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Our second substantive issue for this morning’s meeting is our inquiry on the transatlantic trade and investment partnership. I welcome to the committee Lord Livingston, who is Minister of State for Trade and Investment; and Edward Barker, who is head of the transatlantic and international unit in the Department for Business, Innovation and Skills of the UK Government.
I believe that you are Lord Livingston of Parkheid, which is the way to say it if you are an erstwhile fellow Weegie like me.
Absolutely.
We are delighted to have you along this morning. I believe that you have a brief opening statement to make before we get into questions.
I am delighted to go straight to questions, because I am conscious of time.
Thank you very much. I will ask the first question, as that is the convener’s privilege.
You will understand that there has been a lot of keen interest in the transatlantic trade and investment partnership. The delegates that we heard from earlier from some EU member states have said that they see opportunities in TTIP, but—. That seems to be the same as the feeling in Scotland about TTIP, which is that it could have opportunities, but—. Some of the “buts” are the things that we have been looking at.
The main “but” is about public services—in particular, the impact of TTIP on the fully devolved health service in Scotland. I do not know whether you managed to get sight of the press release and information that went out from Unite the Union yesterday on the legal advice that it had sought, which states that the NHS
“is included in the material scope of the TTIP”.
Can you give us some insight into your thoughts on that and maybe some reassurances? I think that we will be looking for pretty strong words from you this morning to reassure the committee and, certainly, the people who have contacted us about TTIP.
Okay. First, I will take a step back and ask “What’s the intention of all the parties?”, because that seems to have been lost in the discussion about TTIP. I will address that before I get on to the legal aspects and the view of our trade experts. We got their opinion pretty late last night, although we were trying our best to get it earlier.
If you listen to the European Commission, you will hear it say very strongly that public services are not to be included in TTIP and that the EC does not intend that they will be. It made particular comments about the NHS. You may well have seen the letter that Commissioner Malmström wrote to me a few weeks ago—if you have not seen it, I can give you a copy—in which she set out the position pretty clearly in terms of the NHS being in TTIP: that is, it is expected that the NHS will carry on as before and that it will be up to individual Commission authorities—the Scottish Government and the UK Government are the appropriate places—what they do. I hope that the committee has seen that letter. If not, we can provide it.
If you listen to others on the Commission, they also make it very clear that the NHS is not included. Commissioner Malmström is Swedish. Her predecessor Karel De Gucht, who is Belgian, commented that the NHS is and always has been exempt, and that it is just used in our country for political purposes. Perhaps Swedes, Belgians and others have some reason why they all trying to mislead the UK. I do not think so. The UK Government is very sure that the NHS is not included, nor does it seek to have it, or public services more generally, included.
Does the United States Government want—
Will you seek that reservation when you go into the negotiations?
Let me talk about the reservation and go through the whole thing. I will go through what the reservation is: it is about public health services and public services more generally. I make it clear that I have not come across another country in Europe that wants its publicly funded health service to be included in TTIP. The European Commission, the European Governments and the UK Government do not seek to have those services included in TTIP. What about the Americans? The chief negotiator for the Americans, Dan Mullaney, made a statement—we can give you the quotation—in which he says that although there has been a lot of discussion about public services, the US Government does not seek to include public services in its trade agreements. He is happy to confirm that it is not seeking to include the NHS within TTIP.
The Americans are not looking for it, the British Government is not looking for it, and the European Commission and European Governments are not looking for it. I hope that we can come to the conclusion that they are not all lying. You might not trust the British Government, you might not trust the Americans and you might not trust the Commission either, but not everyone is making it up. If we start from the position that that is the intent—which it is—the question is whether we have adequately covered the issue.
I will read the reservation from the comprehensive economic and trade agreement—CETA—the trade agreement with Canada, which is the state of the art. It says:
“The EU reserves the right to adopt or maintain any measure with regard to the provision of all health services which receive public funding or State support in any form”.
That is the reservation. There are about three or four others that add to it as well, but it is a good start. There is a clear reservation for health services.
What there are not are words about the NHS. The reason why there are not words about the NHS is that we are dealing with 28 states that all have their own publicly funded health services. We cannot start saying that we will mention the NHS but we will not specifically mention the French or German health services—the reservation deals with all publicly funded health services. We also do not say that we will have a special reservation for the police, because the police are also covered by a reservation on publicly funded services. TTIP is clear.
