Committee (3rd Day)
Relevant document: 15th Report from the Constitution Committee
My Lords, good afternoon. The hybrid Grand Committee will now begin. Some Members are here in person, respecting social distancing, and others are participating remotely, but all Members will be treated equally. I must ask Members in the Room to wear a face covering except when seated at their desk, to speak sitting down, and to wipe down their desk, chair and any other touch points before and after use. If the capacity of the Committee Room is exceeded, or other safety requirements are breached, I will immediately adjourn the Committee. If there is a Division in the House, the Committee will adjourn for five minutes.
A participants list for today’s proceedings has been published by the Government Whips’ Office, as have lists of Members who have put their names to amendments or expressed an interest in speaking on each group. I will call Members to speak in the order listed. Members are not permitted to intervene spontaneously; the Chair calls each speaker. Interventions during speeches or “before the noble Lord sits down” are not permitted.
During the debate on each group I will invite Members, including Members in the Grand Committee room, to email the Clerk if they wish to speak after the Minister, using the Grand Committee address. I will call Members to speak in order of request and will call the Minister to reply each time. The groupings are binding and it will not be possible to degroup any amendments for separate debate. A Member intending to move formally an amendment already debated should have given notice during the debate. Leave should be given to withdraw amendments.
When putting the Question, I will collect voices in the Grand Committee Room only. I remind Members that Divisions cannot take place in Grand Committee. It takes unanimity to amend the Bill, so if a single voice says “Not Content” an amendment is negatived, and if a single voice says “Content” a clause stands part. If a Member taking part remotely intends to oppose an amendment expected to be agreed to, they should make this clear when speaking on the group.
We will now begin. In Grand Committee in person you do not need to unmute the microphones: the microphones are working, so when I call you, just start to speak.
Clause 2: Implementation of international trade agreements
Debate on Amendment 17 resumed.
It is a pleasure to speak to Amendment 17 and open the batting on a group of amendments on dispute resolution. Put shortly: Amendment 17 opposes investor-state dispute settlement arrangements —ISDS; Amendments 43, 44 and 52 seek to constrain it; Amendment 91 deals with tax matters; and Amendment 94 deals with disputes between state parties.
Amendment 17 is intended to prevent regulations permitting ISDS in the agreements, envisaged by Clause 2, which the Government are negotiating to replace existing EU agreements. Existing EU agreements are listed in the Library briefing. Some of them include ISDS; others do not.
The new agreements will differ from the existing EU agreements, not least by making the UK a party. There will be other modifications too, as explained in paragraphs 37 and 38 of the Explanatory Notes. The Bill envisages modifications. It does not require replication of the content of EU agreements—contrary to the Minister’s comment last Tuesday. Amendment 17 seeks, in the new UK agreements, modification of the content of existing EU agreements by the exclusion of ISDS where those agreements provided for it and its non-inclusion where EU agreements did not.
ISDS is often found in international trade agreements. Where it exists, it is wholly objectionable. ISDS has the power to override the supremacy of Parliament, to defeat the rule of domestic law, and it discriminates on grounds of nationality. Far from taking back control, as the noble Baroness, Lady Bennett, pointed out in our last sitting, ISDS is the surrender of control.
The inclusion of ISDS in the then proposed EU-US trade deal, TTIP, was the principal reason for 3 million signatures—half a million of them in the UK—on the petition against it. The legitimacy of ISDS in EU agreements is now in doubt. The judgment of the Court of Justice of the EU in Slovak Republic v Achmea on the Netherlands/Slovakia trade agreement, held that ISDS has an adverse effect on the autonomy of EU law and is therefore incompatible with EU law. This is an EU judgment we should follow.
ISDS is a mechanism whereby a corporation of one state party to the FTA can bring a claim for compensation against the other state. That sounds fine, until one appreciates that such claims are not brought in the courts of either state, nor under the laws of either state. ISDS is a system of arbitration usually conducted in secret. The usual basis for claims is that the accused state has failed to ensure “fair and equitable treatment” or has expropriated some asset of the investing corporation. Such claims are not open to any but foreign corporations. The claim is not that the host state has breached the law of the land but usually the converse: that domestic law has caused the foreign corporation loss of hoped-for profits.
Take the Philip Morris case, referred to by the noble Earl, Lord Caithness—
My Lords, we are having some technical difficulties online. A number of our colleagues who are participating remotely cannot hear you as well as we can in the Room. If we cannot resolve it in the next minute or two, I will adjourn the Grand Committee for five minutes, until 2.42 pm. I apologise to the noble Lord, Lord Hendy, but it is more important that people online hear his comments.
My Lords, the Grand Committee is resumed. We now resume debate on Amendment 17. I apologise to the noble Lord, Lord Hendy, for having to call on him to start again from the beginning. We have now resolved the technical difficulties so, from the top, the noble Lord, Lord Hendy.
No apologies are needed. It is a pleasure to speak to Amendment 17 and open the batting on a group of amendments on dispute resolution. Put shortly: Amendment 17 opposes investor-state dispute settlement arrangements—ISDS; Amendments 43, 44 and 52 seek to constrain them; Amendment 91 deals with tax matters; and Amendment 94 deals with disputes between state parties.
Amendment 17 is intended to prevent regulations permitting ISDS in the agreements, envisaged by Clause 2, which the Government are negotiating to replace existing EU agreements. Existing EU agreements are listed in the Library briefing. Some of them include ISDS; others do not. The new agreements will differ from the existing EU agreements, not least by making the UK a party. There will be other modifications too, as explained in paragraphs 37 and 38 of the Explanatory Notes.
The Bill envisages modifications. It does not require replication of the content of EU agreements—contrary to the Minister’s comment last Tuesday. Amendment 17 seeks, in the new UK agreements, modification of the content of existing EU agreements by the exclusion of ISDS where those agreements provided for it and its non-inclusion where EU agreements did not.
ISDS is often found in international trade agreements. Where it exists, it is wholly objectionable. ISDS has the power to override the supremacy of Parliament and to defeat the rule of domestic law, and it discriminates on grounds of nationality. Far from taking back control, as the noble Baroness, Lady Bennett, pointed out, ISDS is the surrender of control.
The inclusion of ISDS in the then-proposed EU-US trade deal, TTIP, was the principal reason for 3 million signatures—half a million of them in the UK—on the petition against it. The legitimacy of ISDS in EU agreements is now in doubt. The judgment of the Court of Justice of the European Union in Slovak Republic v Achmea on the Netherlands/Slovakia trade agreement held that ISDS has an adverse effect on the autonomy of EU law and is therefore incompatible with EU law. This is an EU judgment that we should follow.
ISDS is a mechanism whereby a corporation of one state party to the international trade agreement can bring a claim for compensation against the other state. That sounds fine until one appreciates that such claims are not brought in the courts of either state, nor under the laws of either state. ISDS is a system of arbitration usually conducted in secret. The usual basis for claims is that the accused state has failed to ensure “fair and equitable treatment” or has expropriated some asset of the investing corporation. Such claims are not open to any but foreign corporations. The claim is not that the host state has breached the law of the land but usually the converse: that domestic law has caused the foreign corporation loss of hoped-for profits.
Let us take the Philip Morris case, referred to by the noble Earl, Lord Caithness, and the noble Lord, Lord Lansley. The Australian Parliament passed legislation requiring plain-paper packaging for cigarettes. Philip Morris challenged the legislation on constitutional grounds. It failed at every level, including in the High Court of Australia. It then transferred ownership of its Australian companies to a subsidiary it had set up in Hong Kong so as to enable an ISDS claim under the Australia-Hong Kong trade agreement. The claim failed, but only because the transfer of ownership of the companies to Hong Kong post-dated the activity giving rise to the claim.
At Second Reading the Minister rebutted my charge that ISDS could overrule the sovereignty of Parliament. He said that ISDS could not overturn the law but could only award compensation. I was loose in my language and he was precise in his. I should have said that ISDS can override the sovereignty of Parliament and domestic law. How so? By the chilling effect of compensation claims: compensation so eye-wateringly huge that Governments tremble.
Most ISDS proceedings are secret, but of the 1,023 claims known to the UN Conference on Trade and Development, the extent of the claims is known in 710. No less than 104 of them—nearly 15%—are claims in excess of $1 billion. They include: Yukos Universal v Russia, with $4.1 billion claimed and $1.8 billion awarded; Cementownia v Turkey, two claims, for $4.6 billion and $4.8 billion; Tethyan Copper v Pakistan, $8.5 billion claimed; Generation v Ukraine, $ 9.4 billion claimed; Eureko v Poland, $10 billion claimed, $4.4 billion awarded; Libananco v Turkey, $10 billion claimed; Mobil v Venezuela, $14.7 billion claimed, $1.6 billion awarded; International Project Group v Egypt, $15 billion claimed; Veteran v Russia, $18.7 billion claimed, $8.2 billion awarded; Conoco Phillips v Venezuela, $30.3 billion claimed, $8.4 billion awarded; and, finally, Hulley v Russia, $91.2 billion claimed and $40 billion awarded.
Noble Lords might take the view that the benefits to UK companies of using ISDS against states like, say, Vietnam, outweigh the prospect of Vietnamese companies using ISDS against the UK. But global corporations have subsidiaries everywhere. The UK will not be immune. For example, a UK agreement with Canada is sought to replace CETA. Canadian companies have not been reluctant to use ISDS. Cases include: Apotex v USA, with $1.5 billion claimed; Canacar v USA, $5.3 billion claimed; and Transcanada v USA, $15 billion claimed.
Other developed and democratic states have also been on the receiving end. Philip Morris was against Australia. The noble Baroness, Lady Sheehan, mentioned Eli Lilly v Canada—a claim for a mere $0.5 billion. The two claims in Vattenfall v Germany, for $5.14 billion and $1.4 billion, were for loss of profits caused by German legislation phasing out nuclear power.
Eli Lilly and Vattenfall highlight the anti-democratic nature of ISDS claims. My noble friend Lord Bassam mentioned the challenge to public re-ownership of the Lisbon metro. We might consider also Levy v Peru and Cossigo v Colombia, with claims of $41 billion and $16.5 billion respectively for denial of mining opportunities because nature reserves were established; Maersk v Algeria, with $3 billion claimed for taxing oil profits; and KHML v India, with $1.4 billion claimed for the adverse impact of a judgment of the Supreme Court of India—echoes of Philip Morris.
Some of these claims are pending, some are without merit, some are inflated and many more are “outcome unknown”—but the chilling effect on democratic Governments is obvious. Why then invite such threats against our own? Regulations must not permit this repugnant mechanism, which gives foreign corporations the power to threaten our Parliament and override the laws and courts of our country—a mechanism denied to our citizens. I beg to move.
My Lords, the Covid-19 pandemic has shone a spotlight on unacceptable working conditions, especially those endured by many key workers, and on some of the downsides of globalisation—job insecurity, zero-hours contracts, unfairly poor pay, discrimination and lack of recognition—and it is a pleasure to follow my noble friend Lord Hendy’s very able and expert moving of Amendment 17.
The Covid-19 pandemic has emphasised the significance of employment laws and of gaps in international trade agreements, notably the inadequate protection of labour standards and the woeful lack of requirements that contractors for public sector work should abide by ILO conventions ratified by the UK. Ministers have been keen to distinguish between trade deals rolled over from pre-existing EU trade agreements and new deals yet to be struck independently of the UK. The focus of the Trade Bill is on the former, but if these are to be the foundations for future UK trading relationships in the post-Brexit period, they hardly look secure: far from it. Instead, the Bill is full of holes.
This amendment seeks to fill in some of those holes. It guards against regulations implementing any trade deal that permits investor-state dispute settlement arrangements that expose democratically decided laws to potential threat from foreign companies claiming billions in compensation for supposed losses. My noble friend Lord Hendy spelled out examples and I will add two others. These are not hypothetical threats. Canada has been sued for a moratorium on fracking in Quebec, and Mexico for attacks on sugary drinks to fight diabetes. The amendment will also prevent trade deals that contravene international standards of labour law, such as ILO conventions to which the UK is committed and articles of the European Social Charter, ratified by the UK.
Succeeding in global markets today demands more than matching your competitors’ prices. It means setting fresh standards of product quality and providing unparalleled levels of customer service. That can be done only by adopting world-class ways of working and by treating your workforce with respect for the standards set by ILO conventions. For the life of me —I mentioned this when I last spoke in this Committee—I do not understand why the Government are not accepting these amendments, unless they have an entirely different deregulated, low-labour-standards, low-tax, Singapore-on-Thames agenda for Britain. So I hope that the Minister will reassure us on that point when he replies.
My Lords, I am pleased to speak on Amendment 17, to which I have added my name.
While the history of trade negotiations may not be completely littered with the fragments of failed attempts, it is certainly the case that the Transatlantic Trade and Investment Partnership, TTIP, failed, after several years of negotiations, to come to any conclusion. In Britain, much of the opposition was on the basis of the perceived—and I believe very real—threat to our NHS: the threat that the NHS would not survive as a public service and that the writ of privatisation would run ever more unchecked. I was pleased to hear a most eloquent speech from the noble Lord, Lord Patel, offering a catalogue of already privatised and outsourced elements from our NHS, and, significantly, pointing out the dangers that this posed.
Equally, the opposition to TTIP, not just in Britain but across Europe, focused, as my noble friend Lord Hendy said, on the investor-state dispute settlement mechanism—ISDS. My noble friend gave chapter and verse on the reasons for opposing ISDS. I concur with his remarks and associate myself with those of my noble friend Lord Hain.
Let me add a perspective from the United Nations, specifically from the United Nations Conference on Trade and Development. As the Committee might expect, ISDS features in UNCTAD reports. In May of this year, we find the following in one of its reports:
“Foreign investors have used ISDS claims to challenge measures adopted by States in the public interest (for example … to promote social equity, foster environmental protection or protect public health)”—
all issues close, I am sure, to the hearts of many in this House. The report goes on:
“Broad ISDS mechanisms typically used in old-generation”
international investment agreements
“provide for the contracting parties’ advance consent to international arbitration and are characterized by broad scope, few conditions for investors’ access to ISDS and a lack of procedural improvements. As ISDS is at the heart of the IIA reform process, in recent IIAs countries have carefully regulated ISDS and at times omitted it”
UNCTAD goes on to make a number of recommendations, but I shall confine myself to this one:
“Replacing ISDS by settling disputes in domestic courts and/or through State-State dispute settlement”.
In July, UNCTAD returned to the question and said:
“Policy responses taken by governments to address the COVID-19 pandemic and its economic fallout could create friction with existing IIA obligations. This highlights the need to safeguard sufficient regulatory space … to protect public health and to minimize the risk of”
There are huge problems with the ISDS mechanism, from Philip Morris to the Portuguese metro and so many more. It would therefore be wise for the Government to heed the words of the United Nations—but, more so, to heed those of my noble friend Lord Hendy. ISDS should have no place in our future trade arrangements. I will listen extremely carefully and with great interest to the response from the Minister.
My Lords, I will speak to Amendments 43 and 44, which again deal with dispute resolution. In a way, these amendments need to be seen together, because Amendment 44 is perhaps a patch on the current system, while Amendment 43 takes us forward towards a resolution so that we can structure a suitable mechanism for dispute resolution under trade agreements.
Amendment 44 requires that legal proceedings against the UK under an ISDS would be heard in the UK courts. Essentially, it picks up the point made by the noble Baroness, Lady Blower, that one of the recommendations of dealing with the most egregious aspects of ISDS is to throw the issues back into the domestic courts. It provides a patch that would help us get through this immediate set of problems, because suddenly transparency, fairness and respect for domestic law come into the picture.
I am not going to repeat all the arguments already made very powerfully by the noble Lords, Lord Hendy and Lord Hain, and the noble Baroness, Lady Blower, about the flaws in ISDS. I think we can all accept that it is generally regarded as unfit for purpose in a modern, complex economy, with trade agreements that now cover so many issues. We probably all share the concern that rolling over existing ISDS in continuity agreements is generally very undesirable because it sets such a clear precedent for using ISDS again in future trade agreements. I think we all have a particular eye on the US FTA negotiations and are very concerned about ISDS provisions appearing in that.
Let me turn to Amendment 43, which in some ways is more interesting. We need a dispute resolution system for trade agreements that is genuinely unbiased, transparent and, importantly, includes rights of appeal. Amendment 43 would require trade agreements to include a commitment by all parties to pursue a multilateral investment tribunal and appellate mechanism to adjudicate in investor disputes. It seems to me that no agreements should be signed without at least this passage and clause in them, because it takes us forward into the future and toward a resolution of the ongoing ISDS problems.
The European Union is already shifting to just such a multilateral court system. The investment court system is incorporated into the EU-Vietnam FTA and into CETA, and will fully take effect when ratification of those two treaties is complete. Can the Minister tell us whether an ICS, rather than an ISDS, will be in the UK’s trade deals—essentially, the continuity deals—now being negotiated with Canada and Vietnam? Under CETA, if I may use that as an example of the system I am discussing, the EU and Canada will collectively appoint 15 judges: five from the EU, five from Canada and five third-country nationals. They will hear cases of investor dispute on a rotational basis. The rules ensure transparency of proceedings and unambiguous standards of investor protection, but also limit the grounds on which an investor can challenge a decision made by a state. For example, a challenge cannot be made simply on the grounds that profits are affected.
