Uncorrected oral evidence: Trade in a turbulent world: how should the UK deploy its trade instruments?
Oral evidence, 20 October 2026.
Lord McDonald of Salford
Thank you, Lord Chair. For the purposes of my question, let us assume that the Government have a trade policy. My question is to all three of you. From your perspective, what have been the principal strengths and weaknesses of the Government’s trade policy in the areas of labour, development and the environment to date, and what do you think could be improved? I ask that to Rosa first.
Rosa Crawford
Thanks very much for the question and thank you very much for the opportunity to give evidence. As TUC, we very much welcomed the approach flagged in the trade strategy, where the Government said it would “seek strong labour provisions” with trading partners and engage with those trading partners to hold the UK Government to those commitments. It is fundamentally important to trade unions that we have strong, enforceable labour commitments in trade agreements to make sure that we have fair trade and that countries are not gaining an unfair advantage on the basis of exploitation of workers. With the UK-EU negotiations and the reset that the Government launched, we very much see that approach put into action, where the Government have a trading partner in the EU that upholds very high standards on workers’ rights. With the UK-EU agreement, we got a path-breaking commitment—what was called the level playing field commitment—whereby both parties agreed that they would hold workers’ rights to the level they were at in 2020 and not regress from those, and that if they did regress there would be a sanctions mechanism levied. That is a very welcome approach that was a result of trade union lobbying, I should say, on the UK and EU side for many years. That agreement being in place was a huge step forward. The fact that the UK Government are now in the process of building a closer relationship with the EU is very welcome to the TUC, because the Government have been clear that the closer relationship would be founded on mutual high standards of workers’ rights, and we want the UK to commit to implement any improvement made in the EU. That has been a very welcome approach. In the UK’s trade agreement with Switzerland, the labour provision was also subject to dispute settlement. That has shown that the Government are also able to implement a sanctions mechanism for labour commitments with a non-EU trading partner. It has also been very welcome that the Government have engaged closely with trade unions in their approach towards trade negotiations and trade policy, which is an important break from the past, and we are involved in the UK Government’s Trade and Sustainable Development Domestic Advisory Group for the UK-EU, and in the Trade and Labour Forum. It should be said that UK trade unions have not yet been consulted on the text of trade negotiations, and that is somewhere where we think the Government should go further so that we can fully inform the negotiations with the needs of working people. We also want there to be a role for Parliament, because we know that you have not been consulted on the text of trade negotiations either, so we want that increased scrutiny as well. I will just pick up on some areas where we think there is not enough consistency, though, with the approach flagged in the trade strategy about seeking high standards of labour protection. The Government have concluded trade agreements with partners where we have concerns, in particular the Gulf states and Vietnam, which is one of the CPTPP countries where trade unions are banned. In Vietnam, independent trade unions are banned and, in half of the Gulf states, independent trade unions are banned. We are concerned that in both those trade agreements—CPTPP and the Gulf states agreement—there is no effective enforcement for the labour clause. I also mention that we are concerned about trade agreements with India and South Korea, where there is also widespread repression of labour rights. So we think the Government can do more to actually put their commitments into practice. I then just flag that, while we have really very much welcomed the approach with the steel strategy, we have some concerns that good jobs are being undermined by the tariff-free quota that has been set, particularly for India, South Korea and Vietnam, because that is allowing too many cheap imports to come in. That also undermines good jobs, so we think there are some areas for improvement there. We also have concerns about investor-state dispute settlement undermining the Government’s ability to act in the public interest and to do things like improve workers’ rights and bring public services back into national ownership, because, of course, members of the committee will know that ISDS allows for Governments to be sued by companies for actions like renationalising public services. Indeed, the Government are subject to three ISDS cases currently that I am sure we will come on to. We want ISDS written out of all trade agreements and the commitment made, as Australia has done, that there would be no ISDS in future trade agreements. There are areas we want to improve. As I say, there is much better engagement from this Government than the previous Government with trade unions, so we are hoping that we can do more to make that commitment in the trade strategy around high labour standards a reality.