Last night I asked our trade experts about the legal opinion that the convener mentioned. To put it in context, I am sure that the lady concerned is a fine lawyer, but she is not exactly leading counsel. She is an associate—not a senior associate, a principal or a partner, but an associate in her firm. Her expertise is, I believe, in public health and the EU; it is not trade expertise. We basically do not agree with her analysis.
I am happy to hear about things that need to be tightened up. The lack of clarity in respect of public and private ambulances, which the UK has a special reservation for in addition to the health services reservation, has been mentioned to us. I was happy to have that conversation. Such a conversation, however, should start from the point that it is not the intention of any party to include publicly funded services—be they health services or any other type of public service. Unless you believe that the European Commission and the EU are liars or that they are incompetent—given that that is what they believe, that they have tried to put that in their agreements and that they have been pretty good at negotiating trade agreements over the years—we are in a good place.
I dare say that when you look at some of the clauses, you might ask whether we can tweak this, or what exactly the position is on that, or is there a bit that has fallen through. Those points are fine to have a conversation about. However, publicly funded health services are excluded.
10:45
Good morning, Lord Livingston. You said that CETA is the state of the art. I am open to correction, but my understanding is that neither the House of Lords EU Select Committee nor the House of Commons European Scrutiny Committee has undertaken any specific work in relation to CETA. We have not done much examination of it at a democratic level in this country. It might be the state of the art, but perhaps you could illuminate how much scrutiny of it has taken place.
CETA was agreed at political level a number of months ago. We have kept the scrutiny committees regularly updated on what is involved in CETA, on the issues and otherwise. I have spent quite a lot of time writing letters regarding mode 4 immigration, for example. The committees have been very much involved. In addition, CETA will be a mixed agreement and there will be an opportunity for it to be reviewed.
When I say that it is the state of the art, I mean that the wording represents the EU starting point on negotiations. We could take the South Korean agreement, which has been passed, but CETA represents where the EU is. There will be scrutiny of it, but the final agreement before the legal scrubbing and the translation was about four or five months ago: after political agreement, there was final agreement. That is the course that scrutiny takes. The process can take 18 months to two years.
There has certainly been a lot of correspondence. However, the wording represents the wording with which the Commission would look to start off with the US, because it is aiming to do the same thing as CETA.
We have some way to go with ratification of CETA. I can trace only one European plenary debate on it, so we are not really there with proper democratic examination of CETA, either.
Well, no, but that is because scrutiny is a matter of time. The full text has been published, however, and it represents the latest wording regarding how we are trying to protect Europe as well as to do modern trade agreements, particularly with other advanced countries. It could be that a Parliament somewhere in Europe, in the 28 states, will reject it, but the reason why I quoted it is that it is what the Commission would use as its basis for trade agreements. I was asked, “What is the reservation?” I cannot quote TTIP as it does not exist, but I can quote the state of the art and the wording that the Commission used in trying to protect public services across Europe. I think that that is perfectly reasonable.
The point is that CETA has yet to be fully scrutinised, so your point might be premature. Can I—
It is not premature to say that that is the wording of CETA. I am not saying that CETA has been adopted. I am saying that it is the state of the art in terms of the wording.
I will move on to a second point. I am a lawyer by trade. I have not studied the Unite opinion—I can see that it is quite lengthy—but I pay respect to it and will study it in due course. However, in my trade, as it were, agreements are often reached in which one party says that a provision is not necessary, but a belt-and-braces approach is adopted anyway in order to get an agreement that suits all parties. Why does the UK Government not want to listen to the deep concerns about the NHS and go for a belt-and-braces approach?
I think that the phrase
“adopt or maintain any measure with regard to the provision of all health services which receive public funding or State support in any form”
is pretty belt and braces. We are part of the EU. If we referred just to “the NHS”, would that include publicly funded health services that are not within the NHS? We also need to consider the definition of “the NHS” when we have, in effect, a Scottish health service. Would we have separate wordings for the Scottish health service, the English one and the Welsh one? “Publicly funded health service” covers a wide gamut over a long time, and I think it is a pretty belt-and-braces approach.
I could go on to talk about additional exceptions regarding privately funded medical services, which have further reservations. I think that the UK has historically had an out in terms of private ambulance services and so on. I was just using the first of the main reservations.
