Barry Gardiner

Working Hard for Brent North

Barry challenges the government to allow Parliament to debate CETA

On the day that Parliament debates triggering Article 50, the government sought to minimise scrutiny of the controversial Comprehensive Economic and Trade Agreement between the EU and Canada by bringing a debate before a small committee of MPs in a room upstairs from the main chamber.

Barry, speaking for the Labour Party, said:


"Thank you, Mr Chairman. I welcome the opportunity to address the Committee in this important – and long overdue – debate.

"The Labour Party believes in an open, fair system of trade.

"Trade is one of the most effective means of creating shared prosperity and decent jobs.

"From the very first – when free trade was a radical cause in British politics – it was my party that argued for open markets in the crisis years of the 1920s and 30s, as mounting calls for protectionism led the world towards disaster.

"And we understand the power of fair and open trade today.

"We share the dream of the vast majority of people around the world who want to see closer ties between countries. We want to build trade links, not protectionist walls. Trade is one of the most important mechanisms we have to bind peoples together.

"But we want to see trade agreements that respect sovereignty.

"We want to see trade agreements that benefit the little companies and not just the major corporations.

"We want trade agreements that make our society a more – not a less equal place.

"That is why I am speaking in favour of the cross-party amendment tabled under the name of my honourable friend the Member for Swansea West, the Member who speaks for the Scottish Nationalist Party and my own name.

"The failure to bring consideration of the Comprehensive Economic and Trade Agreement to a full debate on the Floor of the House should be a matter not just of regret by the government. It should be a matter of deep disquiet.

"So whilst I welcome the fact that we have today finally been given the opportunity to discuss this issue under your chairmanship, Sir Edward, I cannot help but record that at its meeting on 7 September last year, the European Scrutiny Committee recommended CETA for an early debate on the Floor of the House in view of the unprecedented public interest that had been shown in the new generation of international trade agreements, and the complex legal and policy issues raised for the UK.

"The Committee granted the government a waiver for signature of CETA at the EU Council of Ministers. But that waiver was conditional upon the promised debate being scheduled urgently to take place on the Floor of the House, and at the very latest before the provisional application of CETA.

"The Secretary of State for International Trade appeared before the Committee on 26 October, and stated that that he was 'very happy' to have the debate on the Floor of the House. He claimed that the failure to set a date for the debate had been due to a scheduling problem in the parliamentary calendar. In reality, as a Freedom of Information request submitted by my office revealed, the government had not been delayed by a scheduling problem in the parliamentary calendar. In fact, the first time the Secretary of State’s department had even approached the business managers to discuss a potential debate on CETA was on 25 October – precisely one day before the Secretary of State was due to appear before the European Scrutiny Committee and account for his failure to do so.

"Worse still, the email trail shows departmental officials asking whether they actually need to set a date for the CETA debate at all, or whether it might be enough just to tell the Chairman of the European Scrutiny Committee that they were 'in the process of scheduling a debate'.

"The email actually reads: 'What advice would you give would it be better to have an actual date or do you think we can just tell the chair we are in the process of scheduling a debate.'

"This does not sound like the Secretary of State was 'very happy' to have a debate on the floor of the House at all. It sounds like his department was actively colluding to pull the wool over the eyes of the Chairman of the Committee rather than to expedite the debate.

"The government confirmed in its subsequent letter of 30 November that it recognised a debate on the Floor of the House of Commons to be 'of the utmost importance'. Yet we find ourselves today with a debate not on the Floor of the House, but up in Room 10 on the Committee Corridor.

"And this at a time when many members are rightly preoccupied with the momentous legislation that is currently taking place on the Floor of the House regarding our withdrawal from the EU.

"Moreover, the European Scrutiny Committee issued the government with a waiver that allowed it to sign CETA at the Council of Ministers. The Committee made clear that the waiver did not extend to the provisional application or conclusion of CETA. Yet the Secretary of State chose to disregard the Committee and override its scrutiny reserve resolution when he approved both the provisional application and the conclusion of CETA in the Council of Ministers. I can only concur with the Chairman of the European Scrutiny Committee who said that this was a 'serious' breach, and one which stands in stark contrast to the many statements made by the government in recent days to assure us of its commitment to respecting parliamentary democracy.

"In the same vein, I would also point out that there has been a marked failure to present CETA for consultation before the devolved administrations, despite the fact that their departments are all listed in the annex of entities covered by the public procurement rules of CETA (Annex 19), and are thus exposed to CETA’s strictures on central and sub-central government entities alike. I would call on the government to remedy this failure to consult the devolved administrations as a matter of urgency, prior to initiating the process for ratification of CETA in this House.

"So, Sir Edward; with regard to process:

• The government failed to meet its own successive promises to bring CETA forward for a full debate on the Floor of the House.

• The Secretary of State was, at best, disingenuous in the statements made to the Chairman of the European Scrutiny Committee.

• He explicitly broke the waiver that the Committee had given to him when he approved both the provisional application and the conclusion of CETA.

• And his department has failed to engage with and consult the devolved administrations in respect of an agreement that has specific application to them.