Lord McDonald of Salford
Thank you. I understand why you concentrated on labour, but I point the other two panellists to development and the environment, and go to Amrita next.
Amrita Saha
Thank you very much for having me here. On development, based on our work at the Institute of Development Studies and University of Sussex, I would like to talk specifically about how the UK has provided support strengthening developing countries’ participation in trade. This has been through the UK’s trade and investment advocacy fund, which has been running since 2011. It specifically provides trade and investment negotiation support to developing countries. As we know, it can be really challenging to negotiate effectively due to costs—practical, resource-based operational costs. Many developing countries struggle to play a full role, and many have bare-bones operations in Geneva at the WTO. Our research suggests that the negotiations window of the trade and investment advocacy fund has been effective and has proven good value for money. It has been unique in addressing the imbalance of resources and the imbalance in the influence between developed and developing countries. It has worked on developing countries’ capacity to negotiate and has been most effective in helping to solidify negotiating positions. We all know that negotiating outcomes are inevitably the product of multiple factors, but very specific contributions can be tracked down to negotiating texts that have either maintained or advanced the interests of developing countries. This is good, and we would advocate for this support to continue. Secondly, UK trade policy has improved market access or, in many cases, provided continuity. The UK’s unilateral preferential market access scheme, the DCTS—the Developing Countries Trading Scheme—has made it easier and cheaper since 2023 for developing countries to export to the UK. The objective has been to stimulate trade but with a vision to promote growth, support economic transformation and help reduce poverty. The DCTS can support developing-country exports; however, it can also lower costs for UK businesses. Our research has found early positive signs that DCTS is succeeding in encouraging developing countries to make greater use of these trade preferences, and this translates into higher tariff savings. Post-Brexit free trade agreements and economic partnership agreements are also preserving preferential access. My third point is that UK trade policies and programmes certainly articulate very strong commitments to inclusion and gender equality. The UK supports the International Trade Centre’s programme SheTrades, which works with women entrepreneurs. This is a very strong and powerful case. Export credit arrangements—for example, UK Export Finance—explicitly link its sustainability strategy to positive impacts in developing markets. There is the UK-New Zealand FTA as well as the UK-India FTA, which is focused on trade and development and labour provisions. That is the positive story, but we find that there is a lack of coherence. There is no effective integration of inclusion and sustainability goals. What do I mean by that? You look at these ambitions often in trade agreements, but are they very closely linked with trade and development programmes that sometimes run in the same countries? That remains an open question. Sometimes short-term commercial interests can dominate; LDCs receiving enough sufficient priority, as well as the issue of LDC graduation, is an important one. More fundamentally, I argue that commitments alone do not demonstrate improvements in development goals or, for that matter, inclusive growth. We need to think very carefully about how funded implementation and meaningful participation by business organisations and worker organisations can go side by side with evaluating distribution outcomes. Where are the gains and where are the losses, and how can we really connect these trade preferences that are being utilised with very targeted interventions in a context where aid has gone down—where there are aid cuts? How do we make sure that the support that the UK does provide is targeted to our preference users?