The wording on the public provision of health services is wide ranging and it should cover us. Even if, for instance, you choose to have the private sector provide part of your health service, it is still publicly supported, so it is still covered. This goes wider than just the NHS. We should also remember that the wording covers 28 nations. It would be wrong for us to sit here and say that we want words that relate to a particular activity in one nation.
The approach is very belt and braces. I repeat the words:
“public funding or State support in any form”
I think that you have belt, braces, ties and ropes—everything—in there.
During evidence from John Swinney and the European Commission it was suggested that there can be winners and losers in any trade deal. Which sectors of the UK economy might gain and which might lose out? That includes the Scottish economy, as well.
It is a question of how imports and exports do. You are absolutely right that some sectors of the UK economy—for example, the car industry—will do well. We also think that the food and drink sector should do well. There are many products that we cannot sell to the US just now because of tariffs; for instance, some cheese products have an 18 per cent tariff on them. The partnership will aid small companies in particular, because the current regulatory differences are especially tough for them.
The areas that might lose—some only in the short term—include the electrical machinery market, which the US is particularly strong in. If there was an energy chapter, some parts of energy production might lose. However, given that there is a worldwide price and given that we import from other countries, we might want to replace Qatari gas with American gas. TTIP might give us more options.
Do you have anything to add, Edward, in terms of gains and losses for the sectors?
We would expect the pharmaceuticals sector to be another significant beneficiary.
And the life sciences generally.
Yes. When we talk about “losers”, that is a relative position. The study suggests that it is possible that there would still be growth in the sectors that we are describing as “losers” but their relative share would diminish.
Thank you for that. You mentioned—
Adam Ingram has a supplementary question.
I am sorry, Jamie. I want to ask about the rosy glow that seems to surround trade agreements and the feeling that, somehow or other, increased competition will lead to increased jobs all round. If we lose market share in areas, will we not also lose jobs in those areas? For every job that we gain in textiles as tariff barriers come down, might we lose a job in the food industry as cheap American imports displace our own products?
In some sectors, there will be an initial shift. It will be very small in relationship to the totality, but there will be an initial shift. The question is whether some sectors will change. For example, when the UK joined the EU, the New Zealand farming sector was devastated; as a result it has become the most efficient farming sector in the world and is growing tremendously well. You will see that sort of shift.
It comes down to the general question of whether you believe that free trade, particularly between developed countries but also more generally, enhances overall prosperity. The last major trade deal that we did was with South Korea, and UK exports have doubled since that agreement. A chunk of that is oil, but that is good news for Scotland. That has to be good for the economy of the UK, which now has a trade surplus with South Korea of over £2 billion that it did not have before.
If you look at the research that was done on the World Trade Organization’s Uruguay round, you will see price reductions for families of about £500 a year. Which? undertook that study a number of years ago. There is real evidence that trade agreements can help; I believe that things such as the single market and free trade agreements assist. We have learned, from other things, that putting up protectionist barriers does not work.
Some industries will adapt, some will do very well from the get-go, some will experience some losses and then adapt, and some—regrettably—will not. However, there will be a decent-sized net gain to the economies of the UK.
I am sorry, but the point that I was trying to make is that we do not have an agreement in front of us so we cannot assess whether it will be positive or negative for the flow of jobs, for example. With the North American free trade agreement, the Americans believed that they were signing up to something that would increase the number of jobs in their economy, but they exported jobs to places such as Mexico. We cannot take for granted what outcomes the agreement would lead to, can we?
We can absolutely say that we do not have the final agreement. I would be happy to come back in a couple of years’ time or whenever, when we might have a final agreement, but the committee asked me to come today.
Let us take NAFTA as an example. Many people have different views on NAFTA, but the Mexican economy is very different from the US economy. Its labour costs, for example, are very different. NAFTA might have led to some movement of jobs, but since it, the US economy has powered ahead. The unemployment rate in the US is around 5.6 or 5.7 per cent—it is one of the few unemployment rates that are equal to that of the UK—and millions of jobs have been created.
The US now has a much more prosperous neighbour in Mexico, as well as having Canada. When I speak to people from Canada and the US, they generally say that NAFTA has been a very good thing, and I think that there is a strong belief that the trade agreement on the single market has been a good thing.