The EU has made it clear that as it negotiates new trade agreements, but also as it rolls over existing FTAs as they expire, it will seek to shift to an ICS. That makes Amendment 43 particularly important. The UK should not be left behind with a dysfunctional ISDS system when the EU, in otherwise similar deals, has the benefit of an ICS. The EU’s long-term goal is to go beyond bilateral arrangements and achieve a genuine multilateral tribunal or court system covering many, if not all, FTAs. It is in many ways modelled on the WTO, but in a much more effective way. The UK historically has argued for such a system. Can the Minister tell me if this has changed?
If the Minister tells me that he is going to insist on moving towards a genuine multilateral tribunal or court system, I need to warn him that it will anger the United States, which at this moment is doing everything it can to scupper the WTO dispute resolution system by refusing to allow the appointment of new judges to the WTO’s appellate body. The WTO settlement system continues only because the EU, along with 16 other countries, has devised a workaround. That is not sustainable in the long term. We really need to hear from the Minister what position this Government are taking, because at present we have a wholly unsatisfactory state of affairs.
My Lords, I offer a gentle reminder that all mics in the Grand Committee are live at all times. If everyone’s mobile devices could be on silent and their notifications muted, it would be greatly appreciated.
My Lords, in the light of the way we have spent much of the past hour, I begin by recording my thanks to the members of your Lordships’ House’s staff who have been extraordinary in their patience and calm with the technical difficulties that we have all suffered. They have held everyone’s hand and been wonderful under fire.
It is my absolute privilege to follow the speeches we have just heard, particularly those of my noble friends Lord Hendy, Lord Hain and Lady Blower. I have lent my name to Amendment 17, drafted by my noble friend Lord Hendy. But before I speak to it, I will make a preliminary point of law that is relevant not just to Amendment 17 but to many of the amendments that your Lordships have discussed during these many hours of debate in Grand Committee, which I have had the delight of listening to very closely.
In the community and in the country at large, it is understood that it is dangerous to pontificate about the law and give legal advice without a certain level of qualification. That is so well understood that the profession is regulated and there are tight legal limits. That cannot be the case in the business of legislation, of course, because there is politics and policy on the one hand and the law on the other, with the journey—the process of legislation—in between. So, although I think that dinner-table lawyers are almost as dangerous as armchair medics or epidemiologists, I do understand that making claims about the law during legislative debates is sometimes an occupational hazard.
Your Lordships’ House is criticised in many quarters, but one thing that can often be said of it is that it contains a great many experts who contribute expertise from different areas of life and practice to the business of scrutinising legislation. My noble friend Lady Blower mentioned the noble Lord, Lord Patel. I do not think that she is alone in having benefited from his contributions, from a medical and public perspective, to your Lordships’ Grand Committee.
Of course, my noble friend Lord Hendy, who drafted Amendment 17, has been a practising barrister for 48 years—he will forgive me for pointing this out—working in particular as a labour lawyer but also on legislation and legal disputes, and he has spent 33 of those years in silk as one of Her Majesty’s Queen’s Counsel. So noble Lords can imagine that he would not have drafted an amendment to the Bill if it were outside the scope of the Bill; or, if he had, or if other noble Lords had drafted amendments that were beyond the scope of the Bill, the amendments would not be entertained in this way. They would not appear on the Order Paper and your Lordships would not have been asked to waste so many hours debating them.
That brings me to my preliminary point of law. In the many hours of Grand Committee that I have listened to in recent days, I have heard claims made, at times by the Minister and at times by some of his noble friends, notably the noble Lord, Lord Lansley, and others, suggesting that various amendments trying to restrict the vires of the regulation-making powers in this Bill are somehow beyond the Bill’s scope, or are irrelevant, or would clutter up the statute book—that was one comment I heard—or are otherwise inappropriate because they seek erroneously and improperly to clip the Executive’s wings when they are out trying to make trade agreements. That is one argument to the House that has emerged in your Lordships’ Grand Committee. Another argument that has been made is that the amendments completely miss the point of this draft legislation, because this legislation is purely about so-called continuity or rollover trade agreements; therefore, there is no need to place any additional hindrances or fetters on the regulation-making powers in the Bill to implement these rollover or continuity—other similar phrases have been used—trade agreements.
Well, the politics and the policy can come later, but let us be straight about the law here. That is just not correct. As a matter of law, that is not what is provided in the Bill, which allows for trade agreements, albeit with parties that have already been in an agreement with the European Union. They are trade agreements and there are regulations to be made under those trade agreements to implement them. That is the law. That is not spin. That is not politics. That is the law and the effect of this legislation.
Therefore, it is important to pre-empt the comments that will no doubt come from the Minister in due course and point out that it is completely appropriate for your Lordships and this Grand Committee to use amendments that have clearly been ruled as within the scope of the debate to restrain the vires, or the power, to make these regulations: that is, to say that it is perfectly appropriate that the regulation-making powers to implement these trade agreements—whether you call them continuity agreements or rollover agreements or even Charlie—can be constrained. Many amendments attempt to do that.
Your Lordships are perfectly free to say that some of the constraints should not be there as a matter of politics or policy: indeed, to say that we should not protect the NHS, workers’ rights, environmental standards, et cetera. That is fair for political and legislative debate, but in my view it is not okay—it is not straight talking with Members of your Lordships’ House—to suggest that these amendments are somehow beyond scope or inappropriate for debate in this way. I am afraid that, whatever else we are, some of us are lawyers first and last, just like some of your Lordships are distinguished medics, career politicians and so on. That is quite important.
This brings me to Amendment 17, and ISDS in particular. Obviously, this is dealt with with some care and precision in my noble friend Lord Hendy’s amendment, to which I have added my name, but I noted that, during the many hours of debate, other Members of the Committee have spoken to the evils of this system of secret justice, if such a thing is even possible. It seems to me that, whatever our differences in this Grand Committee and in your Lordships’ House, all Members ought to be concerned about ISDS and should seek to rule it out from being implemented by way of regulation-making powers in this Bill. In other words, if there is to be ISDS in future, it should require a new, separate Act of Parliament that can be consulted on and aired publicly, and debated line by line in both Houses of Parliament. All Members of your Lordships’ House, whether they are socialists, Greens, Liberals or Conservatives, ought to be scandalised by ISDS.
What is more, all people in our nations should be alarmed by the practice of ISDS, whether they voted to leave the European Union or to remain. Why? In a nutshell, because this practice prioritises unelected, unaccountable corporations over democratically elected Governments and the people they serve. That is the first reason. The second reason is that, as other noble Lords pointed out, it prioritises foreign corporations over domestic businesses. That cannot be right either.
Finally, all this happens in secret, with the chilling effect on democratically elected Governments that my noble friend Lord Hendy pointed out, to the tune of billions of pounds, dollars or whatever currency you are talking about. That is a terrible constraint to place on democratically elected Governments in Britain or anywhere else in the world. It is a thoroughly scandalous practice and therefore anathema both to parliamentary democracy and the rule of law. Surely we all have those things in common, whatever our views on private and public healthcare or on workers’ rights or environmental protections. We may differ on some of those matters, but surely we can agree about parliamentary democracy and the rule of law.
In relation to other controversial Bills that are enjoying their passage through both Houses of Parliament at the moment, the present Government are very keen to criticise ambulance-chasing lawyers who might, for example, seek to sue the MoD on behalf of veterans—these ambulance-chasing lawyers are getting in the way of good government and people’s interests. It is always a mistake to blame lawyers for their clients. However, it is interesting how the Government take that approach to one class of legal suit and legal practitioner but a rather different approach to those who act in secret for these corporations that attack parliamentary democracy and the rule of law in that way.
This amendment should therefore have universal support. I look forward to hearing the Minister’s response to it. If my noble—and actually very learned—friend Lord Hendy chooses not to divide the Grand Committee today, I will urge him to seek the Minister’s assurance that this amendment will be incorporated into the Government’s own plans on Report and, if that does not happen, I will urge him to divide your Lordships’ House at a later date.
My Lords, I am rather pleased to follow the noble Baroness, Lady Chakrabarti, since it gives me an immediate right of reply. If she looks carefully at the debates last week, which she was listening to, she will find that at no point did I assert that any of the amendments were out of scope—not least because I have put down further amendments myself that are intended to have an impact on the processes for making regulations for trade future trade agreements, and indeed which impact on schemes outwith the text of the Bill. I will come on precisely to that in Amendment 91 in this group.
I say gently to the noble Baroness, Lady Chakrabarti, that the making of law is not solely the province of lawyers. There is a very valued tradition in this House that we bring expertise from a range of different disciplines. As it happens, my discipline—my original training—is that of a civil servant. Some 39 years ago I wrote the instructions to counsel for a major piece of legislation, and just under 10 years ago, as Leader of the House of Commons, I was responsible for Parliamentary Counsel and the scrutiny of legislation brought before the two Houses, and for the structure of the legislative programme. For 40 years I have engaged in the process of legislation. The fact that I am not qualified lawyer in no sense excludes me from making the points that I made.
As it happens, I did not say that anything was out of scope. The point I gently made last week was that quite a number of the amendments we were looking at were intended to influence—
My Lords, I am sorry to stop the noble Lord, but I understand that there are still some problems with hearing. Is that true of other Members of the Committee? No? Perhaps we can resume and see how we get on.
I was making the point that in amendments last week, I was trying to help the Committee. The objective of quite a number of the amendments was to influence the content of future trade agreements, but the effect of the amendments would have applied only to the continuity agreements. We will need to understand that in particular on Report, and to seek in some cases to amend the Bill, and to do so with the effect that people are looking for.
To come back to this group, I spoke on Thursday, I think, about Philip Morris. I will not repeat any of that but will simply say that it gives rise to considerable sympathy on my part about the actions of some companies. However, the absence of investor-state dispute settlement—
My Lords, I am sorry to interrupt the noble Lord again, but there has been a request that he starts his speech again, because quite a lot of it was lost. May I trouble him to start again?
Since I have no text, it will not be the same speech, so if you will forgive me, I will not do that. It will appear in Hansard, and I encourage Members to read it there. In any case, I am now talking about the amendments in this group, as opposed to responding to the noble Baroness, Lady Chakrabarti, which noble Lords can read in Hansard.
On these amendments, I have great sympathy with what the noble Lord, Lord Hendy, was saying. When Philip Morris was frustrated on an investor-state dispute settlement, it effectively used Honduras and the Dominican Republic to use WTO procedures. So the absence of ISDS is not enough in itself—we have to ensure that we are proof against that. In fact, where Australia was concerned, as it happens, the public health exemptions in the WTO were sufficient in the last decision of the appellate body that the noble Baroness, Lady Kramer, regrets the absence of: the last decision it made in June was to uphold Australia’s position. We have to be very mindful of that.
Before I get to my own amendment, I will speak to the others. There is a very legitimate question. Are the Government planning simply to roll over existing EU agreements as they are, including where there are ISDS provisions and including with CETA in due course, where there is an investment court system? I am very interested to know what the Government’s intentions are. Certainly, my expectation is that it will be very difficult to have a continuity agreement while departing substantially from continuity.
As regards Japan, I do not have the text of the UK-Japan Comprehensive Economic Partnership Agreement, but while the EU-Japan agreement encourages mutual investment, Article 8.9.4 of it makes clear that, while market access, national treatment without discrimination and most-favoured-nation status are offered, it says that for “greater certainty”, most-favoured-nation treatment
“does not include investor-to-state dispute settlement procedures provided for in other international agreements.”
I will be very interested to know in due course whether the UK-Japan agreement says the same thing. I know that my friends in Japan take the view that we will not be able to accede to the CPTPP without accepting an investor-state dispute settlement. So this is a very interesting moment in understanding whether we are joining with the European Union in moving away from investor-state dispute settlement, or whether we subscribe to the Japanese view that it remains a legitimate vehicle in international trade agreements.
Amendment 43 proposes a multilateral investment tribunal. I wish that we could use such a process. The Doha round did not accept a multilateral investment provision—the proposal failed. We have bilateral agreements, but while they might be desirable they are not sufficiently widespread to allow us to get to a multilateral tribunal. Putting in legislation a requirement for such a tribunal when people have not yet signed up to one seems heroic.
Amendment 91 is not about investor-state dispute settlement; it is about disputes between states. The best example to have in mind is the dispute between the European Union and the United States. As a result of US action, the dispute reached the point where it was lawful under WTO rules for the EU to apply specific import duties against US exports into the European Union.
The Taxation (Cross-border Trade) Act 2018 relates to this, but why I am talking about a different piece of legislation? The original Trade Bill and the Taxation (Cross-border Trade) Bill were introduced at the same time, at the end of 2017. They were intended to be considered side by side and they cross-refer considerably. In this instance, it is entirely right for us to look at the Taxation (Cross-border Trade) Act and ask whether the parliamentary scrutiny arrangements relating to it are correct. Section 15 of the Act gives the Secretary of State the power to impose through regulations additional import duties as a result of an international dispute—for example, regulations to impose import duties on US exports. That power is exercisable through the negative resolution procedure, but in my view it should be an affirmative resolution procedure—this should be added to the list of affirmative resolution procedures in Section 32 of the Taxation (Cross-border Trade) Act.
The argument in the Government’s Explanatory Notes for using the negative procedure in the great majority of cases where customs duties are imposed is that there are so many such regulations that they have to be made in that way, otherwise they become impractical. That is patently not the case here. In this instance, I encourage my noble friend the Minister to agree that there will be relatively few international disputes that give rise to the imposition of such duties and that, when that happens, it will by its nature be of considerable significance and therefore should be in the form of regulations subject to the affirmative procedure.
My Lords, we are indeed fortunate to have had someone with the huge experience, not least internationally, of my noble friend Lord Hendy introducing the amendment, as reflected in the authoritative way in which he did so. I always applaud my noble friend Lord Hain, who said that he could not understand why the Government did not accept amendments. I am sorry to bring controversy to this discussion, but we must face the truth. I suggest to my noble friend that the explanation is quite clear. A bunch of ideologues in Number 10, such as we have never been exposed to in my time in politics, are determined to drive their strategy through. Their strategy is for a free-for-all and a totally unregulated society. They are fundamentally opposed to regulation and, with that, accountability. Unless we face that reality, we are just tackling everything down river without going to the source of the problem.
My noble friend was right to underline the importance of the protection of labour and employment standards. I was glad to hear my noble friend Lady Blower speaking. She was absolutely right to emphasise the importance of the UN and UNCTAD in particular. UNCTAD has played an important role in bringing the nations together to find a workable and just system across the world. My noble friend Lady Chakrabarti also has considerable experience. She emphasised the fact that we are talking about the law and our need to be vigilant in protecting the environment and the NHS.
In this process, in Committee and more generally, we are now learning just how much we have lost by coming out of the European Union. There was much maligning of the international court and the international administration of justice but, my goodness, I have served on Select Committees that have examined witnesses from a wide range of relevant professions and backgrounds who foresaw that we would quickly recognise the gap that we now face.
The message of the last election was to take back control. There is no answer to the issue of taking back control because you cannot have it both ways. If we are taking back control, that must mean that parliamentary authority is present in all that we do and that there is an effective means of scrutiny. Without that, we are not taking control; we are giving control to a group of unrepresentative people, bearing in mind the significant dynamics of the ideologues in Number 10. This is an important amendment and I am grateful to have had the opportunity of hearing first hand my noble friend Lord Hendy introduce it.
My Lords, I am delighted to follow the noble Lord, Lord Judd. I will speak in particular to Amendments 52 and 94 in the name of the noble Lord, Lord Stevenson of Balmacara, to which I have appended my signature. I would like to use this opportunity to probe my noble friend on the precise state of the dispute resolution mechanism generally, as well as in relation to ISDS, but I have a lot of sympathy with other amendments in this group.
I will leave the details of the amendments to the noble Lord, Lord Stevenson of Balmacara, but, using them as a vehicle, I refer to the Library Note, which states on page 8 that
“the Government states it may need to implement the results of an arbitration/alternative dispute resolution decision under a continuity agreement.”
On page 9 of the Explanatory Notes, the Government state:
“This could include, for example, implementing decisions made by a joint committee of the parties set up under a trade agreement or implementing the results of an arbitration/alternative dispute resolution decision.”
I will refer to some examples, although not as many as we had from the noble Lord, Lord Hendy, in his excellent opening speech on this group of amendments. There does not seem to be any parity given, in the EU application for the review of subsidies before the World Trade Organization, to Boeing. The dispute that the EU—and through it, the UK—has brought with regard to America giving subsidies in large measure to Boeing does not seem to have got very far very quickly, whereas the decision taken by the US Administration against the EU for the claim that was brought for subsidies and action for Airbus brought a very swift response from the US that has in particular harmed Scotch whisky.
In answer to the noble Baroness, Lady Chakrabarti, I entirely endorse what my noble friend Lord Lansley said: one of the reasons we are here is as legislators, whatever background we are from. I declare for the record that I am a non-practising Scottish advocate.
Scotch whisky is our largest export of food and drink—probably one of our largest exports of any product—and it suffered a 27% decline in exports in the fourth quarter of 2019. This has brought enormous tension within the UK. The Scottish Trade Minister has said on numerous occasions—most recently as reported in the Times this weekend, or perhaps today; I am not sure—that the Scottish Government would like to see a much more rigorous approach by the UK Government and the EU as a whole to see these subsidies lifted. It raises a more general question. I understand that the Trump Administration have made a general threat to walk away from the World Trade Organization mechanism.
So I will use this little debate to ask my noble friend: what is the status within the continuity agreements, particularly those that have already been signed, of the dispute resolution mechanism? Has it been squared off with the devolved Assemblies? Are they all in agreement as to what the mechanism will be? Does my noble friend share my general concern that it takes a woefully long time for a dispute resolution to be reached under the World Trade Organization—something that is now compounded by the threat on the table by one of the biggest players to walk away? In addition, can my noble friend tell us what the status is with the devolved Governments, and what the dispute resolution mechanism is that has currently been agreed under those rollover agreements?