Tom Wills
Thanks for the invitation to appear today. Similarly to my fellow panellists, I say that the positive has been rhetoric and the area for improvement has been delivery. In the trade strategy released last year, again as a result of advocacy from charities, trade unions and members of the Trade Justice Movement, the Government recognised—explicitly for the first time—that trade does not exist as a set of commercial relationships in some kind of vacuum, but rather has important consequences on labour rights, emissions and international relations. There are a couple of quotes to pick out from the trade strategy that particularly reflected our analysis. The Government said that trade “can—absent safeguards—blow away important protections regarding the environment, working conditions or product standards”. They recognised that, alongside free trade, we need a shared set of fundamental social and environmental standards if we are not going to see trade being used as a kind of engine for pushing rights and standards protections down. Another quote is that “Trade policy is one expression of the UK’s international agenda”, and the strategy links to environmental protections, labour rights, corporate accountability and human rights. All of that is very positive. We are yet to see how that very strong and mature analysis actually impacts or shapes what appears in UK trade agreements. Since the trade strategy was published, as Rosa said, we have had flagship free trade agreements announced with India and with the Gulf Cooperation Council. With India, there was a labour chapter, an environment chapter and various provisions, but none of them was actually subject to the dispute settlement provisions within the trade agreements. Essentially, they are second-class citizens within the structure of the trade agreement and are, to all intents and purposes, not enforceable. They are warm words. They perhaps express a direction of travel, but they do not actually have any utility for Governments or for campaigners looking to protect rights or the environment. In the case of the GCC agreement, while we have not yet seen the full text, the Government have released chapter-by-chapter summaries and, in the “General collaboration and sustainable development” chapter, while again, there are bits of language covering labour rights, environmental protections and climate action, none of that is subject to the dispute settlement provisions. What is more, it also seems to not apply at all to the United Arab Emirates, which demonstrates this extraordinary position where the UK is, on one side, saying that it understands that trade policy is an expression of the UK’s international agenda on protecting labour rights but yet, when it comes down to it, it is content not to apply even the weakest labour provisions to a country where 88% of the population are migrant workers operating in the kafala system. There are some really concerning disconnects between rhetoric and delivery that hopefully the Government will be able to make good on in the next trade policy steps that they take.
The Chair
That is a very helpful introduction.
Lord Anderson of Swansea
You have all emphasised the difference between aspiration and achievement. Is it your view that the agenda—the international climate for the areas that you and ourselves are all concerned about—has darkened in recent years?
Rosa Crawford
We work through the International Trade Union Confederation, which we are a member of, and with trade unions in global South countries, around the multilateral trade environment and the WTO in particular. We know that there are really existential challenges facing the WTO. Obviously, the US has been blocking the appellate body for a number of years. Then, more recently, the Trump Administration have posed really severe threats as well. We know that there is severe reform needed from the WTO and we think there is potential through that body. We talk to global South partners and we ask them, “Do you just want no WTO?” They say no—that there needs to be a global framework, but it has to be a framework that is founded on the principle of fair trade. That means, for the trade union movement, that labour standards need to be embedded within WTO rules. They have not been since the organisation was founded over 30 years ago. That has meant that you have members like China—it is not the only member, but it is one of the most significant members—where independent trade unions are also banned. That means they also gain an unfair competitive advantage because one of the ways that they can hold down prices is that workers are not legally able to strike for better pay or conditions. For us, you need to have binding labour rights commitments within WTO rules. We also need to see more flexibilities allowed for global South countries to be able to invest in decent jobs. That means flexibilities around the subsidy rules, around the TRIPS rules and around technology transfer and the rules around special and differential treatment for developing countries. Global South countries have not been allowed to invest in the industries that they need—the clean industries as well—to have decent jobs. They need the flexibility that global North countries have essentially been able to have, because of power asymmetries. There are other improvements we want as well, including a trade and decent work working group set up at the ILO, which involves trade unions. We have historically been shut out of negotiations at the WTO, which has meant that there have not been enough initiatives to promote decent work. The e-commerce moratorium was a big issue at the last WTO ministerial. We want an end to that moratorium so that global South countries in particular can collect the revenue that is often very much needed for the public purse from digital transactions. On the issue of public health, which is obviously not just a workers’ issue but does affect workers, we want an extension of the suspension of the IP rules that were applied on the Covid vaccines to other vaccines for life-saving medicines, because we need that as an issue of public health concern. Reforms are needed, and obviously we need to get over the block on the appellate body. The UK Government have shown a leadership role in the WTO; at the last ministerial it was taking a leadership role. We would like to see the UK Government using that leadership role to press for those changes that the global union movement is calling for around the multilateral trading system and unblock the appellate body so that we can actually make it function again.
The Chair
We want to move on to the next question, but we can have two quick follow-ups from Sandy and Donald.
Lord Anderson of Swansea
Is it your view then that the failure of the March ministerial is capable of being remedied and is likely to be remedied?
Rosa Crawford
As I say, there is potential, and we have the UK Government showing that they want to be a progressive actor in the trade space. We have heard from Tom as well about the intentions of the UK Government; they want to work with like-minded partners like Canada or Norway or other EU countries that also want to be progressive actors in this space. But it requires concerted action and action together because such a severe challenge is being faced.