I accept that, if the EU gets a really bad agreement in which it waives all the tariffs with America but America does not waive any of its tariffs—which will not happen—there could be an asymmetrical outcome. However, when two sets of developed economies negotiate on equal terms, there will be benefits for both from increased trade. In fact, there will also be benefits for third-party countries, because there will be growth in two of the biggest economies in the world.
I apologise for interrupting you, Jamie.
That is all right.
Do you want to continue, Jamie?
Yes—if I can remember what I was talking about.
My other point is that farmers and others have expressed concerns about food safety standards. Will you comment on that? I apologise for being a bit local, but I have been told that the TTIP agreement may impact on the EU protected food names scheme and on products such as Scotch lamb and Stornoway black pudding, which are very important in my region. Will you talk about the EU protected food names scheme and food safety standards?
On food safety standards, the EU has been clear that standards will not be lowered. People say, “Oh, well, it’s always a race to the bottom”, but the single market was not a race to the bottom. In fact, many complaints about the single market have been about its having created so many rules, and a high-level set of rules. We often hear that there will be chlorine-washed chicken and hormone-fed beef. That is a case in which the Americans would like to export, but they will not be able to. The EU trade commissioners have said repeatedly and consistently—and the Americans know—that that will not happen and that EU food safety rules are EU food safety rules.
By the way, we should remember that the Americans have quite a lot of concerns about EU food safety. For example, members may know that they will not allow haggis into their country as they believe that it is not safe. We have even had problems with the Canadians not allowing Irn-Bru. People have strange views on some things.
Maybe it is a case of beware “the Rustic, haggis-fed”.
Apparently, the Canadians thought that there were unnatural ingredients in Irn-Bru. The colour is naturally occurring.
To be honest, I think that there will be a bit of a price to be paid in the agreement for saying, “We are not going to lower our standards”, because the American farm lobby would want some of those things included, but the EU has said that they will not be, and I think that there will be a price for certain things that the EU might want that it will not get in return. There will probably be more non-hormone-fed beef. The Irish have concerns about efficient producers, for instance, but it will not be a matter of food safety standards.
What was the second part of your question?
11:00
It was on the EU protected food names scheme.
At present, we have some protected names in the US, such as Scotch whisky, which is obviously pretty important. There is a big push to have more geographical indicators recognised in the US. That comes in particular from places such as Italy for Parmesan cheese, for example. The Americans consider Parmesan to be just a general name, like cheddar—we could argue about that as well—rather than a geographical location, and that is causing quite an argument. Products that refer to where they are from tend to have greater protection because they state something. Scotch beef—somebody cannot say that they are providing Scotch beef if it is not from Scotland—and Welsh cheddar, for instance, get greater protection.
I do not think that we will go back on anything. The question is how much help we can get. In the Canadian agreement, there was quite a lot of movement on protecting geographical indicators. I suspect that we might get less in the American agreement than we got with Canada, but there is a big push among feta producers and Parmesan producers. Fortunately, there is not a big push among Hamburgers, or it could get silly. However, I do not envisage things getting worse than they are; it is about pushing to make them better.
The more specific the indicator, the easier it is to argue that it is unique. West Country farmhouse cheddar is the one that I tend to think of—because I rather like eating it—compared with cheddar. Our first priority is to protect what we already have with spirits such as Scotch whisky.
Do not forget the black pudding.
Indeed. I hope that products such as Scottish farmed salmon, Scotch lamb and Scotch beef would all be strong candidates within what the EU is asking of the US. It is a difficult issue for the US, but that is what the EU is pursuing.
Welcome, Lord Livingston. I have a wee quick question about something on which we have found it difficult to get clarity. It concerns the lack of awareness across the Scottish business community of the TTIP negotiations. What work has the UK Government undertaken to raise awareness of TTIP among the business community in Scotland and the UK?
It is usually really difficult to get any interest in trade agreements. TTIP is remarkable; I do not recall the Korea agreement getting any attention.
We have worked with the main trade associations—the Federation of Small Businesses, the Institute of Directors and the Confederation of British Industry—to help to get through to their members, and with a number of individual trade associations. We have had roadshows, including some in Scotland, and set up a website with resources.
When an agreement is made, it is important to go to the particular areas that have opportunities or impacts and work with them on how to take advantage of it. We did that in Korea and will do it in Canada.