I place on record my concern at the impact on one particular product, which happens to be our major food and drink export, beyond doubt—Scotch whisky—and ask when my noble friend the Minister might expect a resolution.
My Lords, the noble Baroness, Lady Bennett of Manor Castle, has withdrawn, so I now call the noble Earl, Lord Caithness.
My Lords, first, I thank my noble friend the Minister for the correspondence that we have had since our last discussion. I found his letter, which I got yesterday, very helpful. I also thank him for his continued efforts to assuage my concerns with regard to ISDS. He is getting there but he has not won yet. In his letter, he mentioned the Vattenfall case, because I brought that up with him and he kindly agreed to fill in some more detail for me. But surely the Vattenfall case merely confirmed that an ISDS was not necessary. It was actually the German Constitutional Court that sorted out the problem there. The courts, in an open and transparent way, must surely be the right way for trade disputes to be settled, rather than in the murky waters of an ISDS.
My noble friend also said that the UK had never faced an ISDS claim that had reached arbitration. That is absolutely right, and I think that the public reaction would have been a lot noisier and more visible to us all if a claim had reached arbitration. Surely the reason for the current situation is that our ISDS agreements tend to be with developing countries in which we are investing. Looking ahead, the situation will be very different if and when we sign a trade deal with the US, which has very big investments in this country.
It is interesting to note—and I would be interested in what the Minister thinks on this—that Canada, having had rather bad experiences with ISDS when it was part of NAFTA, withdrew from the ISDS in the new USMCA trade deal in order to get away from that difficulty. Unless we follow a somewhat similar pattern, I fear that the UK will get severely punished in the future.
I will pick up a theme started by the noble Lord, Lord Hendy, when he introduced this amendment and to which other noble Lords referred: the chilling effect of ISDS. In particular, my concern is the chilling effect on environmental regulations and environmental law in the future. ISDS has been used to challenge important regulations, such as those on fracking in Canada and, as I mentioned on Thursday, plain packaging for cigarettes in Australia. This has cost Governments in the countries involved a considerable amount of money. Governments have been reluctant to regulate in these areas because of the mere threat of an ISDS. If we are to fulfil the aim of the Prime Minister, which he stated to the party conference this morning, to have a green revolution to bring us back to economic prosperity, the one thing that we cannot afford is to have ISDS threats on environmental regulation hanging over us in the future.
What has not been raised so far in our debates is the report, Costs and Benefits of an EU-USA Investment Protection Treaty, which the former BIS department commissioned from the London School of Economics. Can my noble friend comment on it? It warned of going beyond
“the traditional core of favourable standards of treatment backed up by access to ISDS”,
“provisions concerning the host state’s right to implement treaty-consistent measures to protect the environment”.
The report found that the UK would necessarily incur costs in defending itself against investor lawsuits, even if the UK wins, and that is something that has not happened to date. It goes on to say that it is
“virtually certain that such costs under an EU-US investment chapter will be higher than under the status quo”.
To quote from the report again,
“we suggest that an EU-US investment treaty would impose costs on the UK to the extent that it prevents the UK government from regulating in the public interest.”
That is exactly the point I have just been making: it is the chilling effect of ISDS. The report concludes that a treaty without ISDS would be a less costly option for the UK. As a minimum outcome, therefore, we should surely ditch ISDS as a matter of urgency, and I find it quite interesting that at least two of the countries with which we have rolled over continuity agreements, Morocco and South Africa, are ditching ISDS in other trade deals that they are doing.
I shall conclude with a question to my noble friend on Covid. I have mentioned this to him before, but can he confirm that he is absolutely convinced that there will be no claims against the UK Government for the actions that they have taken on Covid? I was alarmed to read a couple of days ago that in America there are now more than 5,000 lawsuits that we know of, and lawyers advise that this is just the tip the iceberg, with quite a number of ISDS claims looming. Is my noble friend absolutely certain that the UK is bullet-proof against any claims for ISDS on the regulations that have been implemented as a result of Covid?
My Lords, I am very pleased to follow the noble Earl, because of his dogged approach on this issue, not only on this Bill but on the predecessor Bill and the Agriculture Bill. I commend him on his work and I will be referring to some of the points he raised, because I was reflecting on them as he spoke.
I shall primarily address Amendments 43 and 44, in my name and that of my noble friend Lady Kramer, and also reflect on what I thought was a very comprehensive speech by the noble Lord, Lord Lansley, and some of the points he raised within it. I have supported Amendment 91 in his name. This was raised at Second Reading by the noble Lords, Lord Hendy and Lord Freyberg, and the noble Earl, Lord Caithness. I commend the noble Lord, Lord Hendy, on the way he introduced this group and on allowing us to have this important debate: it is extremely important for the Bill and for UK trade going forward.
The Minister said, in summing up on Second Reading:
“ISDS is a subject which often causes excitement … I confirm that ISDS tribunals can never overrule the sovereignty of Parliament … There has never been a successful ISDS claim against the United Kingdom, but our investors operating overseas have often benefited from these agreements”.—[Official Report, 8/9/20; col. 749.]
I do not know about “excitement”, but there is genuine concern, which primarily comes down to two areas. One is that it is not clear yet what the Government’s position is on the agreements that are yet to be made, which will be continuity agreements, primarily with Vietnam, Canada, Singapore and Mexico, where, as we have heard in this debate, the European Union agreements have moved beyond ISDS. Can the Minister confirm that, in our negotiations with them, we will have follow-on from the European Union position? The second area of concern is what the Government’s position will be in the longer term. Are we moving away from the position we held when we were in the EU and towards a multilateral system?
I think it is helpful to remember the scale of this issue. It is not a minor issue. Across the European Union member states, more than 1,300 investment treaties have been signed with third countries, in addition to some 200 between EU member states. Non-EU states within Europe are party to more than 500, and we will now be in this category. This is just part of the 3,000 that exist worldwide. Most of these include ISDS provisions and often, as we have heard from UNCTAD—I shall refer to UNCTAD in a moment—it is very clear from the annual reports on the use of ISDS that companies have a view that public policy choices made by Governments will have an impact on their profits, and therefore they will use that ISDS.
The Minister seemed to suggest that the Government are in favour of ISDS because it disproportionately benefits British investors around the world. Statistically, that is true about the use of ISDS, so UNCTAD’s data is interesting. The United Kingdom is the third-highest home state of claimants of ISDS around the world. From 1987 to 2018, in the number of known cases, the UK was third, with 78. As the respondent state, we have had only one. So there have been 78 where we have been the home state and one where we have been the respondent state—so, on one reading, the Minister could be correct that this has been of benefit to British-based operations. But a bit more analysis is required as to what “British-based” means when it comes to some of the commercial operations, and where some of those cases have primarily concerned developing countries.
On the second aspect, it was helpful that the noble Earl raised some of the consequences of Covid-19, because it is not just America lining up. We have had reports that law firms have been studying decisions made by British authorities, including the London Mayor’s decision to close Crossrail construction during the pandemic, during the lockdown. While this was not underpinned by a statutory requirement, it is potentially vulnerable to those seeking compensation under the investment treaty. Will the Minister respond to the noble Earl’s question on how vulnerable the UK is at the moment?
The issue moving forward, as my noble friend Lady Kramer indicated, is that the EU has ratified four agreements with an ISDS mechanism: the Energy Charter Treaty, to which 53 European and central Asian countries are party; CETA, with Canada; and agreements with Vietnam and Singapore. Only the ECT is fully in force; the ISDS provisions in the three others will be implemented after all member states have ratified them. More importantly, those agreements include investment court systems and, last year, the Commission presented procedural proposals for the more transparent ICS for CETA. Can the Minister say what approach we will be adopting in our discussions with Canada? Are we seeking, in our agreement with Canada, an investment court system? These new transparent approaches will allow for mediation, which ISDS has largely overlooked, and an appeal mechanism that will then be binding on the parties. All of this has a public interest test, because they are party to the agreements with regards to the making of public policy, so what is our position on Canada, Vietnam, Singapore and Mexico?
It would, for many, be a fully retrograde step if we were not to seek continuity in those new agreements: it would negate the progress that has been made by the EU moving away from the ISDS system. Why is it progress? Well, as many in this Committee have indicated, it is not just the fact that Parliament remains sovereign—of course it does—but what use is sovereignty if the constraints on using that sovereignty are so significant? It is the chilling effect, as the noble Earl said, that is potentially blocking. We have seen attempts against France, Australia and Canada, all attempts under ISDS and intellectual property disputes, seeking either policy change from the Government, or compensation. Some of those could mean that regulations would have to be changed. This is the point: public policy should be made in the public interest, not in the shareholder interest.
The noble Lord, Lord Lansley, made the point about moving towards the long term. We have included that in our Amendment 43. He may refer to it as “heroic”, but that has never stopped the Lib Dems seeking those aims in the past. However, I think we have some strong supporters in the European Union with this approach, and we had strong support in the United Kingdom. The United Kingdom took part in the Council giving the mandate to the Commission for the negotiations towards a multilateral court system for trade. On 1 March 2008, the Council approved negotiating directives for a convention establishing a multilateral court for the settlement of investment disputes. That was a unanimous decision. The Minister will have to remind me, because I have slightly lost track of which Councils the Government refused to attend after we voted out of the European Union, but I am going on the basis—and he can correct me if I am wrong—that we were part of the unanimity in the European Union to move towards a multilateral court for the settlement of investment disputes. After that mandate was secured with United Kingdom support, discussions started on existing agreements, which we have rolled over, for moving towards an ICS approach rather than an ISDS one. We have rolled over 20 agreements so far. Where there have been elements of ISDS provision, the European Union is looking at them again to move towards a court system. Can the Minister say whether we will do the same?
The benefit of moving towards this is that we will be able to be part of an aligned movement of countries looking towards a more open and transparent approach, and that approach has been taken squarely from the European Union with regard to our colleagues in TTIP. The noble Lord, Lord Lansley, is right to ask this question. This will be a choice for the Government. Because of the transparency in the European Union, we know what the position is. We know what the mandate was. We know what the Government’s position was up until the end of December. We need to know their position now with the agreements yet to come.
Finally, I support Amendment 91 and will be brief on this. The noble Lord, Lord Lansley, is right. Any consequence of taking retaliatory action or imposing sanctions under the WTO—which we will be able to do under our membership of it—will, by definition, and inevitably, be serious and impact our country-to-country relations. As I understand it, we would be able to bring these forward only if we had the previous authorisation of the dispute settlement body at the WTO, having made a public case to it. It seems incongruous to me that we would have made a public case to the dispute settlement body of the WTO for approval but will not be doing the same to our own Parliament to make a decision on the ongoing consequences of the implementation of those regulations. I hope the Minister can clarify that the Government would be open to supporting that aspect.
My Lords, I thank all the speakers in this debate. I also echo the thanks from the noble Baroness, Lady Chakrabarti, to the staff for allowing us to get to where we are. We might have had a rocky ride and have missed a few words here and there, particularly the exchange between the noble Baroness and the noble Lord, Lord Lansley, but we are here and we are making progress and we owe them a vote of thanks for keeping us going.
The debate has been rich and the issue has been given a good going over. As the noble Baroness, Lady Chakrabarti, and others have said, my noble friend Lord Hendy spoke powerfully on the key amendment with a huge amount of knowledge. He confirmed that we took the right decision to hold his speech over from last Thursday. It would not have done well to have had the first part last week and the second part today. I am glad we were able to hear it—some of us got it twice, but it was still jolly good—and I congratulate him on that.
I will speak to Amendments 52 and 94. They fit into the general pattern, as I have been describing. Amendment 52 effectively rules out ISDS from the start and requires proceedings that might have been raised under that to be taken under UK tribunals and UK courts. I think most people would expect that from a mature democracy, such as ourselves, particularly as we have well-established and well-respected legal arrangements for hearing exactly these cases. Why invent a different system—a sort of made-up scheme—which, as most people have complained about, is done mainly in secret? The amendment also contains a suggestion that, if the ISDS is required for good reason, and it may well be that in future that the Government might have persuasive reasons, it would be allowed only if parliamentary approval had been achieved.
Amendment 94 deals with what happens in the event of there being an ISDS process. The Secretary of State must report to Parliament on the outcome of the arbitration or on what alternative dispute resolution has been substituted for that and make sure that information is also available to Parliament. Taken together, these are within the main discussions we have had. They are a variation on a theme that ISDS may have been of value in the start, when these new ideas about trade agreements were being brought forward and when people were seeking to secure investment in sometimes difficult territories and in countries for which legal activity was not, perhaps, at the same standard. But I think these days are past, and we have certainly had ample evidence of that. What are we going to do? There is no doubt that ISDS is alive and well: it is in the CPTPP trans-Pacific partnership. Therefore, if we are going to go into that—and the Government seem keen that we should do so—what position are the Government going to take on that? We ought to discuss it and know about that.
On the existing rollover agreements, as has been said, there are elements of ISDS, although, for instance, on the Japan agreement we have had it confirmed, I think on the Floor of the House, that there is no ISDS provision in that. It is a mixed blessing, but we have had only 20 of the 40 or so rollover agreements signalled to us as being successfully rolled over. Who knows what is in the rest of them? It is still a live debate as we speak.
I have two other points which, perhaps, have not made as much of an impact as they should have done. Existing trade agreements are, to a large extent, set in stone. There is not much happening in terms of updating them or bringing them forward to the 21st century. Nobody would claim that the current agreements have kept pace with developments in human rights and environmental protection—a point made by noble Lords including the noble Earl, Lord Caithness. We have heard, but it is an extraordinary thing when you reflect on it, that they effectively set up a parallel legal system and offer benefits to investors with no real corresponding obligations. That cannot be right. Even if we were concerned about the ISDS mechanism for reasons other than the ones already discussed, the idea that somehow there is additional protection on top of that provided in the actual agreement and that the benefit goes to the investors and there is no corresponding requirement or downside for them, seems deeply unfair and something that would require us to act.
We need something that is going to replace ISDS. I do not think we are the only country to have realised that. If the Minister thinks that ISDS has a future and is the way forward, he really has to use his speech—and, perhaps, if he does not have time, to write to us—to give us better and further particulars. I do not think that many people around the table today or participating virtually believe that we are in that position.
What is available for the future? An ombudsman system has been suggested. Some sort of informal arbitration system that would work around that might be a way forward. The EU investment court system was being developed and we were an active part of that before we left the EU. Maybe there is a way in which we can link back to that, particularly if it does not have an automatic roll back to the European Court of Justice. There are also, as we have heard, international multilateral investment systems in discussion.
Whatever happens, we cannot stay where we are. We have to move forward. We have to have a fair and open system that is available to all and has the wider protections that we think are missing at the moment, obligations on those who wish to pursue them that they cannot evade and an appeal mechanism to make sure that everything is done that can be done to make sure that a firm decision is made. As the noble Baroness, Lady Kramer, said, and she is right, we are in danger of being left behind if we stick with an outdated ISDS system. We need to move on from where we are and we need to be alive to that. This is something that the Government really have got to take the lead on. I look forward to hearing from the Minister.
My Lords, it has certainly been an erudite and extraordinarily interesting debate, and I congratulate all noble Lords who have taken part in it. I certainly understand the point made by the noble Baroness, Lady Chakrabarti, that it is right and proper that noble Lords should be allowed a free rein in debating these matters, and I entirely recognise the legal competence that we have in this House, which has been displayed to such great effect in the Grand Committee today.
Your Lordships might expect me to start off, as I always do, by saying that this Trade Bill does not deal with the implementation of FTAs with new partners, such as the USA or Australia. Instead, as noble Lords are no doubt tired of hearing me say, the Trade Bill provides powers to implement those trade agreements to which the EU and third countries were already signatories before we left the EU. I will come back later to the points that noble Lords have raised about the status of ISDS in those agreements.
Having said that, of course I understand completely the concerns that have been raised about ISDS, but I believe that these may be overstated. Perhaps I may be allowed a couple of minutes to try to elaborate this argument. We have heard that the UK has never faced an ISDS claim before an arbitral tribunal; nor has the threat of an ISDS claim affected our legislation. We are clear that the UK and treaty partners retain the right to regulate in the public interest, and this is already recognised under international law.
Before going into the detail of the amendments, which, understandably perhaps, focus on foreign investors in the UK, it is important that we remember that there are two sides to ISDS. It would not be right to let go unremarked the great benefit that UK investors overseas obtain from ISDS. Arguably, the benefit that our investors overseas obtain from ISDS is, for reasons that I will come to later, significantly greater than the benefits that overseas investors obtain in the UK.
We should not forget that ISDS disputes generally arise when private assets are expropriated by the state without paying compensation or where foreign investors are discriminated against compared to domestic investors. These two factors are the essence of the ISDS mechanism. I would suggest that these are perfectly laudable matters to want to protect for investors—either our investors overseas or foreign investors here. I ask that we remember these two points as we debate these amendments.
On Amendment 17, in the names of the noble Lords, Lord Hendy and Lord Hain, and the noble Baronesses, Lady Blower and Lady Chakrabarti, the proposed new clause would result in the UK being unable to implement a continuity agreement that contains ISDS unless the matter in respect of which an ISDS claim was brought had its exact parallel in UK domestic law for UK investors.
Of course, foreign investors in the UK already have access to legal redress against the UK Government through domestic remedies. These will often be quicker and more cost-effective than resorting to ISDS, and the UK’s courts and legal system are held in high regard internationally, so it is not surprising that people often choose to go to our courts in the UK. However, it is important for foreign investors to have a means of redress which is seen to be completely independent of the UK state, and, as I said previously, ISDS remains valuable for UK businesses when investing overseas. It is very much seen as a mechanism of last resort but may in some cases be the only form of legal redress available to investors.