Baroness Verma
I want to follow-up on that. I do a lot of work across the global South, and one of the issues that countries there are now becoming alive to is that, although trade can be all things to all people, if they are not allowed to develop the skill set and processing within their own countries, that conversation still goes nowhere. I want to know whether you think that there is enough work being done to help being supportive in-country, in the global South—not just for workers but for the skill sets and frameworks, where we need to move the dial for them to become much more self-sufficient in processing and developing their own product.
Amrita Saha
Thank you for the question; it is critical. I was talking about the UK’s preferential tariff scheme, which is the Developing Countries Trading Scheme, and how the UK has facilitated market access. But your point is well taken: market access is not market participation. If investments in productive capacity are absent, countries will not be able to utilise those preferences. The reality is that we can talk about improvement in aggregate utilisation of preferences through trade agreements and trade preference schemes, but the reality is that the distributional outcomes of such liberalisation are rarely uniform. When you look across products at country level and unpack that, there is much greater variation. Think, for example, about textiles and garments. Of course there is a concentration; they are heavily imported under the trade preference scheme, for instance, with Bangladesh. There are also close links with what is happening in the UK with east Midlands businesses. It improves competitive sourcing. However, to expand the possibility to utilise those preferences requires investments and targeted support in building productive capacity in developing countries. We can further preferences and make them available but, unless those trade agreements are matched by meaningful support and targeted assistance at a time when aid cuts are quite severe, the gap and the disconnect will remain. The challenge and goal for development policy in trade right now is how we address that disconnect. How do we make sure that we get the bang for our buck that is available through development co-operation?
The Chair
We will move on to the next question. There will be plenty of opportunities for everyone to speak.
Lord Hannay of Chiswick
Perhaps drawing on the first question, which I do not think we have had a very full discussion about, and the inclusion of environmental provisions, I would like to ask you, Amrita and Rosa, whether you are familiar with the agreement that the European Union has reached with Mercosur. The hottest issue was the commitments that the Brazilian Government accepted on the environment. For reasons that some members of this committee, including myself and the then Minister for Trade, found completely incomprehensible, we have made no attempt to reach an agreement with Mercosur ourselves. But my question to you is: are the provisions in the EU-Mercosur agreement on the environment the sort of thing that you think ought to be in a UK-Mercosur agreement, if there were one? That is quite a specific question. More generally, what should be the UK’s priorities in reforming and strengthening the rules-based international trading system in these different areas—development, the environment, labour and so on. This is bound to be a hot subject in the years ahead. What do you think we should be aiming for, in generalities?
Amrita Saha
I would like to answer the second, more general, question, if that is okay. I am sure my colleagues will want to come in on the first part of your question. In thinking about the global trading system, I start with the point that that is not just the WTO; it is spread into a series of interconnected agreements and that is at different levels. Strengthening the global trading system as such requires building and defending coherence and co-ordination. Trade agreements need feet on the ground and we have to be at the table to ensure that co-operation turns them into opportunities. So, in thinking about the WTO specifically, the UK should certainly prioritise a fair rules-based trading system. That requires, as my colleagues have pointed out, effective WTO dispute settlement. Through the Trade Advocacy Fund, the UK is already helping developing countries, and it is really important that we continue that, because negotiating on an equal footing can make the system fairer and also helps the system to run more smoothly. Helping developing-country negotiating partners to conduct the right kind of analysis and have informed stances can avert the case where they just say no. Secondly, the UK should make development a substantive part of the WTO reform, we argue, and this is with commitments matched by resources. While developing countries need a voice in negotiations, talking about productive capacity has to be matched by the capacity to implement agreements. One thing which is really critical in this is the appropriate balance of support at Geneva and country levels. Often we find that Geneva-focused support is economically efficient, but the trade-off is that it can exacerbate a capacity imbalance between Geneva and national capitals, and that could lead to negotiated agreements failing to reflect domestic needs and political realities. My third point is really just a reality check. This was a question from before, about the ongoing lack of progress. The likely future geopolitical directions could limit what engagement at the WTO could achieve. We should of course continue to take part, not least because the opportunity costs of not doing so are very high. Given the challenging context, it is also a chance for us to think what could be done with a constrained budget by spending where it counts, to ensure that the UK continues to exert lasting influence. We should see if support may be better directed at specific negotiations alongside the WTO. This could be the AfCFTA or with ASEAN countries, and this has been done in previous trade advocacy fund programming. Identifying very specific areas of support, combined with supporting developing countries at the WTO, is quite important because the opportunity for impact might be much greater sometimes in these cases.
