Free Trade Agreement: Iceland, Liechtenstein and Norway

Motion to Take Note

Moved by

To move that this House takes note of the Free Trade Agreement between Iceland, the Principality of Liechtenstein and the Kingdom of Norway and the United Kingdom of Great Britain and Northern Ireland, laid before the House on 16 July.

My Lords, this debate is held pursuant to the provisions in Section 20 of the Constitutional Reform and Governance Act 2010. On 16 July, the Government laid before Parliament the free trade agreement between Iceland, Liechtenstein and Norway and the UK. Following discussions between the International Agreements Committee and ours, it was agreed that, exceptionally, the European Affairs Committee would conduct the scrutiny and prepare a report; this was as the European Affairs Committee is charged with considering the UK’s relationship with both the EU and the EEA, given their close economic relationship. The report has been prepared in exactly the same format as that successfully developed in recent times by the International Agreements Committee. I warmly congratulate the committee staff involved in its preparation, particularly the lead author, Chris Johnson.

My remarks will focus on two areas: first, the agreement itself, and, secondly, the scrutiny process for this free trade agreement and free trade agreements in general. The UK became a beneficiary of the EEA agreement on 1 January 1994 as a member state of the EU. In seeking to preserve the benefits of that agreement, the parties, namely Iceland, Liechtenstein, Norway and the UK, entered into two earlier international agreements. The first, in 2019, sought to preserve matters in a UK/EU no-deal situation. That has, of course, now run off. The second, in December 2020, aimed similarly to preserve tariff-free trade in goods after the UK’s automatic exit from the EEA at the end of the transition period. This second agreement was explicitly temporary, and the Government stated at the time that negotiations towards a more permanent agreement had begun in the summer of 2020 and were due to be completed in 2021. This objective has now been met via the new free trade agreement.

Importantly, as we point out in our report, this new free trade agreement goes further than the previous agreements in at least two significant ways: first, with the removal of some tariffs in the fisheries sector, as we detail in paragraph 35 of our report, and, secondly, as it also includes provisions on trade in services. We very much welcome this and note that, while the overall provisions remain more restrictive than was the case when we were a member state of the EU, they go further than the comparable ones in the EU-UK Trade and Cooperation Agreement, as the Law Society also commented.

Nevertheless, the committee welcomes the Government’s successful negotiation of this important agreement and the speed with which it was negotiated, covering a trading relationship valued at over £27 billion, most of which is with Norway. Imports of Norwegian goods are particularly important for Yorkshire and Humber, for instance, where they make up 13.2% of all goods imports, and for my native Scotland, where the figure is 10.4%. Unlike all the other trade agreements concluded by the Government so far, this is not a rollover agreement; it contains substantially new provisions, as I have just observed. Indeed, our report concludes that it should really be seen as the UK’s first new, post-Brexit free trade agreement.

Finally, on the new agreement itself, I would comment briefly on the governance arrangements. We set out the situation in paragraphs 26 to 29 of the report. The joint committee at the core of the FTA will comprise

“senior representatives of each Party”

and has a duty to oversee “further development” of the FTA and review options for the

“further removal of barriers to trade”.

Could the Minister provide some colour around the UK’s expectations of further incremental progress in this relationship?

Turning now to the scrutiny process for this free trade agreement and for FTAs in general, I note that, although this is a substantially new agreement with countries which neighbour the UK, it has not been subject to the same levels of scrutiny and transparency as other new agreements will be, such as the forthcoming one with Australia. Moreover, the materials published alongside the FTA appear to have been published in haste and are in new and sometimes unhelpful formats.

In December last year, the Minister put on record, via a Written Ministerial Statement, a set of commitments for the scrutiny of trade agreements being negotiated with the USA, Australia and New Zealand and the proposed accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. For other agreements, the Government stated that they would

“provide further clarification at the appropriate time.”

The Written Ministerial Statement commitment included the publication of objectives, extensive stakeholder engagement and regular briefings for parliamentarians and committees, plus early access for committees to documents, so that scrutiny was facilitated. None of this has happened with this important free trade agreement, nor has any “further clarification” arrived to explain matters. Could the Minister comment on this?

In closing, I note that, before Brexit, international agreements were the competence of the EU and scrutiny at all stages could take place both through the European Parliament and through the European Union Committee and our sister committee in the other place. This scrutiny has been lost, and to maintain the balance between Parliament and the Executive, a new system needs to be found and adhered to. I thought the Minister’s Written Ministerial Statement last December was a good step towards this, and I am very disappointed that its simple formula has not been followed in this free trade agreement’s genesis. Last month saw the publication of the International Agreements Committee’s report, Working Practices: One Year On. I very much hope that the draft concordat that it proposes, and that the International Trade Committee in the other place supports, will be agreed to.

I am not used to debates without speakers’ lists; I am a bit nervous about going first.

I thoroughly congratulate the noble Earl, Lord Kinnoull, on securing this debate before the expiry of the scrutiny deadline. As he noted, this is the first genuinely new post-Brexit free trade agreement, as opposed to a copy-and-paste of the agreements we enjoyed as an EU member state. As such, it has to be welcomed—but with some caveats. The committee notes that, although this is substantially a new trade agreement, there is a different government approach to parliamentary scrutiny for this one compared to others, such as the forthcoming Australia free trade agreement.

The committee says that government commitments on scrutiny have developed “iteratively”. A less diplomatic way of putting it might be that it is all over the place. Certainly, government commitments on consultation, publication of negotiating objectives, scrutiny of documents, briefings to the committees, access to the texts and so on have not been respected in the case of this agreement. My experience as a Member of the European Parliament was that if the negotiators—the Commission and the Council—took MEPs into their confidence early on, particularly through an approval of negotiating objectives, the further stages were much smoother. But of course, the European Parliament has much greater powers than the Westminster Parliament over trade agreements.

The committee called the layout of the parliamentary report, one of the explanatory materials, “hard-to-read”. It certainly is; I made the mistake of printing it out and it has the titchiest font that I think I have ever seen. The committee also said that the

“rationale for its production is unclear”

and that even the impact assessment was “less informative” than on previous occasions. I hope that this might get a commitment from the Minister to do better in future.

My Lords, speaking as a member of your Lordships’ European Affairs Committee, whose report we are debating, I welcome these three agreements. That may surprise the Minister, who has taken a certain amount of criticism on some of the other debates that we have had on trade agreements, but I do. It is important to avoid the legal and, potentially, practical hiatus in our trading relationship with those three countries that would have followed from our ceasing to be covered by the EEA at the beginning of 2021, this year. Now, as a result of those agreements, that will not happen, which is certainly good news.

However, I have to say to the Government that they would get more credit on an occasion like this if they did not claim, as official spokesmen have done, that these agreements were in some way a massive break- through, a first new-era post-Brexit set of free trade agreements. That is the sort of hyperbole that I am afraid, since it is not true, tends to discredit what is actually a perfectly well-done job. These are nothing of the sort. We have actually been in a free trade area relationship with these countries for many decades, since before we joined the European Community when we were part of EFTA with them. I have to admit—to my shame, because there is the problem of ageism—that I was part of the negotiations for the free trade agreement with Norway and the other members of EFTA when we joined the European Community.