Like other noble Lords, I admired the erudition of the speech made by the noble Lord, Lord Hendy, to which I listened closely. He set out a long list of cases and argued cogently that ISDS may have a chilling effect on a state’s ability to regulate in the public interest. My noble friend Lord Caithness also made that point. However, while some cases that were cited are examples of ISDS impinging on the rights of the state, investor protection agreements do not eradicate the Government’s ability to regulate in the public interest, and it is this right to regulate that is recognised in international law.
The UK has more than 90 bilateral investment treaties in place with other countries, and there has never been a successful ISDS claim brought against the UK, nor, importantly, has the threat of potential claims ever affected the Government’s legislative programme. Let me be clear to put people’s minds at rest: ISDS tribunals cannot overrule the sovereignty of Parliament; they cannot overturn or force any changes in law.
Further, it is likely that the UK’s treaty partners would insist on reciprocal provisions—if I may come back to the amendment—for the implementation of trade agreements. This would result in UK investors overseas being unable to bring an ISDS claim unless there are also equivalent forms of domestic legal redress in those states, which in many cases, or some cases, there will not be.
One of the key benefits of investment treaties is to agree the precise details for an effective and common form of legal redress. Requiring this to reflect different domestic laws could disadvantage UK investors overseas by introducing uncertainty in a well-understood mechanism and denying them the same means of legal redress available to other international investors. I will come later, if I may, to the point that these mechanisms evolve and improve over time.
The noble Baroness, Lady Blower, raised the potential impact of ISDS on the NHS, and I would like to deal with that quite straightforwardly. ISDS does not and cannot force the privatisation of public services. Under current UK agreements, claims can be made only in respect of established investments—that is when a company is already operating in the United Kingdom—and claims cannot be made in relation to an alleged failure to open up public services to a potential investor. ISDS claims can only lead to compensation where the tribunal finds that treaty commitments or obligations have been breached, and they do not lead to a change in the law.
To be absolutely clear, ISDS will not oblige the Government to open the NHS to further competition, and overseas companies will not be able to take legal action to force us to do so. The NHS will continue to be free at the point of use for everyone who needs it. Protecting public services, including the NHS, remains of the utmost importance to the United Kingdom.
Similarly, Amendment 43, in the names of the noble Lord, Lord Purvis of Tweed, and the noble Baroness, Lady Kramer, would require that the UK sign a trade agreement only if it commits all parties to pursue the establishment of a multilateral investment tribunal system and an appellate mechanism for the settlement of investor-state disputes. This would apply to both continuity agreements and future trade agreements, even though the latter are outside the scope of this Bill.
Not all trade agreements include investment protection and investment dispute settlement. It is therefore not appropriate to require all trade agreements to include a commitment to pursue a multilateral investment tribunal system. To include such a requirement on the UK and our treaty partners for ratification in such a manner would hinder the progress of UK trade policy. It would also require reopening agreements to make these significant changes.
However, things move on, and negotiation of options to reform investor-state dispute settlement and the possible establishment of a multilateral investment court—or MIC, as it is known—is in its early stages at the UN Commission on International Trade Law, and I can reassure noble Lords that we are fully engaged in those discussions. As the noble Lord, Lord Fox, said, that could be a very good idea but, to answer the point of the noble Baroness, Lady Blower, we cannot yet say whether we support that idea because the negotiations are at a very early stage. Picking up the point made by the noble Baroness, Lady Kramer, if improvements can be made and generally accepted, we would certainly want to consider them.
I put on record to my noble friend Lord Lansley that the United Kingdom supports a modernised version of ISDS that is effective, proportionate and transparent while minimising the financial risk to HMG. I hope that that also reassures the noble Lord, Lord Fox. Of course, every international treaty is created through negotiations between states. Therefore, every aspect, including ISDS, is subject to discussion and agreement by both parties and cannot be imposed unilaterally by one party.
Returning to the amendment, binding both the UK’s and our treaty partners’ hands before these negotiations have concluded to commit ourselves to a way forward which, by definition, is still unknown, and before countries have even decided whether to set up a permanent court, cannot be in either their or the UK’s best interest. I assure noble Lords that we must, and we will, examine all the proposals as they develop to ensure that any system for reforming the investment dispute settlement system is cost effective and improves on existing investment dispute settlement procedures.
Turning to Amendment 44, again in the name of the noble Lord, Lord Purvis of Tweed, and the noble Baroness, Lady Kramer, this new clause would have the effect of requiring ISDS claims against the UK Government to be heard by UK courts or tribunals in all instances. As I said earlier, investment protection provisions in FTAs aim to ensure that foreign investors, including SMEs and pension funds, are treated fairly and in a non-discriminatory manner, in line with domestic and other overseas investors in the territories where they are established.
It is important that foreign investors have an independent means of redress, as they may be more susceptible to certain risks in certain countries, such as discrimination and expropriation without fair compensation. ISDS through independent, ad hoc arbitration is an internationally accepted framework used to resolve investment disputes and, as I said, remains important to UK businesses when investing overseas.
We should not think that arbitration is somehow a dirty word. It is widely used as a way of resolving disputes under both international law and domestic law. Indeed, the UK is a global centre of international arbitration and remains an attractive jurisdiction for cases across a range of commercial transactions.
With all due respect, the amendment overlooks the fact that foreign investors in the UK will, depending on the circumstances, already have significant rights to seek legal redress against the UK Government without resorting to ISDS through domestic laws and procedures —for example, through access to judicial review or commercial arbitration. I suggest to noble Lords that, if an investor in the UK ever found himself in a position where his assets were expropriated by the UK Government without being paid any compensation, it would be to the courts that he or she would first go to seek redress. That is one reason why the UK has never faced an ISDS claim at an arbitral tribunal.
More importantly, the amendment would undermine access to independent ad hoc arbitration for UK investors, which has successfully supported UK investors in many countries worldwide for the past 40 years. We have to remember that this is because our treaty partners would also insist on reciprocity for future agreements if we asked for this, and they would seek to amend existing agreements accordingly. This would mean that any disputes brought by UK investors against a host state would also be required to be heard in their national courts. I humbly suggest that that may be perfectly appropriate in some cases but, depending on the treaty partner concerned, it could well be to the disadvantage of our investors overseas. I urge the noble Baroness, Lady Kramer, to reflect on that point.
This would likely lead to increased risk for UK investors, who have to date benefited from, and in several cases have had no option but to rely upon, international arbitration as an independent means of legal redress. As we have heard, UK investors have been responsible for around 80 ISDS claims internationally out of a total of around 1,000 known claims. It would also deny equal rights to UK investors as they would lack the same legal means of redress that is available to many other international investors. I am afraid that, ultimately, this could discourage UK investors from investing in particular countries, including in vital infrastructure projects. As we know, British investors overseas contribute to the economic development of states across the world, creating jobs and supporting local communities.
Amendment 52, in the name of the noble Lord, Lord Stevenson of Balmacara, would insert a new clause that would have the effect of requiring the Government to obtain the advance approval of Parliament where they wished to include an investor-state dispute settlement chapter in the mandate for a free trade agreement. As I have said on previous occasions in this Grand Committee, the Government have committed to publishing their negotiating objectives alongside an initial impact assessment and a government response to any public consultation before entering into negotiations. The Government will lay the final treaty text alongside an Explanatory Memorandum before both Houses of Parliament under the CRaG procedure for 21 sitting days. Should the ISDS provisions in the proposed treaty not be to the satisfaction of noble Lords, your Lordships’ House has the power through this process to prevent ratification and the other place can do so indefinitely.
I turn now to Amendment 91, in the name of my noble friend Lord Lansley and the noble Lord, Lord Purvis of Tweed. It seeks to ensure that all regulations pertinent to the variation of import duties made under Section 15 of the Taxation (Cross-border Trade) Act 2018 will be made under the affirmative parliamentary procedure. Section 15 provides the power to vary import duties to deal with an international dispute or issue in a way that is authorised under international law.
First, I thank my noble friend for his diligent engagement on this issue. May I reassure your Lordships that we look forward to engaging with Parliament at every opportunity on these important issues? The Government recognise that international trade disputes serve different functions and can have wide-ranging impacts on sectors and industries across the UK. Naturally, some of these impacts will be of interest to Parliament. In recognition of this, I am happy to give an assurance to noble Lords that Parliament will be updated on the UK’s international disputes where it is appropriate to do so.
However, I am sure that noble Lords recognise that the conduct of state-to-state trade disputes is a matter of foreign diplomacy and is covered by the royal prerogative. International litigation, including launching and defending trade disputes, can be extremely sensitive, with far-reaching geopolitical implications. Where the UK seeks to impose retaliatory duties on the products of a responding state to induce it to comply with its obligations under a trade agreement, the choice of products to target involves a strategic and often very sensitive exercise.
I suggest to my noble friend Lord Lansley and the noble Lord, Lord Purvis, that it would be highly inappropriate for matters of such diplomatic sensitivity to be debated in Parliament, which is why we have put the negative procedure in this Bill. It is important that the Government can take swift and effective action against trading partners that have failed to comply with their obligations under the WTO agreements or an FTA, where their actions are affecting UK exporters. It could damage the UK’s position in sensitive international litigation if action taken to encourage compliance ceased to have effect under an affirmative procedure.
The Delegated Powers and Regulatory Reform Committee previously scrutinised this power when the TCBTA was laid before Parliament in 2018. The committee scrutinised the Section 15 power in its 11th report of Session 2017-19, and it did not report a concern with this power. I reassure noble Lords that, in exercising this power, the Government will always be required to have regard to international arrangements, including WTO law. This assessment must be made before laying regulations that vary import duty.
I turn to Amendment 94, in the name of the noble Lord, Lord Stevenson of Balmacara, which seeks to provide additional reporting duties that the Secretary of State must comply with following arbitration or alternative dispute resolution procedures provided for within international trade agreements. I recognise the noble Lord’s desire to ensure that Parliament is kept fully informed of any implications on UK legislation due to the outcome of disputes with our trading partners. Of course, the Government recognise that international trade disputes serve different functions and can have wide-ranging impacts on sectors and industries across the UK. Naturally, some of these impacts may be of interest to Members of this Parliament. However, we consider the additional reporting requirements as proposed by this amendment unnecessary.
First, if the Government intend to bring themselves into compliance with their obligations under the international trade agreement by amending legislation, this will of course be adopted following normal legislative procedures. Moreover, it is established practice under most FTA dispute settlement mechanisms that the reports of arbitration panels are made public. That is an important principle, which the UK Government are seeking to maintain in our FTA negotiations, as we recognise the importance of transparency. Furthermore, the UK Government will also address important considerations around trade disputes within a report that the Department for International Trade already lays before Parliament each year.
I come to some of the other points that noble Lords raised in the debate. The noble Lord, Lord Purvis, and the noble Earl, Lord Caithness, asked what the Government were doing to prevent ISDS cases arising from Covid emergency measures. No ISDS claims have been commenced against the UK over Covid-related measures, nor would the Government expect any claims to be made resulting from non-discriminatory measures taken to protect public health. We are not discriminating between domestic and foreign entities when taking these public health measures. Of course, the Government recognise the importance of strengthening international investment in response to Covid-19 and the continuing important role played by investment protection and ISDS provisions in safeguarding British investments overseas.
Various noble Lords, including the noble Lords, Lord Purvis, Lord Hendy and Lord Stevenson, asked where we are on ISDS in the various EU continuity agreements that we either have signed or hope to sign shortly. I can inform noble Lords that none of the agreements signed so far has ISDS in them. Some have clauses that will allow us to review them at some point in the future to include investment protection and ISDS. This was a standard clause for EU agreements; we have carried it over. The Canada, Singapore and Vietnam agreements contain ISDS clauses, but the Canada agreement is presently under negotiation so it would not be appropriate for me to comment on the exact position of those negotiations.
My noble friend Lady McIntosh of Pickering asked about the Airbus/Boeing trade dispute, which we of course have a significant interest in. It has been at the WTO, where we have worked closely with all parties for many years regarding its handling of the case. Since July 2019, the UK has raised the issue of tariffs during several meetings and calls with the highest level of the US Administration. I assure my noble friend that we continue to work closely with other Airbus nations, including France, Germany and Spain, to press for a negotiated settlement. I will happily write to her on the important point that she made about Scottish whisky.
I will also write to my noble friend Lord Caithness about the report to which he referred during his intervention as, unfortunately, I am not familiar with it.
That brings me to the conclusion of my remarks. I hope that what I have said has reassured noble Lords and I ask the noble Lord, Lord Hendy, to withdraw his amendment.
I have received a request from the noble Lord, Lord Purvis, to speak after the Minister.
My Lords, I thank the Minister for his comprehensive response to the debate on this group of amendments. I am grateful for that; it shows the seriousness of this issue. I and other noble Lords will reflect on his remarks.
I have two questions. The first relates to the amendment in the name of the noble Lord, Lord Lansley, which I support. As I understood it, if we were to bring retaliatory measures or sanctions, they would have to have been authorised by the dispute settlement body at the WTO, so by the time they came to Parliament, either under the negative procedure or the affirmative procedure, they would be public anyway. Therefore, Parliament’s ability to use the affirmative procedure would be based on what was already in the public domain.
Secondly, I am still not sure why the Government have not indicated that they will continue with their support for moving towards an investment court system in our continuity agreements with Singapore, Vietnam and Mexico, which are yet be signed, given that the European Union has stated categorically that moving towards such a system is the approach for those countries and is now, to quote the Commission in October 2019, “on the table” in all ongoing investment negotiations. I simply do not understand why the Government, who supported moving to a multilateral system, now say that they are fully engaged and cannot say what their position is yet. Why can the Government not simply say that they support this in principle and are working with others to bring it about?
The noble Lord raises two good points. On the first point, I will, if I may, write to him setting out in more detail the disadvantages and advantages that I see of the negative as opposed to the affirmative process. On the court, I make it clear that we welcome changes in the ISDS mechanism and potentially the formation of an MIC if, once the details are worked out, it seems that nations will sign up to it and it will be workable and in the best interests of the UK. We do not have our head in the sand in these matters. Like the noble Lord, I recognise that, if improvements can be made to the ISDS process, it is incumbent on us to do that. The point that I was trying to get across was that these are still early days in the discussions at the UN on this and it did not seem right to put our weight firmly behind it until we see how the discussions move forward. But I assure the noble Lord that we are open-minded about this and we will see where it gets to.
My Lords, I am very grateful to the Minister for his response and to my noble friends Lord Hain, Lady Blower and Lady Chakrabarti for supporting Amendment 17. I am also grateful to all noble Lords who made such elegant and persuasive contributions to this debate, which has been wide-ranging and has covered a lot of issues.
I will not presume on the time of the Committee by commenting on particular contributions, save for two. The noble Lord, Lord Lansley, mentioned the fact that the central issue in the Philip Morris case was litigated in the World Trade Organization dispute mechanism, where the case was lost. His knowledge of the WTO is certainly greater than mine, but my understanding is that the rules, and hence the basis of the claim in the WTO, were different from the basis of the claim under the ISDS, not least because the claim in the WTO—as I understand it; I could be wrong—was brought by nation states rather than investing corporations.
The Minister made many points in his summary that I would like to take up, but I must resist. I will make just three points. First, he said that there were great benefits to UK investors overseas. Of course I accept that that is the case, but there appear to me to be four points to bear in mind.
First, this country should not support a mechanism that provides an avenue of challenge to other democratic states, just as it should not support a mechanism that enables a challenge to our democratic state. A remedy under ISDS is not available to citizens of either state except for investing corporations, but many citizens are affected by the matters covered by these trade agreements—food standards, environmental standards and labour standards.
Secondly, the Minister overlooked the globalised economy that we now have. UK corporations can establish almost anywhere in the world, just as foreign corporations can. So UK corporations can take advantage of ISDS arrangements by establishing a subsidiary to bring a case against the United Kingdom. There are dangers there, too.
Thirdly, when overseas investors make their investments, they of course evaluate the risk that things could go wrong or that the state might change the law. That is a matter for them. I do not see why we should put at risk our democratic standards by inviting a mechanism to protect overseas commercial investors.
Fourthly, this country has an admired legal system, as do many other countries. It is wrong in principle to provide a mechanism of legal challenge that is outside the domestic laws of any country.
Sitting suspended for a Division in the House.
My Lords, we will now resume the Committee. I call on the noble Lord, Lord Hendy, to complete his remarks.
My Lords, I will make two final points in respect of the Minister’s speech. My second point is that he said that ISDS cannot force the privatisation of public services. That is absolutely right, of course, but we cannot overlook the fact that ISDS permits a challenge to taking previously privatised services back into public ownership—something that Governments of all persuasions have done from time to time in the past, especially in times of emergency.
Finally, the Minister said that the Government were considering the merits of a multinational investment tribunal in place of the secret arbitration under ISDS. Of course, one accepts immediately that the EU’s proposal for an MIT gives transparency instead of secrecy, which is very desirable. But it does not resolve the central evil that ISDS challenges, on very broad terms, parliamentary decisions by the chilling effect of a threat of compensation which is measured in billions—a disincentive for any Government.
The issue of ISDS is obviously controversial and the Minister is plainly aware of the concerns of members of the Committee. I hope that those concerns, and those reflected in other amendments, will cause the Government further reflection. In those circumstances, I beg leave to withdraw the amendment.
Amendment 17 withdrawn.