"These are serious procedural failures that show a disregard for the proper scrutiny of parliament, and in themselves I believe they provide a compelling case for this committee now insisting that the government should bring a full debate to the Commons. But there are substantive reasons as well as procedural ones, and in many respects they are even more compelling.

"So I now turn to the content of CETA.

"It will be a matter of surprise to the Committee to learn that the government has not commissioned any research into what the impact of CETA might be on the UK economy. It should also be a matter of concern. Because the government has repeatedly claimed that CETA will bring up to £1.3 billion extra to the UK economy. Now let me say straight away, that I would be the first to cheer if this were a credible prospect. Yet the government has admitted in its explanatory memorandum of July last year that it simply took a projection of overall gains to the EU and divided it by the UK’s share of EU GDP in order to come up with its figure. This ‘back of an envelope’ calculation must qualify as one of the crudest and least credible methodologies ever adopted in projecting the impact of a major trade agreement.

"The only study to date that has disaggregated the prospective impacts of CETA on individual EU Member States concluded that countries such as France, Germany and Italy will indeed see an increase in their exports as a result of CETA. However, the study is clear that the UK would experience a decrease in both its exports and its balance of trade as a result of CETA. At a time when the UK balance of trade is already under so much pressure, the very possibility that we might suffer a loss of exports from CETA should give us pause for proper scrutiny. At the very least, a proper impact assessment of how the agreement will specifically impact the UK needs to be conducted, and further underlines the need for the promised debate on the Floor of the House.

"Members will also be surprised to learn that the government has failed to list in Annex 20 to the agreement a single one of the dozens of great British food products that qualify for protected geographical status. The UK is the only major EU Member State that failed to secure such protection in CETA for its food businesses. If you take a look at the ‘geographical indications’ annex of CETA (Annex 20), you will find page after page of products listed for protection by France, Germany, Italy, Greece, Spain, Romania, Austria, Hungary and the rest, but not a single one for the UK.

"So no protection for Scotch beef, Scotch lamb, Scottish farmed salmon, Welsh beef, Welsh lamb, Cornish Pasties, West Country farmhouse cheddar, Blue Stilton (and white, for that matter); over 50 other British products qualify for protected geographical status. How can the Secretary of State have failed to protect a single one of our products in CETA? No wonder he does not want this discussed on the Floor of the House of Commons.

"CETA is also remarkable in its complete disregard for the interests of small and medium-sized enterprises. Even the Transatlantic Trade and Investment Partnership, or TTIP, contained a dedicated chapter outlining what support measures the EU and USA would introduce for SMEs. By contrast, in all the 2,255 pages of CETA text there is not one single commitment to further the export interests of SMEs.

"We have heard much talk in recent times of the government’s commitment to parliamentary sovereignty. The Prime Minister has declared that leaving the European Union will allow Britain to be a fully independent, sovereign country once again, no longer subject to 'supranational institutions that can override national parliaments and courts'. The Secretary of State for International Trade has likewise given us his vision of 'Britain as an independent sovereign nation, with a parliament beholden to no one.' 

"Yet, as last week’s White Paper spelled out clearly, CETA creates a framework of supranational institutions that are precisely designed to override national parliaments and courts. Along with the CETA Joint Committee, which will have binding powers over sovereign parliaments in future, CETA includes the Investment Court System, the latest form of investor-state dispute settlement (ISDS) mechanism to allow foreign investors to sue host governments over public policy measures that undermine their profits. Under CETA, a foreign company will have the right to bypass the domestic courts and avail itself of its own privileged commercial judicial system to challenge any regulatory reforms that run counter to its ‘legitimate expectations’ as a profit-making enterprise, claiming vast sums in compensation even when Parliament has approved the reforms.

"Labour is opposed to any system that grants foreign investors private justice in their own private courts. As noted in the charter for progressive trade deals that we adopted last year, we uphold the basic principle of equality before the law that requires foreign investors to abide by the same rules as everyone else, in the same judicial system as everyone else. Foreign investors can have full confidence in the British legal system to obtain redress where their interests have been unfairly harmed, and the British people can have confidence that the courts will balance the competing interests of foreign companies and the public good when making their judgements.

"But a company does not even have to win its case in the Investor Court System to undermine UK sovereignty. The very threat of a legal challenge and the scale of both costs and potential damages can make governments back away from regulation that would be in the public interest, and can exert its own ‘regulatory chill’ on government plans for new legislation. A legal technicality prevented Philip Morris from obtaining the billions of dollars in compensation it sought in its case against Australia’s law on plain packaging for cigarettes, but that did not stop other countries from backing away from introducing similar measures for fear of being hit with their own claims.

"It is Canadian companies that have been among the most litigious in using the ISDS powers that exist in other treaties. Yet we have learned from parliamentary questions that the government has failed to conduct any risk assessments into the potential threats of investor-state challenges to health or the environment.

"This is another reason for this committee to insist upon a full parliamentary debate. Such risk assessments are absolutely standard in other countries preparing to adopt ISDS provisions in their trade or investment agreements. The minister really must explain why no such impact assessment was conducted.