I have spoken at a number of business events, at a large number of non-governmental organisation events and to NGOs, and the FSB, the IOD and the CBI are very much involved.
Edward Barker and his team do a lot of work on this, so he might like to add something.
I will add a couple of things. When the negotiation was getting under way, we did a fairly broad consultation for which we got a lot of online submissions that helped us with our initial identification of priorities for the UK. We have regular stakeholder sessions with businesses and also with NGOs and consumer groups, so we hear from a range of interests. I have been to Edinburgh a couple of times with the roadshow that Lord Livingston mentioned, and I think that Ken Clarke spoke at one of the roadshow events in Glasgow. We will continue to do those events over the coming months. Also, we have recently tried to improve our website to make it a bit more useful and accessible.
Thank you.
Good morning, Lord Livingston. I want to open up a further discussion on the health issue. You said that publicly funded health services are excluded. Where in the negotiating mandate that was agreed in June 2013 does it specifically exclude health services from being part of the TTIP negotiations?
From recollection, I think that there is a relation to public services, but I was referring to the wording that we use. I do not think that there is a specific reference in the mandate. It does not contain specific references to many things. However, I think that there is a reference to public services, protecting health and safety and public policy.
I would focus on the text of the agreement, because quite a lot of the framing of any agreement that the EU negotiates starts from a number of assumptions, including the one that public services are protected.
By the way, that reflects the general agreement on trade in services—GATS. One thing that the EU starts with is the agreement on services that already exist, and the EU believes that it has a strong exemption. We have had GATS for 20-odd years.
One of the somewhat strange things about all of this is that, in some of the discussions, it is as if we have never had a trade agreement before. We have had an agreement on services for many years. That is where the EU started from. It then updated the agreement for CETA, and that will be included.
Rather than asking about the mandate, you should look at what the EU is clearly saying—in writing and verbally—about the position. It has made the position incredibly clear. Again, is it that people do not believe what the commissioner is saying? I refer you to the letter that she wrote to me, and I also refer you to the letter that Ignacio Garcia Bercero wrote to me—and to John Healey, I think. The UK Parliament has had a number of witness statements that all make the same point. I also know the position from speaking to the commissioner. On Monday, when she was in the UK speaking at a number of events in London, she said, “Why do people keep asking me the same question when I have been clear about it?” The EU has tried to be really clear about the position.
Where the original mandate referred to that point, it certainly did not say that publicly funded health services were going to be open to competition. I am sure that it did not say that.
Yes, but to be absolutely clear, you said that public health services are excluded. I would expect to see that point put clearly within the mandate; otherwise, what is the status of the mandate? Perhaps that explains why there is confusion and concern across the United Kingdom and across Europe about the issue.
The mandate will build on GATS, and GATS has already excluded those services. If the mandate changed GATS, it would say so, but it builds on what is already in GATS.
I am sorry, but I do not accept that there is confusion because the point is not in the original mandate. The EU has repeatedly been really, really clear. The only reason why there is confusion is that people are creating confusion and choosing to disregard what the EU is saying. That is the situation.
As I said, there are only two explanations. Either you think that the EU is lying and that lots of different people in the EU are lying, including the Belgians and the Swedes—I accept that you will probably not believe the British Government on the issue—or you think that they are not lying and that they mean what they say about the exclusion but they are not competent enough to put the right wording in the agreement. I cannot see any other option.
Again, I refer you to the letter from Malmström—if you do not have a copy, I have one here—which was sent at the end of January, or I can give you a quotation from her speech on Monday night. It has been said time and time again.
I genuinely worry that people are using the NHS as some sort of political football here. Discussing this issue also means that we are missing out on having a proper discussion about what you want to include and what you do not want to include in the agreement, how to make sure that we tighten things up or what has happened in the world in the past 20 years that might cause different choices, because people are starting from the wrong position. That is quite dangerous, because it might mean that we miss things.
There are genuine issues within TTIP that have to be debated, such as the wording, the intent, the position and what is acceptable for Europe if there is to be a deal, and I am happy to talk about them later. Those issues need to be debated, but I ask you, please, to start from the position that the EU is not lying.
Well, I am certainly not going to get into that territory, but can I refer you—
I am sorry, but that is the only logical explanation. You either think that the EU is lying when they say that public health services are excluded or you think that it is not able to put that in.