Amendments 18 and 19 not moved.
We now come to the group beginning with Amendment 20. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate.
20: Clause 2, page 2, line 23, at end insert—
“( ) Regulations may only be made under subsection (1) if—(a) the provisions of the international trade agreement to which they relate are consistent with standards for food safety and quality as set and administered by—(i) the Department of Health;(ii) the Food Standards Agency;(iii) Food Standards Scotland; and(iv) any other public authority specified in regulations made by the Secretary of State;(b) the Secretary of State is satisfied that mechanisms and bodies charged with enforcement of standards for food safety and quality have the capacity to absorb any extra requirement which may arise from the implementation of the agreement; (c) the provisions of the international trade agreement to which they relate are consistent with policy to achieve reduction in the risk of disease or contamination as set and administered by—(i) the Department of Health;(ii) the Food Standards Agency;(iii) Food Standards Scotland; and(iv) any other public authority specified in regulations made by the Secretary of State;(d) the provisions of the international trade agreement to which they relate are consistent with achieving improvements in public health through any food policy priorities set and administered by—(i) the Department of Health;(ii) the Food Standards Agency;(iii) Food Standards Scotland; and(iv) any other public authority specified in regulations made by the Secretary of State;(e) the provisions of the international trade agreement to which they relate comply with policy to achieve targets for farm antibiotic reduction set by the Veterinary Medicines Directorate;(f) the provisions of the international trade agreement to which they relate comply with retained EU law relating to food standards and the impact of food production upon the environment; and(g) any food or food products to which the provisions of the international trade agreement apply meet standards of labelling, indication of provenance, and packaging specified by the Food Standards Agency or Food Standards Scotland.”Member’s explanatory statement
This amendment would ensure that regulations made under Clause 2 can only be made if the trade agreement which the regulations would implement enshrines UK standards in legislation and adheres to UK standards of food production and food safety.
Amendment 20 is in my name and I thank the noble Baroness, Lady Bennett of Manor Castle, for adding her name to it. It concerns the importance of food safety and quality, and how these issues are administered through government departments and agencies for these matters. This includes the importance of nutrition.
We are all rightly proud of the high agricultural and food standards in this country. Many people believe that trade must not undercut those standards, not only to maintain fair competition for agriculture, the food service and food manufacturing sectors—and the diverse food chain—but to maintain and improve the health benefits to consumers from transparent certified and production regulations. These latter points have been underlined by the Mail on Sunday in a letter from Jamie Oliver, the people’s chef, and PE teacher Joe Wicks. The letter, with wide public endorsement, does not want the Government to
“trade away our children’s futures”.
Alongside the letter, a Delta poll found that 68% of people believed that the most important priority for Britain is to maintain high standards for food, even if that meant some trade deals did not materialise.
Amendment 20 has an overreach into the Agriculture Bill, which passed all its stages in the House last week, now that it includes important provisions on this issue. “Food standards” includes not only food safety but production standards, environmental protections and welfare. In this amendment, these regulated standards are administered by the named government department —the Department of Health—and the other executive agency, the Food Standards Agency, including Food Standards Scotland.
We all know the threat post by a potential trade agreement with America and Australia, for example. Although the Bill technically deals with precursor agreements, nevertheless it is important to clarify that these also pass these most stringent tests as they develop. In the case of Japan, these rollover deals can go further. It is material to this debate that the US has 10 times the level of food poisonings that exist in Europe.
The Global Economic Governance Programme of Oxford University has reported that as the Government transferred the entire acquis of EU law into UK law through the withdrawal Act, substantial decision-making powers were conferred on UK Ministers to amend the legislation. That includes amendments through secondary legislation, which carries far less scrutiny in its procedures than primary legislation. There are anxieties around the claimed certainty of the withdrawal Act, heightened by the Government’s bringing forward the internal market Bill, now with further amendments proposed and inserted into the Bill at a very late stage in its Commons consideration. That is why so little credibility is attached to the many protestations from the Government that their word that they will maintain the UK’s high standards in its negotiations can be relied upon. May I stress to the Minister that he reconsider his often-repeated assurances, since they are not being developed into meaningful, transparent procedures and are in themselves inadequate?
This amendment, under proposed new paragraph (e), also has cognisance of future dangers through antimicrobial resistance—AMR—on which UK agriculture has already demonstrated admirable awareness by reducing antibiotic usage considerably over recent years. I also underline proposed new paragraph (g), which draws attention to the issue of labelling, country of origin specifications and the importance of branding through geographical indicator schemes, which have proven so successful in driving high-quality exports. It would be helpful to have the Minister’s comments on the record that these provisions will continue to be recognised through continuity agreement enhancements.
Although it was not initiated by me, I have added my name to Amendment 23, in the name of the noble Lord, Lord Purvis, and other noble Lords, and I will speak only momentarily to it. The Government themselves brought forward this amendment on Report of the previous Trade Bill, which was so graciously steered through your Lordships’ House by the noble Baroness, Lady Fairhead. It was good to see her attending this Committee, and I look forward to hearing from her later. Our Benches were part of the cross-party consensus on which that government amendment was based. I am sure that, through these amendments, other proposers will underline the key necessity of maintaining statutory protections. Only 18 months on, can the Minister give cogent reasons why the Government should now wish to discard this important safeguard?
I thank the noble Baroness, Lady McIntosh, and other noble Lords for their supporting Amendments 24 and 25; I will speak to my Amendment 56 in this group. I also thank the noble Baroness, Lady Jones of Moulsecoomb, and my noble friend Lord Rooker for adding their names to this amendment. While it may appear onerous, I consider it important that government must produce a register that can ensure equivalence and a transparent baseline for a level playing field. That would be another way for the Government to deliver on their election promise to maintain the UK’s high agricultural, environmental, plant health and animal welfare standards.
My Amendment 67 in this group goes further by recognising the importance of animal sentience. The Government have agreed to introduce a measure recognising this to ensure that all future legislation on the welfare of animals is assessed against that standard. While the amendment does not seek to be the whole answer to this issue and does not define animal sentience, nevertheless it would be helpful to hear from the Minister what now is the Government’s view on this and when they might bring forward a specific Bill.
I thank the noble Baroness, Lady Jones of Moulsecoomb, for her Amendment 74 in this group and commend her for the thorough way she approaches the issues at all times—that ratification of trade agreements must be compatible and have equivalence with UK standards. The key approach of all these amendments is that modern trade agreements allowing imports of food into this country have to reflect the quality of food to which all domestic food must comply. Why allow substandard food that would be condemned here to be imported into the UK? This needs to be enshrined in legislation. I beg to move.
My Lords, I will speak to Amendment 23 in particular. All the amendments in this group have very similar goals—they just choose rather different avenues for achieving them.
Amendment 23 would require that trade agreements maintain UK statutory levels of protection for human, animal or plant life or health, animal welfare, the environment, employment and labour. I join noble Lords in supporting the noble Lord, Lord Grantchester, who, along with the noble Lord, Lord Purvis of Tweed, and I, is a signatory to this amendment. He said that upholding standards should not be a matter of trust. We live in a country where important principles are reinforced in law and in statute. That is exactly what this amendment tries to do; I suspect that the other amendments in this group are trying to do the same.
I particularly support this amendment because, as the noble Lord, Lord Grantchester, said, it uses the exact language of a government amendment agreed on a cross-party basis and introduced into the Trade Bill in 2019. On that basis, one would think that the Government would have no problem with it, yet they have removed that language from the Bill. That act of removal is very powerful. Choosing to omit a clause—in effect, withdrawing it—sends a message. I am sure that those countries with whom we are negotiating trade deals, whether they are continuity deals or future deals, have taken note. I am very sure that the United States has taken note of the decision to remove this language and the clause. As we know, actions speak louder than words. I also take the view that, if Amendment 23 does not apply to continuity agreements, why would anyone negotiating a future agreement suddenly insist that the precedent should be broken?
In this context, I want to pick up a point made by the noble Viscount, Lord Younger of Leckie, in the debate on an earlier amendment. He said that regulatory standards are not set in trade Bills. For many years, I worked in the United States as a banker in two major companies. I can tell the noble Viscount that his description will be real news to American companies, which have a long history of using dispute resolution mechanisms in trade Bills to achieving particular policies regardless of whether they override domestic legislation. As we look forward to negotiating a US-UK FTA, we must be well aware that everything we do will make that conversation either more difficult or easier.
In the United States, a complex mix of federal and state regulators set and uphold a wide range of standards. The fragmentation is one of the reasons why the US is so successful at keeping out imports; few exporters want to take on the highly complex US federal and state court systems. In the United States, where there is a very different culture, in nearly every company, there is a real taste for aggressive litigation. Many companies have deep pockets in which large amounts of money are set aside for litigation, making such companies effective at intimidating negotiating partners. In effect, they export US standards regardless of domestic legislation elsewhere.
We are in a period when trade is a tense issue. Historically, we would probably have said that most major developed countries would avoid trade battles with each other. We are not in that period any more. The US is at present taking a very aggressive view towards trade protectionism, and any kind of loophole or weakness within any trade deal will be fully exploited. When we say that we must have safeguards to protect our standards, I hope that the Government will recognise that that protection must extend to this Trade Bill.
My Lords, I have added my name to several of these amendments, but I shall stick to dealing with Amendment 20—indeed, part of Amendment 20. If it was being redrafted, Defra should be added to the list of bodies in paragraph (a): the Department of Health, the Food Standards Agency and Food Standards Scotland. It is not generally appreciated, but in 2010, when there was an attempt to abolish the UK-wide Food Standards Agency, the consensus in government was to remove aspects of its work to the Department of Health—nutrition and one or two other issues—and labelling and country of origin went to Defra. In fact, it was as a direct result of that action that Food Standards Scotland was set up, because the Scottish Government were perfectly satisfied with the way that the UK-wide FSA was operating. That is a minor point, but I want to concentrate on paragraph (b), which deals with the mechanism and the bodies charged with the enforcement of standards of food safety and quality, to make sure that they have the capacity to deal with the extra work.
It is worth pointing out, by the way, that although it is not politically sexy, the definition of food generally encompasses food and feed—feed being food for food production animals. That has not been taken very seriously in the past by the enforcement authorities. They are, generally speaking, local government. In the main, the Department of Health, the Food Standards Agency and Food Standards Scotland use local authorities for that role. Some issues they run themselves—the FSA runs the Meat Hygiene Service directly—but local authorities and environmental health officers are the unsung heroes of food safety and standards for the public.
The Government give us bad news in that respect. In the UK, local authority food hygiene interventions include hygiene inspection audits, sampling visits, verification and surveillance, advice and education and intelligence-gathering. It is absolutely crucial, but all of it will be under pressure with extra work from trade deals. Between 2010-11 and 2018-19, the total number of interventions in the UK reduced by 11%. They went down from 431,852 to 383,494. In England, the fall was from 331,000 to 305,000. In Northern Ireland, the fall was from 21,000 down to 14,000—a huge decrease. In Wales, interventions dropped from 31,000 to 25,000, and in Scotland, they went down from 47,000 to 38,000. I appreciate that with more modern risk techniques and technology, there can be reductions in certain checks, but these reductions are so substantial over that period that the position will be serious if extra pressure is put on because of the work from these trade deals.
I shall give just one local authority example to illustrate how serious the situation is in terms of people checking on our food safety. In Uxbridge in London—I just took it at random—there are 263 food business operations. Twenty-one of them, 8%, have not even been inspected. Thirty of them, 11%, have a food hygiene rating score of zero, one or two. Those are the three scores, of course, that are less than satisfactory, so nearly 20% of the food business operations in one local authority area are definitely a cause for concern. So, the issue in sub-paragraph (b), which aims to make sure that
“the Secretary of State is satisfied that … bodies charged with enforcement”
have the resources to do it, is quite serious, and is the one I want to concentrate on, because I do not want to repeat what others have said.
I remind noble Lords to switch off devices while we are in Grand Committee. It is quite disturbing and disruptive.
My Lords, I thank the noble Lord, Lord Grantchester, for introducing this group of amendments. I congratulate the noble Lord, Lord Purvis of Tweed, on beating me to the starting post. I, too, pay tribute to my noble friend Lady Fairhead on this amendment, which had cross-party support as an amendment to the Trade Bill 2019 in the previous Parliament, and for her patience in meeting all of us who were involved in its drafting. She was very kind in taking different parts of the various groups of amendments, and it is bewildering to see that it is no longer part of this Bill.
I pay tribute also to those campaigns. The noble Lord, Lord Grantchester, referred to the Daily Mail. I add the Farmers Guardian and, closer to home, the Yorkshire Post. Yorkshire has a massive food cluster, in terms of farmers and food producers and processors, so this is a subject that is very close to their heart. The background to Amendment 23, as far as I can see—and also Amendments 24 and 25, which I shall come on to in a moment—is that it should reflect the work and the debates and the amendments on the Agriculture Bill, as the noble Lord, Lord Grantchester, set out. It also reflects the manifesto commitment, with which the Minister will be even more familiar, that we want to have high environmental standards and animal welfare going forward in our rollover agreements and in future agreements as well.
I go further and say that we have to have fair competition and a level playing field. I would like to have an assurance today from the Minister that he expects that imported food products will meet the same standards and that it is not the intention of the Government to allow in food products which will actually undercut our own producers, and then to proceed to place a tariff on them, with a label on the finished product to say that that is what it is. “This is chlorinated chicken, it does not meet our animal welfare standards, but it is safe to eat if that is what you want to eat.”
This takes us back to the very sorry situation we found ourselves in under—dare I say it—a previous Conservative Government, which I supported, where we unilaterally imposed a ban on sow stalls and tethers but allowed producers to produce pork with sow stalls and tethers in Denmark, Poland and other countries and then allowed those imports to be introduced onto our supermarket shelves. The consumer did not understand the farm tractor label and went on to buy on price, and the result was that more than 50% of our pig producers went out of production almost overnight. Surely, that cannot be the intention of the Government in this case. I make a plea to my noble friend to reinstate the original clause by adopting the amendment, either today or on Report. That is what most of us would like to see.
I thank the noble Baronesses, Lady Henig and Lady Ritchie of Downpatrick, for lending their support to Amendment 24. I would like to add food safety to this for the reasons that we discussed at the time with my noble friend Lady Fairhead, and which I repeat now. The case has been strengthened by the reference made by my noble friend Lord Gardiner when summing up the Second and Third Readings of the Agriculture Bill. He referred to the multiple protections that the Government have put in place, not least the role of the Food Standards Agency and Food Standards Scotland to which the noble Lord, Lord Rooker, referred. Keeping food safety in Amendment 23 would protect that.
On Amendment 25, I again thank the noble Baronesses, Lady Ritchie of Downpatrick, and my almost noble friend the noble Baroness, Lady Jones of Moulsecoomb, for supporting this amendment. I would like to put my noble friend Lord Trenchard’s mind at rest because when we have these debates he frequently says that he would like an assurance from the Minister that whatever we negotiate will be WTO-compliant. If he looks at the World Trade Organization pages, he will see:
“Environmental requirements can impede trade and even be used as an excuse for protectionism. The answer is not to weaken environmental standards, but to set appropriate standards and enable exporters to meet them.”
That is what we are trying to do here. We want to ensure that we make provision through any future regulations under the Bill—or any future trade agreement —that those regulations will not have the effect of lowering animal health, hygiene or welfare standards, the protection of the environment, food safety, hygiene, traceability or human and workers’ rights below EU or UK standards. The World Trade Organization goes on to say that we should be looking to have higher standards that could be met by all those wishing to participate in a particular free trade area agreement.
I will conclude by drawing my noble friend’s attention to the Dimbleby report that he was kind enough to read over the weekend. The executive summary on page 7 of National Food Strategy Part One states:
“Grasping the once-in-a-lifetime opportunity to decide what kind of trading nation we want to be. The essence of sovereignty is freedom—including the freedom to uphold our own values and principles within the global marketplace. In negotiating our new trade deals, the Government must protect the high environmental and animal welfare standards of which our country is justly proud. It should also have the confidence to subject any prospective deals to independent scrutiny: a standard process in mature trading nations such as the United States, Australia, and Canada. If we put the right mechanisms in place, we can ensure high food standards, protect the environment and be a champion of free trade.”
I would like an assurance from the Minister today that that is what he intends and to put at rest the minds of farmers such as Mrs Joan Riddell who has written to me from Banbury in Oxford. She wants an assurance that the high standards of our farmers in this country will be met. Will my noble friend say whether that is what we intend? What is the status of the Dimbleby report? Sadly, the Government will not have responded to it before we have passed the Agriculture Bill or the Trade Bill here or in the other place. Presumably, if the Government have asked Henry Dimbleby to report on this matter, they intend to follow his advice.
I am speaking to Amendments 20, 23, 24 and 25. It is a great pleasure, as ever, to follow the noble Baroness, Lady McIntosh of Pickering, with whom I am in complete agreement. Ministers keep emphasising that this is a continuity Bill, no doubt to reduce its significance in laying a framework for future legislation in relation to trade deals but, as we have already heard, in one area this Bill is not a continuity Bill in the sense that it does not retain the crucial compromises relating to standards and regulations which were agreed on Report of the previous Trade Bill with the noble Baroness, Lady Fairhead.
