of lower welfare” will have their tariffs reduced under the deals with Australia and New Zealand? Can she explain why it is possible to differentiate on standards when it comes to labels placed on imports, but not on the tariffs they face?

The second fundamental issue is around the role of the TAC in relation to Australia and New Zealand. Members of Parliament, the media, the public and, most of all, our farming communities were repeatedly promised last November that the new TAC would provide Parliament with an assessment of every trade deal for how it would affect the competitiveness of UK farmers and whether it would undercut the standards they are required to meet. No matter how that role was defined in statute, we all know what we were promised. If the new TAC is not going to assess these two trade deals in that way, not only is that utterly shameful, but it will turn the TAC into a total waste of time.

I hope the Secretary of State will honour those promises, because if we ever needed a better illustration of why we need the TAC to perform that role, we have it in the deals agreed with New Zealand and Australia. That is why it is more vital and more urgent than ever that the new TAC should be able to do the job that the House was promised and act as the voice of the farmer when it comes to passing verdict on these two new deals. I ask the Secretary of State again: will she let the TAC do its job?

I will do my best to answer the right hon. Lady’s questions. We are really pleased. The deal is really balanced and brings lots of exciting opportunities for our businesses and our consumers. We will see customs duties on 100% of tariff lines for originating products removed. The UK will eliminate tariffs on 96.7% of tariff lines on the day the FTA comes into force, and New Zealand will eliminate 100% on the day the FTA comes into force.

On beef, the UK will remove duties after 10 years, and the quota volume will increase in equal annual instalments to ensure that the markets can stabilise and grow as required. To the right hon. Lady’s point about the increase in sheepmeat capacity, the interesting thing with New Zealand is that it already has a much larger World Trade Organisation quota that it does not use with the UK because, as we discussed earlier, it has the opportunity to sell many of its meat products into the Asian markets, where it gets high prices. We are therefore not expecting New Zealand to use these quotas in these early years, but we look to the opportunity for us to work for mutual benefit. For butter, full liberalisation will be over a five-year period, and it is similar for cheese.

This is a really exciting deal, and not only for the food and agriculture sector. There is a huge amount of opportunity for our businesses, looking at the digital space in particular and service provision. I reiterate—we will keep saying it until the Opposition are willing to be comfortable with it, if required—that we will never compromise standards for food coming into the UK. I had an interesting conversation with a farmer just last week, who was perhaps more forward-thinking than some Opposition Members. As we have different pests and different soil types, the sorts of products used in other countries may be different, but that does not mean that the quality, standard or welfare is lower. We will always be clear that we will not accept the lowering of standards. We appreciate that different countries have to manage their climatic and environmental situations in different ways, so that will continue to be the case.

I am pleased that the right hon. Lady has seen the written ministerial statement just put out by the Department on the TAC response and the launch of the new Trade and Agriculture Commission, which will be independent. It will have the opportunity to scrutinise all those free trade deals as they come forward, including, in the first instance, the New Zealand and Australia deals, once we have brought them to a full signed conclusion.

I welcome my right hon. Friend’s statement, in particular her reference to encouraging small businesses and the opportunities that the deal provides for them. Will she ensure that her Department focuses on small and medium-sized businesses and encourages them to enter the export market? On a wider point, prior to our misguided decision to join the European Community, we had good trading relationships with New Zealand, Australia and the wider Commonwealth. Will she assure that House that she will do everything possible to extend deals with our Commonwealth friends?

I thank my hon. Friend for his encouragement of the work that we are doing. In order to support and assist small and medium-sized enterprises, we want to champion their great products and services more widely than in the UK. Only a small proportion of businesses that could export, do so, and we are keen to ramp that up and give them support.

The export support service that was launched on 1 October supports businesses that are thinking about or are already exporting to the EU. We look to grow that as the service embeds. We also have the Open Doors campaign, which is an opportunity to help champion some of the fantastic UK goods and services that exist. We will continue to grow that too.

I charge all Members to come and talk to us about businesses in their constituencies and issues that they want us to champion as we go around the world and have the opportunity. In Commonwealth countries, there is much potential for mutual bilateral trade, so Members should help us to make sure that we are opening those doors for them.

I have looked hard to try to find something to welcome, so let me start with a positive: we welcome the promotion of trade in environmental goods and services, although naturally the detail will need to be reviewed.

The UK Government’s assessment shows that an FTA with New Zealand would bring zero benefit and, indeed, could lead to a contraction in GDP. The Under-Secretary of State for International Trade, the hon. Member for Finchley and Golders Green (Mike Freer) talked earlier about timescales and giving it time, so can the Secretary of State tell us how long it will take for this deal to make up even 0.5% of the 14% drop in Scottish food and drink exports to the EU ?

Ministers have clearly shown that they need help in understanding Scotland’s trade, so will the Secretary of State ensure that the Scottish Government are involved in the detail of the agreement? Bilateral trade has important impacts and implications for services, so given the sector’s importance to Scotland, it is vital that the Scottish Government are also involved in those details.