"It is not just Canadian firms that will be able to use CETA to challenge social and environmental protections in future. Around 80 per cent of the 13,000 US companies that currently operate in the UK have active subsidiaries operating in Canada through which they will be able to bring ISDS claims using the new CETA investment court system. That means that, overnight, 10,000 US firms will gain the right to sue the UK for any new social, environmental or public health regulations that might adversely affect their profits in future.

"In this way, CETA will open the floodgates to precisely the wave of suits that the UK government was warned about in the cost-benefit analysis it commissioned from the London School of Economics back in 2013. That study made clear that providing North American investors with these privileged rights would bring no benefits whatsoever to the UK economy, but would incur 'considerable' monetary costs to the UK taxpayer – as well as significant political costs.

"The Investment Court System has been rejected by the European Association of Judges, representing 44 national associations, as well as by the German Magistrates Association. Over 100 legal scholars from European universities have issued a strongly worded statement warning that the inclusion of such powers in CETA would undermine not only the rule of law but also the very principles on which our democracies are founded. On the other side of the Atlantic, a group of Canadian lawyers with direct experience of investor-state disputes have published a letter outlining the threats that the Investment Court System poses, and I quote: “the undermining of democratic regulation, the special privileging of foreign investors, the lack of judicial independence and procedural fairness in the adjudicative process, and the lack of respect for domestic courts and domestic institutions.”

"Another reason for ensuring that CETA is debated on the Floor of the House is that, uniquely, it departs from all previous EU trade agreements in being the first in which the EU has accepted the high-risk ‘negative list’ approach to scheduling our service sectors. Under this approach, all sectors that are not explicitly exempted are automatically committed to binding liberalisation – including future services that have not even been invented yet. The adoption of this method in CETA marks a significant departure from the EU’s previous use of the ‘positive list’ approach, where only those sectors actively listed for inclusion are subject to the rules and disciplines of the agreement.

"In addition, CETA introduces the ‘standstill’ and ‘ratchet’ mechanisms which prevent countries from reversing liberalisation commitments already made in their service sectors, whether now or in the future. The ‘standstill’ clause states that governments forfeit the sovereign right to introduce any reforms that could reverse the level of market liberalisation registered in CETA. The ‘ratchet’ clause goes even further, in that future governments lose the right to reverse liberalisation measures that might be introduced in years to come.

"There has been much concern as to whether our public services are vulnerable to attack from the far-reaching provisions of CETA. Trade lawyers from within and without the European Commission have cast serious doubts on the validity of the repeated assurances that public services such as the NHS are safe. Suffice it to say that on the European side, the only sectors definitively carved out of CETA are audio-visual services (in deference to the French 'exception culturelle') and certain air services. There is no disagreement that health, education, post, rail and waste water services are all sectors covered by CETA.

"Individual EU Member States were permitted to register their own national reservations in the two service annexes to CETA. In order to compensate for the lack of certainty surrounding the status of public services, the German government took out a comprehensive reservation to ensure that all its health and social services would be fully protected from the threat of market liberalisation under CETA. The UK government entered reservations for certain aspects of privately funded health and social services only, including privately funded ambulances, but failed to protect the core functions of the NHS.

"The full intricacies of this complex issue are beyond the time we have available to us here this afternoon – but the lack of clarity that plagues it is yet another argument for the fuller debate of CETA that we were promised on the Floor of the House. I will just mention that the official impact assessment carried out for the European Commission at the start of the negotiations included a specific warning that health and education services should be exempted from any investor-state dispute disciplines adopted in CETA. The fact that this recommendation was not taken up in the negotiations, or in what is called the ‘legal scrubbing’ that delivered the final CETA text, is yet another reason why we must avoid rushing into any agreement that could see us bound into a deal that may well be in the best interests of our fellow European Countries, but not in our own.

"Indeed, honourable members may consider that it might be better to conclude a separate deal with Canada when we have the legal capacity to do so on our own, outside of the EU.

"Mr Chairman, these are some of the most pressing concerns we have in relation to CETA, and there are many more that time prevents me from mentioning.

"Let me conclude with one final observation. The Secretary of State for International Trade stated just last week that he intends to ‘adopt’ all the EU’s free trade agreements into standalone UK treaties with the trading partners in question. For its part, the Canadian government has said that it sees CETA as the baseline for any future UK-Canada trade deal. Moreover, government ministers in this country have suggested that CETA could even provide the blueprint for a future UK-EU trade deal. All these considerations underline the critical importance of getting it right on CETA. They underline the critical danger of not submitting the agreement to the full level of scrutiny that it deserves.

"There is still time to schedule the CETA debate on the Floor of the House, as we were promised by the government, and to hold parallel consultations with the devolved administrations before the provisional application of CETA comes into effect. This was the original chronology stipulated by the European Scrutiny Committee. Certainly, the process of ratification must not be initiated in this country before Parliament has had the opportunity to come to a decision on this issue. I support the amendment."


published this page in News 2017-02-06 20:10:10 +0000

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