We have not yet had a clear or honest explanation of that rather important change. What we have had is simply a mixture of rather lame excuses and comments as to why writing standards and regulations into the Bill is no longer necessary. The real reason for that, of course—as has become increasingly clear—is that the United Kingdom is desperate to turn its back on the EU and conclude a trade deal with the United States. It was no great surprise when the International Trade Minister recently rebuked Jamie Oliver and the many others leading the campaign for high food, animal welfare and hygiene standards on behalf of millions of people. She commented that their campaign was making it “more difficult” to secure a trade deal with the United States. Well, the millions of people in this country who support high regulation standards in relation to the issues covered by this group of amendments do not oppose a trade deal with the United States as such; they oppose the importation of unhygienically produced foodstuffs—from wherever they come—meat and poultry stuffed with hormones and cheap produce manufactured by mass production methods that would not be allowed in this country.
It is worth repeating a point made by the noble Lord, Lord Grantchester, when he moved this amendment. Food-borne illness has been described as America’s secret epidemic. Every year in America, at least 3,000 people die of food poisoning and 130,000 people are hospitalised. We know—because the American Food and Drug Administration tells us—that American chicken, beef and pork contains high levels of the bacterium E. coli and that the United States has at the very least 40,000 cases of salmonella every year. Indeed, a recent United States Department of Agriculture study revealed that about a quarter of all chicken pieces sold in stores across America were contaminated with salmonella. So, perhaps the great British public have a strong point with regard to high food standards.
I must tell the Minister that the 80% of the population who have in the past few years consistently expressed their views, often very forcefully, on food and animal welfare standards and regulations, the campaigning right and left-wing popular newspapers and their petitions —which have already been mentioned—the pressure groups, the National Farmers’ Union and the large spectrum of countryside groups will not change their minds. The Government are on a collision course with the people—not with the mere 48% of people who opposed Brexit but with a great majority of the British people; that is, the 80% who want these standards and regulations written into this Bill and, if necessary, other Bills.
In one sense, these amendments reflect that huge public demand. In another sense, they are probing amendments to see what excuses and explanations the Minister will come up with on this occasion for his Government’s decision to no longer be willing to write high standards and relevant regulations into the Bill. Perhaps—just perhaps—the Minister will be able to give us an honest appraisal of what Britain’s trade strategy actually is, including how farmers and the agricultural sector fit into it and how the empty slogan of “a global Britain” will be translated into a credible set of policies consistent with the promises made less than a year ago in the Conservative election manifesto. I will not hold my breath. I expect these amendments to reappear on Report. Indeed, it would be excellent if a compromise amendment could be agreed between the Minister and the signatories to one or two of these amendments. Alas, more realistically, I think that after further discussion on Report, we will have to resort to a vote in order to include in the Bill the high standards and relevant regulations mentioned in these amendments.
My Lords, I am delighted to follow the noble Baroness, Lady Henig, who gave a comprehensive presentation in relation to this issue. I particularly support Amendments 23, 24 and 25.
To put it succinctly, food imports must, and should, comply with the highest food standards, which should be enforced in statute. Having said that, I think the general public want to know whether the animals and the produce that they eat are imported or indigenous, and that the husbandry involved and the agricultural production of the land are carried out in a safe way and are of a certain quality. It is important, therefore, that such regulations are placed in statute. This applies to rollover trade agreements and any future trade agreements.
I am a little perplexed as to why the government amendment that is captured in Amendment 23, in the names of the noble Lords, Lord Purvis of Tweed and Lord Grantchester, and the noble Baroness, Lady Kramer, was not carried over into this particular piece of legislation. Again, I ask the Minister to outline to the Members of your Lordships’ Committee why the Government decided not to include this amendment. Is it their intention to accept a cross-party amendment on Report, to which the Government would also be a signatory, thereby underlining their commitment to ensuring that food standards, food safety, animal health standards and other standards to do with imported agricultural produce are placed in statute, and thereby safeguarding lives and the good, safe quality of food?
We heard many conversations on this issue during the Committee and Report stages of the Agriculture Bill, and there is obviously a direct read-across here. But the bottom line in both Bills is the need to maintain statutory protection, because, without that, we could import food that could be often of inferior quality, which can impact on public health outcomes. Like the noble Baroness, Lady McIntosh of Pickering, I would like an update from the Minister on the Government’s position on Henry Dimbleby’s report, evidence from which we took for our report in the Food, Poverty, Health and Environment Committee back in February. What his report said was very cogent and very apposite at that time. Now, particularly with the Covid pandemic, it illustrates the point that there needs to be the highest levels of protection, but they must be placed in statute. That is why we called for the trade and agricultural standards commission to be given statutory permanency in the Agriculture Bill, because we wanted to see that protection. We want health and food standards to be protected. We do not want chlorinated chicken or hormone-infused beef being imported, which is of a lower standard than the food that is already indigenous to the United Kingdom.
I hope that the Minister can give us an update on the Government’s attitude and response to the Henry Dimbleby report and explain why Amendment 23 was not captured as it was in the original Trade Bill last year.
I call the noble Baroness, Lady Jones of Moulsecoomb.
One day, I am going to send round a notice about how to say my name—but it does mean that I start every speech with a smile.
Noble Lords have covered almost every issue that I was going to speak on today, so I will be like a sparrow under a bird table and hop around to find things that I feel particularly strongly about. Noble Lords have spoken about environmental protection, animal welfare and sentience, and public health. I thank the noble Lord, Lord Grantchester, for his kind comments about Amendment 74 in my name, which is basically about ensuring food standards, food safety, environment protections and so on—that is what you would expect from a Green, of course.
The noble Baroness, Lady McIntosh of Pickering, mentioned the good progress that we made on the Trade Bill before with the noble Baroness, Lady Fairhead. She worked with us and I thought that we found a way forward. The noble Lord, Lord Stevenson, was also involved. I realise that the noble Lord, Lord Grimstone, is not in the same place—his party now has a majority of 80-plus in the Commons and he therefore does not need to talk to us in the same way—but the fact is that almost all the speeches have been united on our need for such protection in the Bill. That is partly because we simply do not believe the Government. It is not about individual Ministers, for whom we have a great deal of respect, even a liking; we just do not trust the Government. They have proved again and again that they have no respect for either the law or Parliament. We therefore need protections in the Bill because if they are not there, we do not believe that they will happen.
It is a case of understanding that trade is not trade on its own; trade has an impact on virtually every area of our public life. A climate emergency is happening now. Parts of America are burning to death and parts of the Arctic are melting into the sea, never to be ice again in our lifetimes. We must understand that trade has an impact on that. There is no argument with that. Personally, I feel that there is no option but to embed these ideas for how to be a more sustainable country in the Bill—in fact, in every Bill that we debate.
Next year, we will host COP 26. The noble Baroness, Lady Boycott, asked an Oral Question today about sponsors and so on. The Minister came back and said, “Well, you know, we’re going to judge our sponsors and their short-term action plans and that sort of thing.” I am afraid that that is just not good enough. We do not trust the Government to judge anything as sustainable or climate-friendly. You have to go outside the Government to find people who understand what sustainability means and what the climate emergency is. We have an opportunity as a country to show some leadership. Quite honestly, we do not have leaders in the Government at the moment; we have children who bluster and act like clowns. It is all very embarrassing, I am afraid.
I mentioned the Government’s majority in the House of Commons. The fact is that that majority lets the Government off the hook, unfortunately, and absolves them of any meaningful scrutiny. However, we scrutinise here and we can tell you that this Bill is not good enough.
I am still hopping around under the bird table. My Amendment 74 would prevent the ratification of any trade agreement that does not comply with UK standards, or at least
“standards that are comparable in effectiveness to those of the United Kingdom”.
It is a simple, effective amendment. I hope that the Government will read it and see that I am trying to be helpful, not difficult.
I echo the noble Baroness, Lady Henig, who pointed out that we do not yet know what criteria the Government are using for their trade deals, that they have not given us any sort of meaningful policy intent or criteria and that we do not know how they will approach and evaluate trade negotiations and trade deals. I assume that that is because they do not know themselves, but it would be really helpful if we had some guidelines from the Government on how they will take these issues forward.
With that, I will finish. I am deeply, deeply furious about the way in which this Government are handling the whole country. I cannot blame the Ministers here but, as British citizens, we should all be thoroughly embarrassed.
I will not be following the same line of argument as the noble Baroness, Lady Jones. I remind noble Lords that the majority of the amendments in this group apply only to regulations made under Clause 2, which applies to continuity agreements only. All noble Lords who have the bogeyman of a trade deal with the United States in their minds when they make their speeches are barking up the wrong tree. These amendments would have nothing whatever to do with any trade treaty outside the continuity agreements.
This feels like Groundhog Day. Having just come through the Agriculture Bill, I see the same people making the same arguments. I have this nightmare that in every Bill going forward, for ever, the noble Lord, Lord Grantchester, the noble Baroness, Lady Jones, and a number of other noble Lords will be popping up with amendments in virtually the same form, whatever the basic content of the Bill, if they have half a chance of squeezing them into the long title.
These amendments go beyond food standards and all those things that so many impassioned words have been said about already into how food is produced. Noble Lords will be aware that, under WTO rules—they are our future in trading terms, if not our past—it is not allowed to mention food production methods without a scientific basis. That is one reason why the EU, and therefore the UK, has been in contravention of WTO rules. We need to come to terms with the fact that we are now living in the post-EU world where the WTO will be extremely important to us. I hope that my noble friend Lord Trenchard, who knows much more about the WTO than I do, will amplify that when he speaks later.
The noble Lords who have spoken know perfectly well what the UK Government’s stated policy is in relation to the standards that they are keen to see adopted in the way that the Government pursue business. UK law is aligned with EU law by virtue of retained law, so whatever trade agreements are entered into, it is not possible to import, for example, hormone-treated beef into the UK—even though there is actually no scientific basis for that, certainly on food safety grounds. Treaties do not and cannot change UK law. As I have said before, we do not customarily write every government policy into legislation. That would create a very cumbersome way of building up legislation.
Noble Lords have remarked in various ways how they think these policies need to be written into the Bill because they do not trust the Government or think that the Government are not sufficiently persuasive. They have often accompanied those remarks with a number of insults about either the Prime Minister or the Government in general. I have to say, it is not the approach of any Government involved in legislating to write into legislation things that appear to upset noble Lords on the Opposition Benches, or even on the Cross Benches. Noble Lords will be aware that, even if we wrote it into the Bill, it could easily be changed if the Government sought to change it in later legislation and Parliament agreed to that. As has already been mentioned, the straightforward electoral arithmetic now means that, with a majority of 80 in the other place, the Government’s policy can change. If we try to put anything into this Bill, it does not necessarily determine government policy for ever and a day, which is what noble Lords are trying to do.
The amendments in this group are not necessary and are, I believe, a waste of legislative time. I would fully expect the other place to reject them if they were pursued and passed on Report. I will speak in specific terms about one amendment only: Amendment 23. A number of noble Lords have referred to it as representing some kind of glorious compromise around the time of the previous Trade Bill. I will speak to it because my noble friend Lord Grimstone, the Minister, was not here at that time. He will have not been aware of the circumstances in which that amendment was put into the Bill.
We have to remember that, at that time, Parliament was barely functioning. It was more focused on resisting any form of Brexit in any way possible. Getting the Trade Bill through the House of Lords was an extremely difficult thing for my noble friend Lady Fairhead to try to achieve. Not to put it too mildly, the amendment that came forward was just an act of attempted appeasement to those noble Lords who were bent on obstructing anything related to Brexit. I say this to noble Lords: the world has changed. That amendment belonged in that era, and that era is behind us.
My Lords, I plan to say a few words on Amendment 20, moved by the noble Lord, Lord Grantchester. I am also sympathetic to Amendments 23, 25 and 26.
Food production and environmental standards, as well as the safety that they enshrine, are crucial to a healthy agricultural sector that seeks to mitigate the dangers arising from poor practices and the low-quality products they produce. Ensuring continuity has been a big priority for a number of Members. Issues surrounding the responsible administration of antibiotics to livestock, for example, are not national issues but global public health ones. Despite the Bill covering existing trading arrangements, we should not forget that the raison d’être for leaving the European Union was the assertion of our sovereignty. It is therefore right that the existing arrangements, conducted while we were in the EU, ought to be scrutinised by the relevant departments to ensure that the UK does not inadvertently undermine measures to achieve reductions in the risk of disease or contamination—or, indeed, targets for antibiotic reduction.
This by no means seeks to discredit trading arrangements made while we were in the EU, which I am confident already abide by the regulations set forth in Amendment 20. However, the scrutiny put forward in this amendment will guarantee this and ensure that the UK reinstates its commitments to the environment, food standards and a safe and healthy agriculture sector globally through its existing trading partners. I look forward to hearing what reassurances the Minister can give us on this group of amendments, particularly on whether there is some way in which the broad drift of what many of them try to get at can be brought back in the hope that we do not have to table specific amendments on Report.
My Lords, I am pleased to speak to these amendments because I believe that each and every one of them is important—not least because of their implications as much as their substance, which matters a lot. After all, the legislation around which they are drafted was made entirely properly via the so-called community method, endorsed by Parliament during our membership of the European Union. As a result, they are as legitimate a piece of law as any domestic statute.
When we left the European Union, it was entirely sensible to slide the then acquis directly on to the domestic statute book and to add a provision enabling amendment by statutory instrument. After all, there is a need for all kinds of consequential adjustment. But it does not follow from this that they have to be amended by statutory instrument, merely that they can be. Equally, perhaps, they can as effectively be amended by Act of Parliament.
Clearly, too, when we left the European Union, the power that Parliament bestowed on the Union in respect of international agreements fell away. This means that such international agreements now again revolve around the use of the royal prerogative. However, as has been pointed out on many occasions, the character of the interdependent world in which we now live means that binding international commitments have a much bigger impact on this country than much domestic legislation, which of course is why the CRaG Act was put on the statute book. The reality is, as many people have pointed out, that the procedures under the CRaG Act are a shadow of substantive full parliamentary procedures in terms of scrutiny, checks and balances, transparency and so on, not least because the crucial international decisions are essentially completed before and not after UK parliamentary deliberation, and by then it is a bit late.
The reality of the world that we live in is that Parliament is given Hobson’s choice. In my mind, for serious, wide-ranging legislative change, that is very undesirable and comes about because of a congruence of our leaving the EU and the role of the royal prerogative. Its effect on legislators and the public is substantial in terms of diminution of their involvement, and scrutiny of what is going on. That is one thing for minor technicalities, but not for major policy changes.
The Government have argued this afternoon that they have made promises in respect of a whole range of these things. Of course they have, but, equally, it was interesting that the Chancellor said earlier today that he would try—I repeat, “try”—to deliver as many manifesto promises as he could. Already there is a bit of a let-out there. And let us be clear: it is not unheard of for Governments to change. After all, I think we have had four in the last five years and, dare I say it, sometimes promises are broken. While it is convenient for Ministers to have Parliament rubber-stamp their wishes, it is not Parliament’s role to do so. Rather, we should deliberate on and then accept, refuse or amend the Government’s proposals—and that is slightly different.
The bulk of the amendments in this group reinforce Parliament’s role in developing agricultural and/or food law. It is difficult to think of anything more important domestically than the quality, wholesomeness and origins of the food that we eat here, be it from the perspective of human physical and mental health, its impact on the NHS and public expenditure or its impact on land management and the environment across the country. In a properly organised world, I suggest that significant changes in respect of these matters merit full parliamentary scrutiny, and at least the amendment is a move in the right direction.
The environment and climate change are in the same category. After all, all carbon emissions, wherever they may originate, do not respect national boundaries, and the effect of excessive emissions, regardless of where they originate, is in general terms a bit like putting the whole globe into a microwave.
On top of all this, where proposed domestic change to ex-EU legislation involves breaches of international legislation—something which it is clear from the events of the last few weeks that the country does not like—I do not believe that the Government should be able to proceed towards that unless either the proper international withdrawal legal procedures have been followed or they have first had express parliamentary authority to proceed.
These amendments do not go as far as I would like, but they are a real step in the right direction.
My Lords, I am glad of the opportunity to speak very briefly in support of the amendments that address issues of food safety and the importing of agricultural goods. I had intended to add my name to the lead amendment, Amendment 20, and I concur very much with the points made very effectively by the noble Lord, Lord Grantchester.
As was mentioned in the first bank of amendments that we debated last week, dealing with environmental issues, in this Bill we are overlapping significantly with the debates that we had on the Agriculture Bill. That is again the position as we address the safeguards needed against importing food of inferior quality to that produced in the UK or the European Union.
I am not going to repeat the arguments that I put forward on Report of the Agriculture Bill, but it might be as well to remind the Committee that amendments on those issues were carried in the context of that Bill and they are equally relevant in the context of this one. I hope that the Government will bear that in mind as they seek to pass a Trade Bill—namely, to make it acceptable to all parts of this House. I commend Amendment 20.
My Lords, much of what I wanted to say has already been said in this useful debate. I am supporting the noble Lord, Lord Grantchester, again. I have been doing that quite a lot in recent weeks. I have to say to him that it might not continue for very long after today, but it has been fun so far.
The House of Lords Select Committee on Food, Poverty, Health and the Environment made the important recommendation that food imports must be required to adhere to the same health, environmental and animal welfare standards as food produced in the UK. Like the noble Lord, Lord Rooker, I sat on that committee, and I was convinced by the evidence we received that it was necessary to put that on the face of the Bill. We have tried it with the Agriculture Bill, but it is also worth trying to get it in this Bill.
Let us be absolutely clear that restricting imports that are below standard will not solve the health problems of this country. We produce a lot of good, healthy food in this country, but the food industry turns it into processed rubbish that poisons us. As the Prime Minister said this morning, it was his obesity that caused a lot of the problems that he had when he got Covid. So it will not be a panacea, but it will help.