Rosa Crawford
If I might build on that last point that Amrita made, we think it is very important that the Government have increased the funding around Aid for Trade and increased that support at the WTO level for trade union or covenant capacity in influencing those negotiations. For us also, as Amrita says, country-level capacity building and capacity building for trade unions specifically is something we want the Government to have a fund to support, which we had under the previous Labour Government. Up to 2010, the Government were funding trade unions to do capacity building, including in the area around influencing trade negotiations. That funding was cut in 2010 by the coalition Government and has not yet been restored. We are engaging with the Government about possibilities for restoring that funding, albeit we know it is a difficult financial climate, but it is not a large amount of money and it actually creates a huge outcome. Increasing union capacity to influence trade negotiations means that you can have the concerns and the needs of workers, who are going to be affected by this agreement, adequately affected in the agreement. As the TUC, we have done self-funded projects with unions to build capacity that have had a real impact. For example, in Cameroon, on the AfCFTA, we funded a project which increased their capacity to influence negotiations. That has meant that labour considerations and the needs of workers in Cameroon have been factored into negotiations to a much greater extent than they would have been if trade unions had not had that capacity support. We would like the Government to direct support also to trade union capacity building in their aid spend as a way to reinforce the role of workers, to have their voices heard and to influence the multilateral trading rules. I covered quite a lot of the multilateral trading asks in the previous question, so I might not go into those. I can touch on Mercosur, but I want to give Tom some space.
Lord Hannay of Chiswick
The two of you who have replied so far have suffered from complete brain fog about Mercosur.
Rosa Crawford
I can come in on Mercosur if that is—
The Chair
I know Tom wants to come in; maybe he could be more specific on that.
Tom Wills
I shall be brief. I am not going to pretend to be an expert on the environmental provisions of the EU-Mercosur agreement. However, it is worth reflecting on the strategic wisdom of focusing on this kind of free trade agreement beyond all other approaches to trade policy, which the UK has essentially followed for the last six years. The EU put, I think, more than 25 years into negotiating with Mercosur, with a huge amount of political capital and a huge amount of controversy. The UK has its agreement with India that is set to add 0.13% to GDP by 2035. With the GCC, the figures are even less impressive. The disconnect between the political and media noise around FTAs and the actual economic advantage of them is colossal. Putting a huge amount of political capital and perhaps years of negotiating capacity into an agreement with Mercosur, which is likely to deliver pretty unimpressive economic returns, probably is not the most strategic thing we could do.
Lord Hannay of Chiswick
But you are aware, I am sure, that Mercosur countries comprise a very substantial proportion of the remaining rainforest. One competitor in Sunday’s election will probably chop a lot more of it down and one has said he will preserve it. My question really is: is it part of Britain’s interest? It is really rather difficult to think it is not in Britain’s interest to have an agreement with Mercosur. These are countries of extraordinarily important industrial capacity as well. What sorts of environmental conditions are the ones the EU has negotiated broadly okay, if implemented?
Tom Wills
I am not in a position to comment on that, I am afraid.
Lord Hannay of Chiswick
None of you knows. You are just waiting to be hit by a negotiation, and then you will work out whether the EU provisions are any good.
The Chair
David, we do want to move on. If any of you have any thoughts post this meeting, we are not completing our inquiry for another month or so, so we would be grateful maybe for you to feed that in. It is a reasonable point in terms of your objectives and Britain’s trade objectives. I just have a quick supplementary question for Rosa. Do you have a figure of the relevance of unions to our exports? I do not know how many union members there are in this country. I would have thought that a lot of them would be public sector rather than manufacturing, private sector and potentially some services. Do you have a figure that would help me understand the relevance of unions in the export discussions?
