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Trade (Australia and New Zealand) Bill

My Lords, it is a pleasure to follow my noble friend. I agree with 99% of what she said—the 1% is that lamb from the Scottish Borders could even just edge Welsh lamb. But I will allow the Minister a life-raft after what he said at Second Reading: he does not necessarily need to choose between Scottish and Welsh lamb, he just needs to say that he will back British producers over Australian and New Zealand producers. He is the British Trade Minister, so he needs to bang the drum for our sectors.

We have heard from the noble Lord, Lord Lennie, on whether George Eustice’s comments were in breach of the compact made in accepting everything bad that is done by your Government once you leave office. The noble Lord, Lord Lansley, is scrupulous in doing that and protecting the previous record.

I turn to the point made by the noble Lord, Lord Kerr, on impact assessments. When it comes to the impact on some of our sectors, the Government themselves have touted the protective measures. They have indicated that this could go wrong and therefore that protective measures could be triggered. The NFU is quite clear that they are insufficient; nevertheless, Boris Johnson and others have said that there are protective measures and that we need not worry. So we need to know the baseline information about that—it needs to be transparent and open—otherwise we will not know whether we are getting close to understanding whether a triggering mechanism will be required or not.

As my noble friend Lady Bakewell indicated, we are starting from the basis that cattle and sheep production in the UK are having difficult times. I noticed, just this morning, from statistics on GOV.UK that this is the first time since 2012 that total UK meat production has

“decreased by 0.8% to 4.1 million tonnes.”

That is a reduction in cattle of 4.6% and in sheep of 9.5%. The sectors are having a difficult time, for a whole set of reasons that have been indicated, and therefore the last thing that they needed was an agreement that did not sufficiently offer a degree of protection that there would be like-for-like competition.

As we all know, this was an agreement of liberalisation, but it was a liberalisation from our end and not theirs, because they were already liberalised. So the only opportunities that could arise would be if Australia or New Zealand either seek or want to capitalise on that. The Minister made the point at Second Reading—he made it very clearly—that it was unlikely that they would want to take all the quotas and capacity they have now secured; he said that it would be unlikely that that would be the case. However, that does not recognise, as the NFU and others have said in very clear briefings, that it is not just the overall volume of imports; it is also what kind of cuts and meats they are and what kind of competition exists.

One thing that, I confess, I had not noticed—it was subsequently drawn to my attention—is that, unlike normal practice, this is an agreement on shipped product weight; it is not an agreement on carcass weight equivalent. That is absolutely desirable for the Australians and New Zealanders; they want to ensure that the good cuts for our markets will be shipped in a way that is super-efficient and is not an overall carcass-equivalent weight. That means that every percentage point that they increase on shipped product weight that comes directly to our markets will have a disproportionate impact on our own ability to compete with that, because our farmers are ordinarily trading on a carcass weight equivalent basis. Unless I am incorrect, I understand that we trade with the EU on carcass weight equivalent, but we are giving Australia and New Zealand the advantage of trading on shipped product weight. I would be grateful if the Minister could say whether that is the case.

My second point is about the Government’s own estimates, which say that we are likely to see a 5% contraction in the sheep sector and a 3% contraction in the beef sector. As the noble Baroness, Lady McIntosh, indicated when putting that in GVA terms, the NFU has calculated that that would result in £464 million lost to GVA. That is not an insubstantial sum when it comes to a sector that operates in some of our most remote and rural areas and, as indicated before, in areas that have received considerable challenge over recent years.

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That is notwithstanding the point that there will of course be some exporters who seek to take advantage of the Australian aspect. I think it was the noble Lord, Lord Lansley, who spoke earlier in the group on an area on which I did agree: geographical indications. The point was raised at Second Reading, with faint hilarity, that we are going to be able to protect our geographically indicated goods only once Australia has signed its agreement with the EU. I wonder whether the Minister is encouraging the talks between Australia and the EU to hurry up that agreement in order to accelerate the protections that we are looking forward to securing. I would be grateful if the Minister could state whether that is so.