We need to be very careful that we do not malign the USA too much. The noble Baroness, Lady Ritchie of Downpatrick, mentioned chlorinated chicken. I have been to the USA every year for the last 21 years —except for this year, because I was banned from going because of Covid—but in each of those years I have eaten chlorinated chicken, and delicious it was, too. We chlorinate a lot of the food that we eat; a lot of vegetables are chlorinated. The point is that it is not the chlorination that is the problem but the standards in which the hens are kept before chlorination. Those animal welfare standards are the most important thing in this discussion.
So I am happy to support the noble Lord, Lord Grantchester, once again, and I wish him well with this amendment.
I call Lord Judd. We appear to be unable to reach the noble Lord, Lord Judd, so I call the noble Lord, Lord Beith.
I am sorry about that. I had problems unmuting, and I was slightly taken by surprise because I thought I would be speaking after the noble Baroness, Lady Ritchie of Downpatrick.
My Lords, these are essential matters. Animal welfare, food safety and the environment affect us all, and they have huge implications for public expenditure because, if you get it wrong, the pressures on the health services and other care facilities become all the greater.
My noble friend Lady Henig dealt with the disturbing statistics from the United States. It is not very nice to think about dear American cousins in this light. However, it is true that deaths and hospitalisations in the States are—I called them troubling, but in a way they are quite threatening. As the noble Lord, Lord Inglewood, said, these things know no national frontiers.
We know that in the pressure for trade—trade is an end in itself—there could be terrific pressures to undermine all that we have built up, because we have built up a great deal in these spheres and can be quite proud of our record, although we cannot be satisfied with it yet, and to see that undermined with a scramble for trade would be shocking. We must monitor and have scrutiny in this area. Our families, friends and children are at stake. I so much agree with my good friend and fellow Cumbrian the noble Lord, Lord Inglewood, that it is sad about our having left the European Union. We need to work on these things effectively internationally and here was a chance to do that and contribute what we have—and we have a lot to contribute—to raising standards across Europe as a whole and from Europe moving into the world as a whole. This is a sad moment in our history—I state it again.
I commend all those who have tabled these amendments and all those who have worked and fought and struggled so hard over so many years to build up our standards. There is a great deal of understanding in the agricultural and farming community in this country about the importance of these things. The noble Lord, Lord Inglewood, was right: these amendments are a significant step in the right direction. They are not enough because we cannot give up the international struggle on the basis of our own standards.
I now call the noble Lord, Lord Beith. As we seem to be unable to reach the noble Lord, Lord Beith, we will move to the noble Viscount, Lord Trenchard.
My Lords, my noble friend Lady McIntosh of Pickering has already intimated that she expects that I will be presenting a different viewpoint from that which most noble Lords have presented on these matters, and she is completely correct, although I was indeed most happy to have support for what I am going to say from my noble friend Lady Noakes and, to some extent, from my noble friend Lord Caithness.
As I am one-quarter American—my mother was half-American and my grandmother was a farmer in Illinois and Iowa—I strongly resent the widely held belief encouraged by the Daily Mail that American food is bad and inherently worse than ours. I think the noble Baroness, Lady Henig, criticised food safety standards in the United States quite strongly and quoted Henry Dimbleby, but she quoted him selectively. He also said in his report:
“But negotiating trade deals is hard. Any blanket legislation requiring other countries to meet our own food guidelines would make it nigh-on impossible. We already import many food products from the EU that don’t meet UK standards. A blanket ban would make it impossible to continue trading even with this most closely aligned of partners.”
Chickens reared in Poland also come to mind, where stocking densities are massively higher than what we tolerate in this country. Are we quite as good as we think we are? From what I have been reading about pollution in the River Wye and other waterways in Herefordshire and the west country, I am not so sure.
To my noble friend Lady McIntosh, I would say that she is correct that the WTO permits countries to apply higher than international standards to food production, but only when it is not for protectionist reasons, and only when justified by science. The WTO has found the EU bans on GM crops and on hormone-treated beef not to be consistent with that: in other words, it does not believe that the science justifies the ban. Indeed, examination of the science behind the ban on hormone-treated beef suggests that the incidence of the hormone substance in the beef is absolutely minuscule and of no great significance: far less, for example, than found in half a dozen free-range eggs, commonly available in any supermarket.
I believe that the amendment in the name of the noble Lord, Lord Grantchester, is unnecessary, and since the Department of Health, the Food Standards Agency and other bodies have the statutory powers to maintain food safety, I am surprised that he sees it as necessary. I oppose his proposal to require trade agreements to comply with retained EU law relating to food standards, for the reasons I just mentioned. As noted in a previous debate, it will be a matter solely for the UK to decide on our food safety standards in future. The noble Lord is also misguided in thinking that all EU rules contribute to the maintenance of high safety standards: some do not. For example, the incidence of campylobacter infection in the UK is five times what it is in the United States because EU regulations prohibit the washing of poultry products in peracetic acid. I think it likely that in this respect, the US, as well as some other countries, might well have an issue with the UK’s food standards.
My noble friend Lord Caithness said that what is described by most noble Lords as “chlorine rinsing”—that is actually out of date, because peracetic acid is generally used instead of chlorine—has nothing to do with food safety. Indeed, American chicken tastes very good, so I agree with my noble friend. When I go to America, I do not worry about eating chlorinated chicken: it is not bad, it has nothing to do with food safety.
The noble Lord, Lord Purvis of Tweed, stated that his Amendment 23 is similar to a government amendment made to the Trade Bill introduced to your Lordships’ House in 2019. That may be so, but I nevertheless hope that my noble friend the Minister will resist it, for the reasons I have mentioned. UK levels of statutory protection will in future be a matter to be determined by UK statutory agencies and this Parliament. The same applies to Amendments 24 and 25 in the name of my noble friend Lady McIntosh. I think my noble friend’s attention to animal welfare standards compromises her attention to food safety. Furthermore, her Amendment 25 shows that she thinks standards are two-dimensional, higher or lower, rather than multidimensional. I ask the Minister to confirm that the UK will not enshrine in law any measure that treats EU and UK standards as identical. This does not mean that I am suggesting that the UK should depart from its current high standards in connection with the environment, food safety and workers’ rights.
Amendment 56 in the name of the noble Lord, Lord Grantchester, seeks to restrict imported agricultural goods to standards similar to UK-produced goods. I think this would again be a mistake because it would unnecessarily restrict trade with developing countries and introduce distortions into the market.
Amendment 67 seeks to bind the UK to EU animal welfare and animal sentience provisions, which I also oppose.
In her Amendment 74, the noble Baroness, Lady Jones of Moulsecoomb, seeks to ensure that UK standards regarding food safety, the environment and animal welfare cannot be undermined by imports produced to lower standards. I point out to her that in certain respects EU food safety standards have prevented the UK applying safer food standards, so her amendment is not only unnecessary but in some respects harmful.
I am a passionate believer in the benefits of free trade. I am not advocating a race to the bottom, but I think it is unnecessary to bind ourselves in law. We had these arguments for so many hours over the Agriculture Bill and we are having them again. We are going to be responsible for our own regulations in future. Whatever you think about the way other countries produce agricultural products, if we have good labelling in this country people will not be compelled to buy anything. To import more from overseas is the right way to guarantee food security and not the reverse.
My Lords, it is a pleasure to follow the noble Viscount. I agree with one point he made in his speech: it is for Parliament to seek guarantees on our standards. In essence, that is what we are seeking to do: to have a statutory underpinning to ensure that our trading relationships and trade agreements do not undermine them through various different mechanisms which can be beyond amending primary legislation.
It is certainly not uncommon for there to be duties in law on Ministers that frame how they carry out their duties. Most legislation that comes before Parliament has such duties. We are seeking the equivalent for the new approach we have for Ministers and the Department of International Trade when carrying out their trade negotiating duties. There should not be any great surprise about that. This legislation has restrictions in Clause 8 on the new powers for HMRC. There are duties in Schedule 1 about how Ministers carry out their duties on consultation. There is no great surprise that this legislation has restrictions and duties. We are simply arguing that, when it comes to the elements within our amendment, we are expanding the scope of those restrictions and those duties. The noble Baroness, Lady Noakes, might consider that to be appeasement, which I will refer to a little further on, but I disagree with her.
I wish to move government Amendment 23. I want to use those words because I doubt I will ever be able to move a government amendment, but a government amendment was moved on the previous Bill and, without wishing to be facetious, I shall go a little further and quote:
“My Lords, I am bringing forward amendments designed to maintain UK levels of statutory protection when implementing continuity trade agreements … The fact that I am able to do so is testament to the cross-party working that makes this House so valuable, and I have no doubt that this process has enhanced the legislation.”
That was the Minister, the noble Baroness, Lady Fairhead. Later, she said it was
“an improvement to the Bill”.—[Official Report, 20/3/19; cols. 1439-40.]
That is testament to cross-party working. It is not déjà vu or Groundhog Day, and I say to the noble Baroness, Lady McIntosh, that it is not a race or sprint in which we got there first because she is a dogged campaigner on these areas. I think this is more of a relay race between legislation and different individuals. I hope the Minister feels from knowing and seeing the Agriculture Bill and this Bill that it is the settled will of a cross-party consensus that the Trade Bill should be strengthened by the reinsertion of what the Government themselves had considered a strengthening of it.
I want to refer back to the Agriculture Bill, as other noble Lords have indicated. When the noble Lord, Lord Gardiner of Kimble, summed up, he referred to me and the noble Lord, Lord Rooker. In rejecting what we had argued for at that time—although the House did not agree with the Government and passed the amendment—he said that
“none of the 20 continuity trade agreements signed to date would undermine domestic standards.”
He then set us a challenge, saying:
“I look forward to those noble Lords who are determined that this is not the case at least having the courtesy to say, ‘Actually, our fears have been allayed’. I set that as a challenge.”—[Official Report, 22/9/20; col. 1755.]
In around five years’ time, if I am still here, I will say to whoever the Minister is that allays have been feared. The powers under this legislation are for five years and the Government have indicated that some of these continuity agreements are likely to change. Countries that we have signed continuity agreements with will have changed their agreements with the European Union over that period because many of them are discussing changes. The UK will have to choose how it changes its agreements. We are saying that any changes being brought forward must comply with our statutory standards.
The Government have indicated that that is not really necessary because they have pretty much got all the agreements done anyway, so it is purely an academic exercise. We have signed 20 agreements and there are 18 to go. Half is not all of them done and dusted. Given the fact that the Government had this amendment in the legislation when 18 were signed, not 20, what has changed? The noble Lord, Lord Gardiner, did not give a proper response. I look forward to the Minister giving one. The noble Baroness, Lady Noakes, said it was because the previous Government appeased those who wanted to keep our statutory functions. I would be grateful if the Minister can indicate why the Government have changed their position.
I turn to the issue of whether we should be completely reassured that, as the Minister has said before, no trade agreement can ever change statutory provision. The noble Viscount, Lord Younger—who is now back in his place—indicated in the previous group that that would be the case. On the face of it, that is correct. Any trade agreement would require statutory changes, if necessary, to change the primary legislation. However, we have already seen decisions made, for example, on quotas on imported sugar. Decisions have been made over the summer that will have a big and damaging impact on our domestic agricultural market because we will be giving a competitive advantage to those who are operating without the environmental or labour standards that we find acceptable. They also undermine commitments that we have given to the least developed countries.
It also comes back to the issue of chicken. I have been struck by the Government’s language about chicken and the use of chlorine washing. It was helpful that the NFU gave us the details of some of the concerns about this. It comes back to the specific food hygiene regulation. We are carrying this regulation over but the Government have said that it will change on completion of the implementation period. I shall quote from it:
“Food business operators must not use any substance other than potable water—or, when”
“permits its use, clean water—to remove surface contamination”.
That is what the Minister has quoted to us in the past, and that is correct, but I found it really interesting, because the Minister did not finish the quote. It goes on to say
“unless use of the substance has been prescribed by the appropriate authority”.
So materials can be used—in a trade agreement that we can accept from America, for washing any of their products—if we simply prescribe that by an approved authority, and that can be done by negative resolution.
My suspicions always grow when Ministers, when they want to give us reassurance, give us half the situation. The record of the Government this year up to now is, I am afraid to say, that they say they have no intention of doing something just before they do it. The Government say “Trust us, because we have no intention in our future trading relationships of undermining any environmental standards” in the same week as they appoint a trade commissioner, Tony Abbott. I remind the Committee that the week he was appointed, when we were raising concerns on standards in previous proceedings on this Bill and on the Agriculture Bill, he told a conference in London, when he was giving his top tip on how to achieve success in trade negotiations, that they needed,
“not to be held up by things that are not all that important, and not be distracted by things that are not really issues of trade but might be, for argument’s sake, issues of the environment”.
I think the House believes that those aspects are issues of trade. Therefore, the current legislation lacks the enhancements that had been made by the previous Government in their amendment.
In conclusion, the Government’s previous position was:
“A key aspect of that continuity is to ensure that UK statutory protections are maintained. These protections are highly valued by our businesses and consumers and are an important component of the UK’s offer to the world”.
That is correct, and our offer to the world should be the highest standards. The Minister, the noble Baroness, Lady Fairhead, continued:
“It makes it clear that the power can be used only in a way that is consistent with the maintenance of UK levels of statutory protection in the listed areas”—[Official Report, 20/3/19; col. 1439.]
but the agreements, some now very old, will need to be updated, and, in updating them or replacing them, we will have to ensure that any of those changes will be upholding our current standards.
The noble Viscount, Lord Trenchard, suggested that some of this may restrict our negotiators or put extra burdens on them. I do not agree, for an historical reason. The noble Lord, Lord Lilley, said on Second Reading that the party of free trade should not be imposing restrictions. That was half the story. We got rid of the Corn Laws and introduced free trade at the same time as we got rid of adulterated bread, beer and milk and put in place public food standards against them and against counterfeiting.
The Sale of Food and Drugs Act 1875 was a major precursor of the Food Safety Act 1990, itself the precursor of the standards that we are now inheriting. Upholding them is the strongest tradition of Britain, where we have led since Victorian times and other countries have followed. Reinserting this amendment, with the addition of food standards, by the noble Baroness, Lady Bennett, and others and the support of the noble Lord, Lord Grantchester, would be a very strong signal to our trading partners in the world that we will be upholding our standards—British standards.
My Lords, no one listening to this debate today could be in any doubt about the importance that noble Lords attach to the maintenance of the highest standards in the areas that we have been discussing. To make the Government’s position clear, we entirely concur.
I turn to the amendments, starting with Amendment 20 in the names of the noble Lord, Lord Grantchester, and the noble Baroness, Lady Bennett of Manor Castle. It is intended to ensure that regulations can be made under the Clause 2 power only if they adhere to UK standards of food production and safety and that partner country products are in line with our domestic health policies and policy targets.
I was grateful to my noble friend Lady Noakes for reminding us that Clause 2, to which many of the amendments that we considering today relate, relates to continuity agreements, not to new free trade agreements. As your Lordships are aware from the many debates that we have had on this issue in both this Bill and the Agriculture Bill, the UK already has extremely high import standards of food safety enshrined in domestic law. I say again that we have no intention of lowering these; I completely reassure my noble friend Lady McIntosh of Pickering on this point.
The regulatory bodies named in the amendment already oversee those standards, ensuring that all imports are safe when they enter our market. The UK’s food standards agencies will continue to ensure that communities are protected from unsafe food. Imports will also need to meet the requirements of the Veterinary Medicines Directorate. Countries will continue to need to comply with these import standards after the end of the transition period, both on an FTA and MFN basis.
The effect of this amendment would, I am afraid, therefore likely simply to cause confusion among businesses as to its intent and purpose, at a time when they are preparing for the end of the transition period and, of course, are managing the impacts of Covid-19.
I turn now to Amendments 23, 24 and 25, in the names of the noble Lords, Lord Purvis of Tweed and Lord Grantchester, and the noble Baronesses, Lady Kramer, Lady Ritchie of Downpatrick, Lady Jones of Moulsecoomb and my noble friend Lady McIntosh of Pickering. These amendments would restore the effects of a government amendment on standards made during the passage of the previous Trade Bill. I can assure noble Lords that, although these commitments can no longer be found on the face of the Bill, they can still be found at the heart of our trade policy. During the passage of the 2017-19 Trade Bill, your Lordships had absolutely no evidence that the Government’s word would be upheld when negotiating trade agreements. Our continuity programme had yet to get off the ground, and we were not even close to launching negotiations with new partners such as the United States. In this context, of course I can understand why noble Lords sought protections in the Bill to ensure that our trade programme did not undermine standards.
But times have changed. Rather than asking your Lordships to accept a promise that Governments will maintain existing standards, I am now able to point—perhaps to the annoyance of the noble Lord, Lord Purvis—to the evidence that, of the 20 continuity agreements we have signed so far, none has weakened or diluted standards in the areas of animal welfare, environmental protections, food or employment standards, and I can assure noble Lords that we will pursue the highest standards in continuity agreements which we are yet to conclude.
The EU withdrawal Act transfers the EU comprehensive protection in these areas into UK law. Any future decisions on standards will be made in Parliament through domestic legislation, not in international trade agreements and, to reassure my noble friend Lord Trenchard, not by the European Union.
As we have noted, the UK has often led the way on the development of standards and goes significantly further than our trading partners in a number of areas. Examples were provided previously by my noble friend Lord Younger in the debate on the environment and climate change. When it comes to food safety, the Government have been very clear that agri-food imports must adhere to our high food safety standards, both now and in the future. To take the two examples perhaps most frequently cited, chlorine-washed chicken and hormone-injected beef are both already banned from being imported into the UK. As noble Lords will know, the UK’s food standards for both domestic production and imports are enforced by the Food Standards Agency and Food Standards Scotland, which are the prescribed authorities; I hope that reassures the noble Lord, Lord Purvis. There is not a shred of evidence that the Government will be diluting standards as part of our trade agenda. It is quite the opposite; the continuity agreements that we have signed thus far, and those which we are still working towards, have maintained high standards.