I do not believe that that is true. I think it is actually a diversion from the real argument. Yes, there is the reservation in CETA, which states the case quite clearly, from my point of view, and commissioners in the EU have clearly stated their intention. However, what we need to know is what the UK Government is saying. Will it go to the negotiating table with CETA and say, “This is what we want and this is how we want to protect our public services”? That is the main question here, and not whether people are lying.
I can answer that very clearly. The UK is happy with CETA and we want to see it replicated.
Will it be in your negotiating plan when you go to negotiate the UK’s position?
I do not go to negotiate the UK’s position; the EU negotiates the EU’s position. I sit in the Council meeting, and I have talked to Commissioner Malmström repeatedly about the NHS in order to ensure that she is entirely on side about it, and she is. There is no issue with that. That is why I asked for the letter that she wrote, which was in response to my request for her to be 100 per cent clear in her views.
The situation is clear. The UK Government is happy with the commissioner’s letter. It makes the position clear, and we are fully supportive of that.
Will the UK Government now be in a position to answer the First Minister’s letter when she seeks those reassurances?
I got a letter from Alex Salmond and I responded to Nicola Sturgeon very clearly. I am happy to give you a copy of the letter if you do not have it. I made the position clear, as I have done repeatedly. The fact that the Scottish Government chooses not to accept it is a different matter.
Willie, do you want to finish your line of questioning?
In September, one of your colleagues, a chap called Earl Howe, who was a UK health minister at the time—I do not know whether he still is—said quite clearly that trade talks must not exclude access to healthcare. He went on to say that exempting health would not be in the interests of British pharmaceutical firms. Who is right—you or him?
There is a difference between health and publicly funded health services. For instance, Scotland has a good and high-tech pharmaceutical and life sciences industry. Do you want it to have access to the US? That is the question. That is why health is different from publicly funded health services. We want to ensure that the pharmaceutical industry is included in those industries that have access to the US markets. We do not want British firms, including Scottish firms such as Touch Bionics—which I think might be an Edinburgh firm—or others that are doing work on revolutionary treatment for hip joints to be locked out of the market.
The position is entirely consistent. Health as a whole should not be off limits. Publicly funded health services are reserved.
I appreciate what you are saying time and again, but where can we see that written down as a matter of UK Government policy?
As I said, CETA represents the state of the art in terms of Government policy. The CETA agreement is similar to where we would start with the US. You are welcome to see the CETA agreement, and that is what the policy represents. The UK has been active in the European Council—we must remember, of course, that the decision is a European one, which is something that we are very happy about.
I want to protect the health service as much as anyone. You mentioned Parkheid earlier, convener. There are two reasons why I chose Parkheid. One is, of course, because of the first British winners of the European cup. However, the other reason is that my dad was a general practitioner in the Parkhead and Dennistoun areas for 40 years. My sister is a psychiatrist, my wife does research on Alzheimer’s and my four first cousins, including two who work in the Glasgow royal infirmary, are all doctors in the health service. The health service is part of me. It was a big disappointment to my father, to his dying days, that I was not a doctor.
We are protecting the health service. It is true that the UK Government may have a different view on how aspects of the health service are provided, but we do not want anything to be put into the agreement that would force us to do things. That should be a matter of Government policy. The Scottish Government may have different policies for its health service from the policies that are in place in the English and Welsh health services, and that should be fine.
Ultimately, it is for the United Kingdom Government to determine whether it goes along the lines that you are suggesting or whether it changes its view, which may happen after May, for example.
I cannot guarantee that it will not change its view after May. I cannot even guarantee that I will be around after May. I am not even allowed to vote.
That is where the power to decide the matter would rest.
It will rest with the British Government, if it is not happy with the reservations on health, to say that. However, the state of the art says X. Also, the EU Commission has been really clear about it. It is not even pushing at an open door; there is complete agreement with the EU. No one is saying otherwise, including the US. It has said publicly that it is not seeking to have publicly funded services in the agreement. It does not want its police forces to be open to competition. TTIP does not force a change in how the health service operates.
We have had GATS for a very long time, which also has requirements. TTIP does not go beyond those. I can only keep on saying that. [Interruption.]
11:16 Meeting suspended.
We will resume from the point at which we were interrupted.
I had finished, convener.
I will pass over to Hanzala.