I mentioned earlier the really rather impressive report from the Australian Parliament with regard to environmental aspects, and why we need an impact assessment in this area. Just to preface this, I noted the remarks of the noble Lord, Lord Lansley, when it comes to trade and agricultural advice. I read that advice, as he would expect; it was carefully worded with the questions that the Secretary of State asked for advice on—including, for example, whether the FTA mandated a change in our law. Well, it does not, so when the TAC says that this FTA does not mandate a change in our environmental laws beyond what we have committed, of course it does not. But that is not necessarily the question that the noble Baroness, Lady McIntosh, and others have been asking. What they were asking was: what is the space between the bar we have set, which is high, and the level that Australia has, which some argue is lower, that we will trade within?

For example, the TAC indicated that it was unlikely that we would have hormone-growth beef imported, but it did not exclude it. Similarly, it did not exclude the possibility that pesticides and fungicides that we have banned but are used in Australia could be imported. It is about this space where they are able to export to us by using practices which we have banned, but we have not changed our legislation. It is just that the space which exists is that difficult area, and the TAC was more cautious in its conclusions concerning that area.

Let me quote from the Australian Parliament’s report. Paragraphs 7.44 and 7.45, headed “Negotiating Objectives”, are quite interesting. They state:

“Australia’s negotiating objectives with regard to the environment were succinct: to ‘ensure high levels of environmental protection, consistent with international agreed principles, standards and rules’.

Paragraph 7.45 states:

“The United Kingdom’s … strategy for the AUKFTA was more comprehensive—stating it would use free trade agreements … to pursue strong environmental commitments and support the UK’s aims in the low carbon economy. The strategy reflected a view Australia’s environmental standards are not as high as the UK’s. Many of the UK’s identified negotiating objectives have been incorporated into the text of Chapter 22, though most were provisions often found in environment chapters, or incorporated using language such as ‘shall endeavour’ or ‘shall strive’, or committing the Parties to recognise the importance of such matters”.

I am not sure how much hard bargaining was required—although I will defer to the noble Lord, Lord Kerr, who has done this a lot more than I have—to have agreement on both sides to recognise the importance of such matters, but it is there.

This led the Australian Fair Trade and Investment Network to tell the Parliament that

“the commitment to address climate change did not contain any specific targets on emissions reductions and is a soft, aspirational commitment … new articles on the circular economy, air quality, marine litter, and sustainable forestry were aspirational and not enforceable …the process for proving a breach of commitments on not weakening environment protections to encourage trade and investment had a high barrier”.

So, where there is a concern, there is a high barrier to doing anything about it, while in other areas there are simply aspirational commitments. It is very important,

across the whole breadth of these areas for our really important sectors—for beef and sheep in particular, as well as for the environment—that it is clear what the impact assessment is now and that we have clear reporting mechanisms.

This leads on to my Amendment 18, which I will jump to at the moment, which seeks a means by which one of the areas in the agreement that I welcome—the ability, quite particular to the Australia FTA, to include within our procurement social, labour and environmental standards—a mechanism to understand what those standards are and how they can be policed and clarity in guidance for our procuring authorities. The agreement also includes an environment working group; its processes must be public and it must regularly report on these issues, so we are seeking to help the Government facilitate that.

In Amendments 15 and 16, I refer to the impact on procurement. This is related because, currently, about 30% of Australia’s procurement goes to SMEs, and under the new Albanese Government the policy is that it should be 20%—they overshoot that by a considerable degree and they are very happy with that. This is relevant to the threshold question because, if a sub-regional authority has maintained a high threshold, below which it does not need to advertise—say, an education authority in New South Wales with a contract for food or any kind of crop—how will our businesses know about it? That 30% carve-out for SMEs reduces the space where we will be able to compete. The Minister referenced that in his letter to me, and I am still scratching my head as to why the Government think that British SMEs will equate to Australian SMEs. I do not think that is the Australian policy; I think it is to encourage Australian SMEs, not British SMEs. I would be grateful if the Minister could clarify that point.

Finally, I agree very much with the comments from the noble Baroness, Lady McIntosh of Pickering. Rishi Sunak simply cannot get away with making a commitment and, when faced with the mechanisms to deliver on that commitment, ignore it. So clarity from the Government on how this Bill, with this procurement, will support British farmers is fundamental. I hope the Minister can be crystal clear on that when he winds up this group.