I am thankful to my noble friend Lady McIntosh and the noble Baroness, Lady Ritchie of Downpatrick, for referring to Henry Dimbleby’s report on the national food strategy. At the suggestion of the noble Baroness, I read the interim national food strategy report with great interest over the weekend; I extend my thanks to those who contributed to its contents. The Government will publish a response to the interim report in due course but I assure my noble friend that the comments in the report relating to the importance of high standards entirely echo the Government’s own views—subject to the valuable points that my noble friend Lord Trenchard trenchantly made, of course.
Amendment 56 in the names of the noble Lord, Lord Grantchester, and the noble Baroness, Lady Jones of Moulsecoomb, would stipulate that the UK is unable to import under an FTA any food or agricultural products that are not farmed or manufactured to the same production standards as we enforce here in the UK. My noble friend Lord Younger has already drawn your Lordships’ attention to two unintended consequences that this new clause could have. The first relates to the impact on the developing world, from which we import a huge amount of food each year. It is widely acknowledged that technical measures such as agricultural standards can impede trade, particularly for developing countries. The second unintended consequence is the disruption posed to UK customers in terms of the price and availability of foodstuffs on which we are dependent from both developed and developing countries.
When it comes to developing countries in particular, the UK imports predominantly raw food and ingredients, such as tea, cocoa and bananas, among other things. Where these imports are included in FTAs, these countries would be required to prove that they meet the UK’s domestic environmental standards, among others, before they could continue to export to the UK. Not only would this cause supply chain disruption to the UK and put businesses in developing countries at risk; it would also disincentivise developing countries from seeking new opportunities with the UK through FTAs given the burdensome requirements that this would impose on trade partners, as they would have to ensure that their legislative provisions are aligned with those of the UK.
On Amendments 67 and 74 in the names of the noble Lord, Lord Grantchester, and the noble Baroness, Lady Jones, the Government have given assurances—I have repeated them here today—that they are committed to standing firm in trade negotiations and maintaining our high food safety, environment and animal welfare standards. Again, I ask your Lordships to observe our record. We have now signed 20 continuity agreements with 48 countries, replicating the terms we had with them under EU trade agreements. Imports under continuity agreements must continue to comply with our existing import standards. None of these agreements have resulted in a lowering of agricultural or other standards referenced in the amendment.
While I happily acknowledge the expertise and sincere beliefs of the noble Lord, Lord Grantchester, in the light of these reassurances, I ask for his amendment to be withdrawn.
My Lords, I have had a request to speak after the Minister from the noble Baroness, Lady McIntosh of Pickering.
My noble friend Lord Grimstone has just confirmed my worst fears about this interchange of terminology between food safety and food standards. We owe the noble Lord, Lord Purvis, a great debt of gratitude because he clearly stated what Heather Hancock, as chair of the Food Standards Agency, has said on numerous occasions: that our current food safety standards can be changed overnight by the passing of a regulation—that is, a statutory instrument. I think he said that that could happen via the negative procedure, not even the full affirmative procedure.
There we have it. That is the problem. We are not even speaking the same language, which concerns me greatly. On food standards, whatever chemical you want to rinse with—such as chlorine—or hormone you want to inject your beef with, it is not something that the consumers of this country want to consume. I just wish that my noble friend Lord Grimstone would accept that this goes to the heart of our concern, reflected in this group of amendments and the other amendments that we will come on to when we discuss the International Trade Commission and what the future criteria will be.
It is not that the chicken or beef might be unsafe to eat; it is that the product does not meet the high standards of production that our farmers must meet. It will therefore undercut our farmers, who could potentially be put out of business. That is precisely what happened under a previous Conservative Government in the mid-1990s; as a result, 50% of pig producers—who were largely in north and east Yorkshire, I might add—went out of business. That is a position to which I do not want to return. Will my noble friend accept that this terminology is extremely important and that what the noble Lord, Lord Purvis, said in regard to the regulation being amended literally by the sweep of a pen is what goes to the heart of this argument?
I thank all noble Lords who contributed on this group of amendments and reflected on the provisions that they would bring forward. I thank my noble friend Lord Rooker for his experiences at the Food Standards Agency and for bringing up serious concerns over paragraph 9(b).
The noble Baroness, Lady McIntosh, drew attention to previous experiences when the UK imposed higher standards on its producers than the EU did, and the lack of redress that resulted in the closing of many UK businesses.
My noble friend Lady Henig underlined why the British public hold standards to be of key importance and that this must be clearly understood when food purchases are made by them. This point and other comments from the noble Lord, Lord Inglewood, and others were reflected around the Committee in the debate, and the Government were asked to show leadership. The Bill sends a clear message, both in and beyond continuity agreements. Principles do not rely on circumstances. The noble Lord, Lord Purvis, spoke very powerfully.
I thank the Minister for the consideration that he has shown. I am glad that he concurs, but he then seeks to wriggle out of what this requires. The evidence is the omission of Amendment 23 in the Bill. Partly why his assurances are so unconvincing is that there does not seem to be any coherent strategy between trade agreements and why trade deals are being pursued by the Government. Elements of that strategy could certainly address standards—that is, how they will be addressed through continuity agreements and beyond. We need to know how the UK Government will approach competing standards regimes.
Another element of a strategy could be climate change, which we addressed earlier in our debates. There does not appear to be any rationale for scrutinising trade deals in the recently established Trade and Agriculture Commission. The Government do not appear to look beyond Brexit and tomorrow’s headlines. There is no real answer other than Brexit.
When amendments to the Agriculture Bill on food standards were proposed in the Commons, the Government argued that their place was in, and their relevance was to, the Trade Bill. However, the Government have not put any such amendments in the Trade Bill. We are happy to enshrine the Government’s commitment in their place. Do they wish to vote against their commitment here?
The charge of protectionism is often levelled against these amendments, but who is being protected and against what? Free and fair competition is to be encouraged. That does not include constraining domestic production in law while allowing access to lower-quality produce that it would be illegal to produce here, for many good reasons.
The WTO allows recognition of standards in international agreements, especially in relation to mutual recognition and the outlawing of dumping practices. These are all serious considerations to be kept in mind in the drafting of amendments and in how best to reflect them in legislation. We will need to keep amendments in mind for further consideration while the Government reassess their approach. We will consider carefully the situation and how best to respond to complement the Agriculture Bill. However, in the meantime, I beg leave to withdraw the amendment.
Amendment 20 withdrawn.
Amendments 21 to 25 not moved.
We now come to the group beginning with Amendment 26. I remind noble Lords that anyone wishing to speak after the Minister should email the clerk during the debate.
26: Clause 2, page 2, line 33, at end insert—
“(6A) No regulations may be made under subsection (1) by a Minister of the Crown, so far as they contain provision which would be within the devolved competence of the Scottish Ministers (within the meaning given in paragraph 6 of Schedule 1), unless the Scottish Ministers consent.(6B) No regulations may be made under subsection (1) by a Minister of the Crown, so far as they contain provision which would be within the devolved competence of the Welsh Ministers (within the meaning given in paragraph 7 of Schedule 1), unless the Welsh Ministers consent.(6C) No regulations may be made under subsection (1) by a Minister of the Crown, so far as they contain provision which would be within the devolved competence of a Northern Ireland department (within the meaning given in paragraph 8 of Schedule 1), unless a Northern Ireland devolved authority (within the meaning of paragraph 9 of Schedule 1) gives consent.(6D) No regulations may be made under subsection (1) by a Minister of the Crown, unless they have consulted with devolved administrations on the implementation of international trade agreements.(6E) No regulations may be made under subsection (1) by a Minister of the Crown unless the Minister has laid before Parliament a statement that, in the Minister’s view, the regulations do not undermine constitutional arrangements related to devolution.”
My Lords, Amendment 26 is in my name and I thank the noble Baroness, Lady Finlay, for her support. This amendment would not only require Ministers to consult devolved Administrations in relation to trade matters but would provide a mechanism under which the procedures that flow from trade agreements would be dealt with in consultation, and with their consent. I shall also speak to Amendment 31, which is supported by the noble Baroness, Lady Finlay, and the noble Lord, Lord Bruce. Amendment 31 again deals with the question of consultation and would add a small section at line 40 of page 2 of the current Bill.
Amendment 50, which is also in this group, is a slightly different measure but an important one none the less; again, it is supported by the noble Baroness, Lady Finlay. Here, we try to bring forward for the consideration of the Committee the question of having a joint ministerial committee and the powers that it might need to discuss international trade issues in relation to the interests of the devolved Administrations. Before anyone in the Committee raises the question of whether we are aware of what we are doing, we are well aware that Amendments 26 and 31 deal with continuity agreements but that Amendment 50, being a proposed new clause, in fact points forward to the new free trade agreements in which we hope the Government will be engaged, and would provide a mechanism under which these could be considered in the context of the interests and involvement of the devolved Administrations.
As with all the others in this group, these amendments are about strengthening and protecting our current devolution settlement. In common with most amendments in Committee, they are probing in nature, although I hope it will be agreed around the Committee that they raise rather big issues, some of which overlap with the internal market Bill, shortly to be received in your Lordships’ House. My noble kinsman, the noble and learned Lord, Lord Hope of Craighead, has raised many of the issues covered by these amendments regularly over the years, and I look forward to his contribution later in the debate—although I think that is now likely to be on Thursday. I hope very much that he will be able to attend then.
These amendments stem from the well-known Sewel convention, which has served the country well for many years. But the problem with the Sewel convention, now incorporated into many devolution Acts, is that it covers only primary legislation. It was founded on the principle, however, that UK Ministers would not normally seek to legislate in primary legislation for issues that were not reserved under the devolution Acts. But the question of whether it should or could be made to apply to secondary legislation is still open.
At Second Reading the noble and learned Lord, Lord Hope, asked for clarification, but I am afraid that he did not receive much from the responses at that time. So I hope Ministers will take the opportunity now to be clear why, if the powers, for example, to modify retained EU law are to be used by Ministers in the UK Parliament to amend legislation in devolved areas, there is no mention of this in the Bill or a requirement to consult devolved Ministers, let alone a clear commitment not to legislate without obtaining their consent. These probing amendments give the Minister the chance to resolve these matters, which are of pressing importance given the imminent elections north of the border and in Wales. I look forward to his response.
Amendment 50 takes the argument a step further, post the implementation period, in the sense that we currently have very little understanding of what happens if consultation has been carried out but consent has not been obtained from any or all of the devolved Administrations on any matter, including, of course, trade. I am sure the Minister is aware that this is an important issue in the Internal Market Bill where mutual recognition and non-discrimination issues are the key to the smooth running of our internal sale and resale of goods and services.
We urgently need a means of settling disagreements, one that commands confidence and trust, so Amendment 50 is a probing amendment but it points the way, I think, towards reforming and restructuring the present, informal arrangements for the Joint Ministerial Committee in relation to international trade and gives it powers to approve mandates, receive progress reports and see the final agreements before they are ratified. The amendment is clearly complementary to Amendment 57, which is in my name, which deals with parliamentary scrutiny more generally and which is in a later group. I beg to move.
My Lords, I begin by apologising for not having been able to take part at Second Reading. Amendment 27, tabled by my noble friend Lord Bruce of Bennachie, to which I have added my name, continues the theme that he and I highlighted at Third Reading of the Agriculture Bill: how we deal with conflict created by power being conferred on the Secretary of State or UK Ministers to make regulations in areas of devolved competence. I make absolutely no apologies for repeating our arguments in relation to the Bill today. It is in many ways similar in its objective to Amendment 26 and other amendments in this group to which noble Lords will be speaking. In essence, we are all seeking recognition by the UK Government of the powers of the devolved Administrations and, at the same time, a mechanism to ensure that their views are sought and taken account of.
In Clause 2, as the Senedd’s Legislation, Justice and Constitution Committee report on the Welsh Government’s LCM on the Bill points out:
“The international trade agreements potentially covered by this provision will encompass a wide range of policy areas falling within the legislative competence of the National Assembly for Wales”—
as it was at the time of writing—
“to include agriculture and fisheries.”
We all understand that the details of devolution settlements can be complex, but as the Senedd’s External Affairs and Additional Legislation Committee acknowledges and clarifies, international relations and the regulation of international trade are reserved matters, but implementing obligations arising from international agreements that relate to devolved matters, to which Clause 2 applies, are primarily the responsibility of the devolved Governments and legislatures. So why are the Government overlooking this?
The Senedd’s LJC Committee is also concerned, as I am, that the powers in Clause 2 (6)(a) allow UK Ministers to make regulations that amend the Government of Wales Act 2006, a legislative provision that is worthy of attention and scrutiny by this Committee as well. These powers, we are assured by the UK Government, will not be used to legislate in devolved areas without the consents of the devolved Governments. This wording, it has been argued, has presumably been used to exclude the devolved Parliaments from consultation. I would be grateful if the Minister will clarify this.
Herein lies another problem for those of us who wish to support and defend our devolved legislatures. Are we to believe those words, “We are assured by the UK Government”? There was a time when a response from a Minister at the Dispatch Box would be accepted as the word of the Government, but experience has shown us that we need to be wary. How easily, it seems, the hard-earned powers gained by the Senedd and the other devolved Administrations can be clawed back by this Government. For more than 20 years, successive Labour, coalition and Conservative Governments have added to the powers of the devolved Administrations, making them the effective legislatures we have today. They crave more powers and, in the case of the Senedd, more Members.
Sometimes Governments can behave in the same way as the very worst of parents in exercising their powers. Domineering and unthinking, they eventually and sometimes belatedly understand that removing rights bestowed on their children leads only to resentment. The best of parents listen to the opinions of their offspring and build a relationship of mutual respect and trust, ensuring that the family remains close. The UK has often been described as a family of four nations, but it is a union that we all agree is most unequal. For many of our citizens, it is a union that is no longer working as well as it could, hence the calls for Scottish independence and a growing openness to the prospect of independence for Wales. Chipping away at the powers of the devolved Administrations only adds to the volume of those calls.
I know how willing the Welsh Ministers are to work co-operatively with the UK Government and the other devolved nations. They have contributed effectively to the development of frameworks in many areas and are content to take that process further. In reacting to the publication of the internal market Bill the Counsel General for Wales, Jeremy Miles, said that the Welsh Government were the first to highlight the need
“to develop a new form of joint governance .... in order to manage the intersection between devolved competence and the internal market”.
His comments are equally relevant to this Trade Bill.
As a signatory to Amendment 27, it has my support. Proposed new subsection (6A) would allow for consultation with the devolved Parliaments in order to obtain their consent to regulations and proposed new subsection (6B) would provide qualified majority voting, ensuring that if more than one Parliament withheld consent the regulations could not proceed. It would provide a mechanism for that co-operation, consultation and consent.
My Lords, I echo the comments of previous speakers on this group. I want to put Amendment 26 in context. I have supported these amendments because of the difficult interface between the power to undertake trade negotiations, which is reserved, and the right of the devolved institutions to legislate on and regulate those areas of policy which have been their responsibility for more than two decades, such as plant and animal health, food standards and environmental standards. Amendment 26 would ensure that the devolved Administrations consent to legislation that UK Ministers wish to make which is within devolved competence when that legislation is a consequence of trade agreements they have entered into. This should be wholly uncontroversial. If you decide to tarmac over the driveway to your house and think it would be more effective and look better if your neighbours’ drive was similarly treated, you would ask for their agreement before instructing the contractor to do it.
Of course, it would not cause a problem were the UK Government serious about working with the devolved institutions to ensure that their interests are reflected and respected in negotiations. Unfortunately, there is some doubt about that and some fear that there is no desire to work with the other nations of the UK. If the Government are not putting in the work to build such a consensus agreement with the democratically elected institutions of these islands, then we must try to induce them to do so. If they are they will find willing partners, certainly in the Welsh Government; I am sure we will return to that theme later in the internal market Bill. For smooth functioning, a market must have common frameworks; that will not be achieved with a system of diktats from Whitehall.
Amendment 31 is simple but important. The sunset provision suggested by the Government allows for the powers to be renewed again and again. Others may have a view on the appropriateness of that, but the amendment simply requires the consent of the devolved Governments for those extensions to be granted. As I made clear, the Bill and its consequences potentially constrain the powers of devolved institutions to operate freely in areas of devolved competence. The case for this seems unanswerable.
Amendment 50 concerns the devolved institutions. They are obliged, even within the areas which are fully devolved to them, to respect the international obligations which the UK has entered into. International law is not an option, to be discarded if politically inconvenient. As a result, it is imperative that the devolved Governments are appropriately involved in defining the UK’s objectives in entering trade negotiations which will impact on areas of devolved competence, including food standards and animal health and welfare, and in overseeing these negotiations and agreeing that the draft terms agreed with a third country are acceptable. This should not rely on some grace-and-favour arrangements; it needs to be defined in statute, which is what this amendment seeks to probe. The general election result is not a mandate to overlook the interests of the other legislatures in the nations which make up this union.
I hope that the House will support this amendment, or another version of it, and give a firmer foundation to intergovernmental relations within these shores in respect of trade negotiations.
My Lords, that concludes the work of the Committee this evening. The Committee stands adjourned. I remind Members to sanitise their desks and chairs before leaving the Room.
Committee adjourned at 7.31 pm.