Good morning, Lord Livingston and Mr Barker. Welcome to the Parliament. I see that you are getting a bit of a hard time, which you might think is unjustified.
I will raise two points. First, I am a little concerned that not enough work is being done to determine how jobs will be affected in Scotland and whether we will be winners or losers or whether the status quo will remain. We have a high rate of unemployment, and we obviously want to protect our jobs and our industry. We want realistic figures on how TTIP will impact on our employment population.
Secondly, people are a little nervous because TTIP is perhaps not as clear in the mandate as it could be in saying that health services are excluded. Although you have gone to great lengths to reassure the committee that that is the case—indeed, you have repeated that several times—we must have a governmental commitment not just from the European Union but from the British Government to say that health services are not part of the plan, regardless of what happens after the election.
We must send out a clear signal to people who are very uncomfortable with the status quo because there seems to be—I am not suggesting that this is your or anyone else’s fault—an apprehension in the community about that. The community needs to be shored up; it needs to be reassured. What steps can you take to do that? You have reassured us at committee level but, at the end of the day, the population is genuinely worried and fearful.
I agree that some people are fearful, but that is largely because people are going around saying repeatedly that the Tories are going to sell off the health service to Americans. We are saying that that is not true.
Various Government ministers, including me and the Secretary of State for Health, have said that the operation of the health services will not be affected by TTIP. Decisions on how they are operated will continue to be for the democratically elected Government of the individual area. That is quite clear and straightforward. We will say that repeatedly. It is the British Government’s policy.
On the point about that policy not being in the negotiating mandate, we could look back to 2013 and ask whether, if we had known that it was going to be such a big thing, we should have put it in. The reservation is already in the GATS so it is not a new issue. We need to bear in mind that we cannot put absolutely everything on the agenda, and there was no disagreement about that—there were some other areas of disagreement.
We need to park the mandate. It was what it was at the time, and it was built on existing agreements that were quite clear on the issue. The UK Government has been very clear in what it has said repeatedly and we are very supportive of the EU’s position.
There is no argument with the EU and I cannot create an argument to oppose the EU. I know that people have tried to say that we are opposing the agreement. The EU has been clear, we are clear, and I can only keep on saying that, as the UK Government stands today, we will continue to say that what is in CETA seems to us to be good. We do not wish to see, seek or agree with changes in the operation of the health service as a result of TTIP.
I can tell the committee that another agreement on trade and services is being negotiated, and I understand that one country that is not in the EU or the US tried to put something in about health services. We and the European Commission pushed back extremely strongly and said that it was not even on the table. That will remain the Government’s position. We do not want to see that in the agreement and, as I have said, the Americans do not want it either. I hope that I can keep on saying that.
The jobs issue is complex. One of the problems is that the best economic modelling has been done on a full employment model to see what the impacts would be on the economy. It assumed that the benefits would come through higher wages rather than through net changes in employment because that would be what happens if there was full employment. As the agreement develops, we will have to do more work on the pluses and minuses.
We have done some work on some of the export industries, and Scottish exports would benefit pretty much in line with the rest of the UK. Within our export industries, we do whisky well and it would benefit from the agreement, as would some of our pharmaceutical industry.
The exact impact on jobs will depend on how companies react and go after exports, for example. If we just sit on our hands and do not do anything, it will not be as advantageous as it would be if we went after the marketplaces.
I speak to a lot of small companies about this and many of them say that they do not export to the US because it is just too difficult. One example is clothing manufacturers, and that is one area in which we will see benefits. Fire destruction testing has to be done in Europe and in the US. That does not really matter if someone is producing and exporting 1 million garments, but a lot of the Scottish knitwear industry might produce only a couple of hundred garments so it is rather expensive to do that kind of destructive testing. That is why, as I stressed earlier, UK Trade & Investment and Scottish Development International are really going to help companies to get after the opportunities and make sure that we get the best result.
The general question we have to ask ourselves is whether free trade is a good thing. Do we agree with the single market? Somebody said to me that free trade agreements are bad. If that is your belief set, I do not agree with it but it means that we should not be making any trade agreements and we should not be part of the European Union—although I know that that is not what Hanzala Malik was saying. We start from the position that free trade aids the wealth of the economy.
Partially it is up to us to ensure that companies around the UK, including those in Scotland, go after these opportunities. Given that we have quite an open economy in the UK, we have a really good opportunity to go after them. We must remember that the US is our biggest export market today.