The deal, as it stands, provides protections for meat imports only by phasing reductions to zero, which is opposed by the National Farmers Union. Will the Secretary of State look to build further protections into the agreement, such as tonnage quota systems and percentage controls? According to the Government’s figures, the deal will cut employment in our farming communities, but for what—possibly about £112 million? That is about half the cost of the Prime Minister’s new yacht. Is that really a good deal?

Some of our most fantastic brands and products come out of Scottish businesses and all the trade deals that we are putting together and negotiating have some of those at the top of our call list. We want to make sure that that continues by opening up more markets, which will provide opportunities for fantastic Scottish whisky, amazing Scottish beef and many other products, many of which are green products that are helping to solve some of the climate challenges that we all face. We want to make sure that those businesses can export not only to our EU partners but more widely, and we want to see that grow.

Built into the New Zealand agreement in principle are a clear set of quotas that grow over a number of years to ensure, on the hon. Gentleman’s point, that we can see those changes in imports work well with our own commerce. As I make new trade deals, I want to ensure that our farmers are finding new markets for their products. We are seeing, as I mentioned in my statement, a growth in markets across Asia, where the call for high-quality produce is growing by the year, and we want to make sure that our farmers and our businesses are part of that success.

May I use this opportunity to welcome my right hon. Friend to her place? I wish her all success, and I welcome this statement. Many of my constituents are deeply concerned about climate change. Could the Secretary of State outline how this new free trade agreement will promote our efforts to tackle climate change as well as growing our respective economies?

As I said earlier, it is absolutely critical to this Government that, as we find ways to grow our businesses and grow our economic growth, we also, right alongside, continue to champion, as we are with the presidency of COP26, the solutions that we all need to find to meet that climate challenge. This is a really exciting free trade agreement in which there is a very strong environment and climate change chapter, where we set out very clearly our mutual commitment to the Paris agreement and all that goes with that, and the challenge of keeping 1.5° C alive. For all our constituents, we should have confidence that that mutual support for meeting that challenge is absolutely embedded in this deal. We will have the opportunity, as our innovators and our businesses come up with new solutions, to take those goods and services to New Zealand with no tariff limitations.

Cambridge people care deeply about the quality of their food, and they will want to know that anything imported is produced to our high standards. I listened closely to the Secretary of State’s response to my right hon. Friend the Member for Islington South and Finsbury (Emily Thornberry), and she did not address the question of the framework standards suggested by the previous Trade and Agriculture Commission. So can I ask her again: will the Government be adopting that framework or not?

As I have said, we recognise the importance that both countries attach to high welfare standards. New Zealand and the UK have committed together to a specific chapter on animal welfare reaffirming those key points about food production. Indeed, to the hon. Gentleman’s point, we will absolutely ensure always that goods coming into the UK do not fall below the standards that we set and that we want to ensure for the safety of our constituents.

I congratulate my right hon. Friend on achieving this agreement in principle. Can I assume that it follows very similar lines to the agreement with Australia, so that we can have full triangulation for the UK with Australia and New Zealand, between whom there is already a unique relationship in their trade? Could she explain how this will assist and help in an even further expansion of free trade for this country through the CPTPP accession negotiations?

My hon. Friend raises a really important point. We have submitted our application to become a member of the CPTPP, which is a group of 11 countries that work together with a free trade agreement. We are the first new member to apply, and we are presently going through what I can only describe as an exam process as our legislative requirements are tested against its framework. It is incredibly important. New Zealand and Australia are two key partners within the CPTPP, and in having these two first free trade agreements with them, we are setting out very clearly what is important to us. As I say, with this New Zealand agreement today, we are setting out all the areas that are really critical to us and indeed to our businesses. It shows the importance that we will continue to give to what free and fair trade means. It is ensuring that our businesses are working in a fair and competitive environment so that they can sell their fantastic produce. I have the fantastic challenge and joy of being able to share that across the world. I am making sure that, as we look to that CPTPP market, through these first two trade deals we are setting out our important and, indeed, great offer.

Taking a piecemeal approach to trade agreements is having an impact in many sectors, but especially for farmers. What assessment have the Government made of the cumulative effect of all these free trade agreements on sectors such as farming?

The cumulative effect of more and more free trade deals is the opportunity for our fantastic businesses that provide goods and services to reach many more markets. The huge growth in population, and wealthier communities across Asia in particular, are markets that we want our businesses to have every opportunity to access, because we believe that our products are some of the best in the world.

I congratulate the Department and the Secretary of State on this announcement. I chair the all-party group for small and micro business, so will the Secretary of State set out what the trade deal means for small and microbusinesses, which are the backbone of our country, including in my constituency of Meriden?

Our small and medium-sized businesses, and indeed our micro, small and medium-sized businesses—known as MSMEs if said quickly—make up 95% of the backbone of our businesses. At the G20 trade talks last week, we discussed that area in some detail, because all nations across the G20 know that a business might be a microbusiness this year, but in 10 years’ time it could be a major business in any of those economies. As we build these trade deals, we want to ensure that things such as reductions in tariffs and the opening up of digital trade, mean opportunities for our small businesses today, so that they have the opportunity to become great trading businesses of the future.

