Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation

Motion to Regret

Moved by

That this House regrets that the Trade Agreement between the United Kingdom of Great Britain and Northern Ireland and the Swiss Confederation, while differing significantly from the precursor European Union-Swiss Agreements, does not make adequate provision for trade in services.

My Lords, I tabled this Motion to Regret, effectively on behalf of the EU Select Committee, as the only way available to us to register with the House as a whole our concerns over these so-called rollover treaties—rolling over from EU treaties to UK treaties. There are also implications in the way we are dealing with these for the role of Parliament and of this House in dealing with trade treaties in the future.

First, I emphasise that, contrary to frequently heard claims that these rollover treaties are simply a matter of “delete ‘EU’ and substitute ‘UK’ and all will be fine and relations will continue more or less as before”, in fact this Swiss treaty in particular is decidedly not an equivalent substitute, either in form or in substance, to the arrangements with Switzerland that the UK enjoys as a member of the EU. This is despite the fact that both the UK Government and the Swiss Government genuinely wished for as little change as possible.

Secondly, unlike most of the other treaties with smaller states that our committee has so far reported on, Switzerland is a major trading partner for us in the UK. Indeed, in terms of goods and services, Switzerland is our 10th-largest trading partner. Of course, seven of the first nine are members of the EU; hence, after the US and China, Switzerland is actually the third-largest non-EU global market for the UK. That makes the treaty important in itself, as well as for what it implies for the process.

Thirdly, the House needs to understand the difficulties of having allocated the scrutiny of these rollover treaties to the EU Select Committee and its sub-committees, which have very limited powers. In effect, they are dealing with a fait accompli: a treaty already concluded and signed by the Government.

Lastly, I want to cover the long-run situation, which may be the most important. There is no way in which this Parliament and this House should accept that this extremely limited role for dealing with future trade treaties should apply after this rollover process. I thank the Government for the various publications they have provided as background to this and for continuing to do so for all the treaties we consider. I also thank the Minister for her letter on 20 March, which set out some of the understanding behind this treaty. The House needs to understand, however, that the EU Select Committee’s work in scrutinising this treaty and all the other treaties is a completely new and major task for the committee, and particularly for its staff.

The committee recently published its 10th such report, and those 10 reports cover more than 40 separate treaties. We have gained experience in analysing these agreements, but they have actually raised new issues for this House and for Parliament as a whole. Initially, the draft treaties coming through to us were either to deal with relatively small volumes of trade with small trading partners, or else agreements with larger trading partners but for only one particular sector. The sequence of treaties coming through was a little odd and seemingly random. At one point it appeared that either the Department for Trade or the FCO had a policy of prioritising all such treaties that dealt with the wine trade: perhaps Members of the House would appreciate that sense of priority, but it did seem slightly odd.

The agreement with Switzerland on air services was dealt with early on: we sought to retain the existing arrangements and nodded it through. Since then—this is perhaps incidental to the main point of the debate—we were expecting a large number of treaties on air services with various countries around the world to be subject to scrutiny, but those putative treaties have since been reduced to memoranda of understanding, thereby entirely avoiding parliamentary scrutiny. I am not entirely sure of the rationale for that, and perhaps the Minister can explain, because it is on the face of it a way to evade parliamentary scrutiny. I reiterate that this fragmentary process is regrettable, as the absence of proper provision for services does not give us a clear way forward in the development of UK-Swiss trade and is in no way a simple process.

I turn to what is covered by the agreement, the trade in goods. A number of elements of the precursor agreement have been disapplied. Other elements cannot come into force until we have other agreements. One of the somewhat technical but important trade aspects of this is that the issue of cumulation arises. As I have often said to this House, any trade agreement short of a full customs union and single market is inevitably not exactly frictionless. In particular, there are always rules of origin involved. In the world in which we now live, where many products are multi-sourced in their components, rules of origin involve parts of goods being made in several different countries. The issue for a bilateral treaty is when they are regarded as the equivalent of being produced in one of the parties to that agreement.

In this case, there are a number of complicated provisions, some of which depend on a future agreement between Switzerland and the EU and the UK and the EU, some of which potentially involve a large number of other countries. For example, the existing treaty refers to all the EU arrangements with PEM countries—the pan-European Mediterranean area—which are treated by the EU as the equivalent of EU production. But that will depend on each one of those countries— 20-odd—reaching a future arrangement with Switzerland and with the EU if they are to be treated the same in future.

The mutual recognition agreement allows goods with attestations of conformity in terms of regulation from one market to be sold in the other without any need for further certification. Twenty or so sectors are covered by the EU-Swiss agreement but only three are covered by this one. Admittedly, they are the largest and most important sectors and, by and large, the sectors covered by international standards because the manufacturers work globally. Nevertheless, the agreement is silent on 17 other sectors. Are the Government trying to agree a more basic MRA for those sectors, some of which are important to particular firms in the UK? It would be helpful if the Minister could indicate whether subsequent revisions are intended to cover them.