My question about job losses is important. As you will appreciate, we have limited opportunities for employment in Scotland as it is. I am asking about whether we will be winners or losers because, if we are going to be on the losing end, I want to know how we will support industry that will be losing. You made a throwaway comment that we will not be able to export haggis. I eat vegetarian haggis. I do not see what is wrong with vegetarian haggis; it is full of vegetables. That is just an example.
It is sheep’s lungs that the US has a problem with, actually.
What I am trying to get at is that I do not want to see any job losses in Scotland. What are you doing to protect jobs in Scotland and how will you support us to build on that? You say that people need to go out and find business, which is fine, but it is not fine if you are a small operator in a small part of the UK and you have to compete against the giants. You need support for that. Where will that support come from if it is required?
One thing to consider when you take on any agreement is the length of time that people need to adapt. That is not abnormal; a number of these things take a long time to do. A lot of the changes will be about reduced tariffs both ways, which will be good for prices.
At this point, we do not know which areas will be in or out, because there is some negotiation to do. We do not have an agreement on services tariffs, for instance, yet services represent the majority of the UK economy. There is a lot of work to be done on what is going to be in and out. As we develop what will be in and out and what will be regulated, we will make very strong efforts—like those that we made for the Korean arrangement—to help create the winners and help companies adjust.
The reason why we are doing this is to help the UK economy. There is no ulterior motive; we believe that free trade does help. We provide things such as export support and we will work with the SDI very closely—in fact, I will see the SDI later today. It will take a number of years before the agreement is implemented and as it develops we will see what can be done to help businesses export. We will also look at the implications for businesses that might be against more imports—the farming industry for instance, because American farmers are quite efficient—and at what can change and what specialisation might be needed.
It is too early to know that now. We are some distance off knowing, and the implementation will take many years. First things first: working on the Canadian agreement will probably be next.
The investor-state dispute settlement is not part of the current negotiating process. After receiving 150,000 responses to its public consultation, the Commission is engaging with stakeholders. Will you outline the UK Government’s current position on ISDS provision?
The current position is that we believe the right ISDS clause should be in the agreement—I stress the word “right”.
ISDS is sometimes presented as being something new. The UK has 94 ISDS agreements, as well as the energy charter treaty, which in effect has ISDS clauses in it. We have had ISDS for a long time: if you add it all up, our 94 agreements have been in existence for 2,000 years in aggregate. Do you know how many cases we have lost in that period? Sorry, that is a rhetorical question. The answer is none; we have never lost a case in the UK.
ISDS is not new, but we believe that it can be improved. There are some bad ISDS clauses around and we want to look at areas where ISDS is being abused and misused and to tighten up the provisions. Again, CETA went quite a long way towards doing that.
We are looking at the consultation responses to understand what people’s concerns are and what needs to be reflected in the agreement. For instance, would it be good to have an appeals mechanism in it? People talk about secret courts. In the past, that was largely true with ISDS, but the Americans and Europe are both signed up for the process to be open, as it is in CETA, and NGOs will be able to submit cases, and things like that. There are quite a lot of changes.
Given that we are the biggest investor in the US and the US is a big investor in the UK, we believe that it is helpful to have the right clause. It should make it entirely clear that the Government’s right to regulate is protected, but by the same token it should protect against discriminative action against our companies in the US. It should find that balance.
That is our position. We must bear in mind that 97-plus per cent or something of those 150,000 responses were standard letters. All of them will be reviewed, but if the same comment appears on 80,000 occasions it is difficult to separate them out. The discussion on ISDS has been suspended to take that on board. We are also looking at CETA, which moved a long way away from old ISDS clauses.
We have to finish there, because we have another agenda item that we must deal with before we finish today. Committees are not allowed to continue when the chamber is sitting, and the Parliament will meet in nine minutes.
I will rush out.
Thank you very much for coming to the committee. TTIP has been a matter of great consternation, not just in the committee but among the public, as you will have seen in the public gallery. There has been a lot of very keen interest in TTIP, a lot of fear and possibly a lot of misunderstanding, but maybe some very clear statements from the UK Government would address some of that and allay some of those fears. I hope that we have learned a lot from you this morning and we hope that you have learned a lot from us.
I hope that you have heard some very clear statements. Thank you very much.
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