The Secretary of State has a beautiful north-east constituency, and she knows that, like many of my constituents, I take great pleasure in the gorgeous north-east landscape with its wild hills and beautiful coastline. That is a consequence of small-scale farming, with high standards of animal protection, environmental protection, and sustainability. What does she say to north-east farmers who are facing huge levels of unfair competition from massive increases in New Zealand imports to this country? Will she guarantee that not one north-east farmer will fail as a consequence of this agreement?

The hon. Lady and I agree that Northumbrian lamb is, without a doubt, best in the world, and I am happy to say that to any New Zealander who wants to take me on and challenge me. We have meat imports from the EU that are much greater than those we now receive from New Zealand, and they will continue to be. As I have said, New Zealand has not taken up its quotas already, and I am not at all concerned that the high quality produce made by Northumbrian farmers, or indeed in any other part of our wonderful UK, will be put at risk. We are selling some of the best quality produce in the world, and that will continue to be the case. As we make new free trade deals, we will open up more markets for farmers to use.

I congratulate the Secretary of State on the agreement reached with New Zealand. She will know that Warrington has some of the finest gin production anywhere in the world. What will this agreement mean for small spirit producers in Warrington?

I did not know that Warrington was the centre of gin, but now I have discovered that I will have to go and visit as soon as possible. The trade deal strips away tariffs on all goods with rules of origin, and clearly a producer of Warrington gin, which absolutely is a Warrington gin, will have the opportunity to take their goods to market in New Zealand without tariffs. I look forward to championing Warrington gin, and all other forms of British gin.

I have not tasted gin-soaked lamb recently, so I am not quite sure what it tastes like, but that is by the way. What discussions have taken place with Ministers in the Department for Agriculture, Environment and Rural Affairs at the Northern Ireland Assembly to assess the impact on and benefits for Northern Ireland agriculture from this new deal? What protections are in place for our farming sector, to ensure that it continues to produce the high quality, ethically raised food that our Northern Ireland farmers within the United Kingdom produce on a daily basis?

My ministerial colleagues and I have regular discussions with our counterparts in all the devolved nations, and I know that such conversations went on with Ministers yesterday to really get a sense of, and to encourage, the exciting opportunities that now exist with the agreement in principle. As we move from this stage to finalisation—this is where it gets complicated, with pages and pages of legal text, and lawyers are required—there will be refinement to ensure that all those nations have their concerns and, indeed, the important issues that they want raised, crystallised into the final deal.

I thank my right hon. Friend for her work on the agreement, and for the particularly good news about sauvignon blanc. Will she please say a little more about the effect on manufacturing businesses and jobs, particularly in the north of England? What support may be available for those businesses that want to take advantage of the agreement and export to New Zealand?

I think many of us will be excited at the reduced price, potentially, of our glass of New Zealand wine of an evening. This goes in both directions. We will want to champion the opportunities for small businesses across our constituencies, and the Department is there to support and guide. We now have not only trade and investment hubs here in the UK but both trade commissioners and great trade envoys. I know that they will help us to champion the great businesses we have here to ensure that they are known and loved, and become part of the landscape of New Zealand’s markets.

The National Farmers Union of Scotland has just released a statement expressing great anger over this latest trade deal, describing it as

“merely a slow journey to allow New Zealand…unfettered access to food and drink UK markets.”

The Government keep saying that high food and environmental standards in the UK will continue for UK-produced goods, apparently failing to recognise, if I am being generous, that farmers will be forced to reduce those standards when they are competing against tariff-free goods produced to lower standards in countries such as Australia, New Zealand and, as those trade deals have set a precedent, all the other countries to follow. The National Farmers Union of Scotland sees that very clearly. Will the Secretary of State at least acknowledge its concerns and recognise that as a possibility?

The UK has some of the finest standards in the world, and indeed some of the finest produce, which is exported with great success across the world. As our landmark Environment Bill comes through and work continues to set out the new frameworks to support our farming communities since we have left the common agricultural policy, we will be working hand in glove with all our farming communities to ensure that they have the support and the drive to be successful 21st century farming businesses that are able to take up the opportunities that all the free trade deals—not only those with Australia and New Zealand but all those to come—will bring to take their great products into markets across the world.

Diolch, Madam Deputy Speaker. I am sure that the Secretary of State will be aware of similar concerns expressed by the agricultural unions in Wales overnight and this morning in the light of the agreement in principle. Given that the Government’s own analysis suggests that the number of people working in agriculture may be negatively impacted by this deal, I think those concerns are well founded. May I ask her, quite simply: how will Ceredigion farmers benefit from this deal?

Farmers will have the opportunity to reach out and share their wares more widely; that continues to be the case. I continue to proffer reassurance that New Zealand already has an enormous WTO quota, which it does not use with the UK because it exports a lot of its sheepmeat to Asian markets. Indeed, much of the EU imports that come into the UK are balanced easily by the fantastic British produce that comes from our Northumbrian and Welsh farmers—and, indeed, any other of our farmers, but we have a very strong voice for those two farming communities in particular. I reassure hon. Members that giving our farmers opportunities to reach out and build new relationships and new trading routes is our great passion, and we will continue to do that in the Department.