Then there is agriculture. The agricultural deal with Switzerland is significant. The Government have been unable to agree a transition for precursor agreements relating to the labelling of organic products, sanitary and phytosanitary measures for plant health, animal feed, seeds and so forth. We have passed SIs to enable the Swiss to export their organic products here, but there is no mutuality at the Swiss end as yet. Of course, our organic sector exports some goods to Switzerland. Trade in other agricultural products could continue although certain facilitations will drop away. However, Switzerland will be able to accept imports of animals and animal products from the UK only once the UK has been listed by the European Commission as having appropriate regulation in this area. It would be useful for the agricultural sector to know whether there is a timescale for that and whether we expect the Commission to follow it graciously.

The customs security agreement is incorporated but then disapplied, again because it requires the UK to have an agreement with the EU on safety and security before it can be applied to us and Switzerland. A rather troubling consequence of that is that each party will no longer recognise the authorised economic operator scheme of the other—a particularly important issue for road haulage.

There is also the procedural question of how the future arrangements will work in terms of revision. As noble Lords will have gathered, I hope for significant revisions to cover these gaps in future. This raises the issue, which the House has raised generally, of the scrutiny of joint committee decisions, which are set out under these and other treaties. It must be stressed that it is not clear whether changes agreed by joint committees will be subjected to the same level of scrutiny, inadequate though it is, that we apply to the treaties. It is clear that any amendments that are subjected to the CRaG procedure will be covered by some degree of scrutiny; the issue is whether all future agreements fall under the context of the CRaG arrangements. It is not clear which class of agreement will invoke CRaG.

This gets us on to the question of the future scrutiny of trade agreements. It has to be said that the present arrangements are not very satisfactory, as I have spelled out. The reality is that we have received from government departments only a fait accompli at the end of the line and in a rather random order. I am particularly concerned about future trade treaties since, in reality, this represents a significant reduction in the parliamentary scrutiny we have enjoyed for nearly 40 years, to a large extent through our membership of the European Union and the role of the European Parliament, and particularly through the more detailed provisions since the Lisbon treaty. If Brexit happens, whoever is in government will need to recognise that provisions which limit the role of Parliament in signing off a fait accompli at the end of a lengthy negotiation do not amount to parliamentary scrutiny in any meaningful sense. The complexity of this Swiss treaty underlines the range of topics and interests that potentially will be affected by the process of treaty-making itself.

At some point we will receive from the Government supposedly rollover treaties with Japan, Korea, Canada and so forth, and we need to get this right by the time we do so. We also need to set the right precedent for dealing with treaties in the future as we move into the new alleged global Britain in a post-Brexit world. My view is that we need a trade committee in this Parliament covering all future free trade agreements or possibly a more general treaties committee. I personally favour the former, as I do a joint trade committee of both Houses which will allow it to have appropriate authority. At the moment, frankly, we have minimal authority even on these effectively rollover arrangements. We are dealing only with a fait accompli. The European Parliament dealt with the negotiating mandate, with the process of negotiations, the final draft and the signing off of the treaty. Very similar arrangements in a slightly different context apply in the United States and, to some degree, in other countries such as Canada and Australia. It would be wrong if this Parliament and this House did not have the same deal and the same appropriate level of scrutiny.

Some of that is for a later stage, but most of it arises through looking in detail at this Swiss treaty. I welcome comments from the Minister and from other noble Lords, some of whom may have participated in the scrutiny of these treaties. I beg to move.

My Lords, it is a pleasure to follow the noble Lord, Lord Whitty, not least because he chairs the sub-committee of which I and several other noble Lords present are members. He chairs it rather well, which sometimes can be irritating because one would like at least to be able to poke a bit of fun at him. However, I do not entirely agree with him on this issue, although he has raised some good points.

I shall be brief and raise but three points. The first is that what comes through from this agreement is the good will on both sides which led, whatever the defects which have been pointed out, to a relatively easy agreement. I hope that that will be the same when it comes to agreements with the EU as a whole, because I have to say that it has not shown quite as much good will as one might have hoped.

Oh!

I hear the noble Lord, Lord Deben, expressing a bit of irritation from a sedentary position, but I recall that Monsieur Barnier said that he wanted to “educate” the British people, which I think is called “teaching them a lesson”. However, people in this House have different views, which is still allowed as far as I am aware.

My second point is that I hope that, when the Minister comes to reply, she will answer some of the points set out by the noble Lord, Lord Whitty, and in particular that she will give a fuller explanation of why services are not included. It may be that they are covered in some other way. I do not know, but we would wish to hear that explanation and indeed, the explanation that the noble Lord, Lord Whitty, has asked for.

My third and final point is more one about general procedure. It is fair to say that we in Parliament, be it in the Commons or in the Lords, have not undertaken great scrutiny of the trade agreements made between the EU and other partners. That is a fact. They may have been scrutinised by the European Parliament, but they have not been scrutinised particularly well here. I sat in the Commons for 23 years and I do not remember a lot of such scrutiny, although perhaps I was sleeping at the time—you never know. When it comes to parliamentary scrutiny, which as the noble Lord has said is absolutely vital, there is a balance to be struck. Treaties are not actually made by parliaments; they are made between Governments. We are discussing treaties here and, while it is easy for us to sit back and scrutinise, it would be difficult for us to make treaties with Switzerland or wherever it might be because, of course, a parliament, be it the other place or here, does not have the facilities to do so.

While I do not particularly regret the agreement, I support the noble Lord generally because he chairs the committee rather well.