Rosa Crawford
I do not have a specific figure, although I can check and write to the committee, but our manufacturing sector is one of the most unionised sectors in the country. Our second-largest affiliate, Unite, represents manufacturing unions and is one of the unions that have kept very strong union recognition. So exports are incredibly important to union members—exports such as steel, automotives, ceramics. These are all areas where obviously the EU is an absolutely critical market. As I say, that closer relationship with the EU—removing more barriers to trade—is important. We very much welcome the SPS agreement currently being negotiated, but sectors such as pharmaceuticals, automotive and chemicals are still facing a lot of barriers to trade, and those are very unionised sectors. For us, the EU is the critical relationship and the other trade agreements, as Tom has said, do not really make a huge difference in terms of our export market. That is why we really hope that, after the summit with the EU in November, we can move on and have a more expansive agreement. That is very important for the union movement.
The Chair
Thank you for that; it was a well-made second point. If you could give us a rough figure—I do not know how you would want to do it; percentage terms?—it would be quite interesting to see that. That is all, because it helps us think about who is being represented in these discussions.
Rosa Crawford
I am happy to write.
Lord Boateng
I have two questions, but I should first declare my interest as outlined in the Register of Lords’ Interests. I am a senior independent non-executive director of the Ghana International Bank, which is a major provider of trade finance. The first question is to you, Ms Saha. Perhaps you could answer it in the context of our upcoming leadership of the G20. Is the UK giving sufficient weight to development objectives in its trade policy, and how could trade instruments be used more effectively to support developing countries while at the same time advancing the UK’s interests? While we are talking about the EU, I am sure you would agree with me that the EU’s economic partnership agreements with Africa and the developing world have not been an unalloyed success in promoting development. I will put the second question out there while you are answering that, so that your two colleagues can think about it. Is there evidence to indicate that the department for business and trade, the FCDO, Treasury and the relevant public finance institutions are in fact working any more closely together in this area of trade and development than they used to? There is precious little evidence in the past, actually, that they have worked effectively together. What can we do to create a new institutional framework that might bring trade development and investment together?
The Chair
Sorry to ask, but can you keep your answers quite condensed at this stage, because I am quite keen to get through all the questions? Thank you.
Amrita Saha
That is a complex question, but UK trade policy has improved and in many cases provided continuity in market access for developing-country partners. Thinking back to my example of trade preferences, the unilateral preference scheme of the UK is DCTS. As I said, the evidence is that there is greater use of preferential tariffs, and this translates to higher tariff savings. You mentioned the EU and the EPAs—the economic partnership agreements. In many cases the UK has continued or rolled over the agreements, and continuity is definitely a good starting point.
Lord Boateng
But if they were faulty in the first place, how do they assist?
Amrita Saha
I was going to add that there are also instances in which there is a good basis for deeper co-operation. For example, the CARIFORUM-UK EPA already includes services, intellectual property and procurement. While starting from the point of continuity is good, having the basis for deeper co-operation is promising. However, I qualify that by saying that the distributional consequences of such liberalisation need to be unpacked. In this sense, there needs to be greater operational weight to development. That is really critical because, unless you are connecting evidence generation with accountability, there is a gap. Actually, the UK did make some headway on this. A lot of us will remember the Independent Commission for Aid Impact review of UK’s Aid for Trade. As a response to that, the Foreign, Commonwealth and Development Office announced the evidence innovation programme. Unfortunately, that programme was cancelled after one year of being in operation. It was meant to provide independent evidence informing the distributional consequences, both ex ante and ex post, of several trade agreements. What would be the agenda going forward? That is an important one on how we take that evidence generation. Your point about how the FCDO works together with different departments is an important one. That is exactly what this programme was set out to do in response to the ICAI review, which pointed out these gaps, as you have rightly pointed to. In my assessment, the UK does give development meaningful recognition in its trade policy. But is there sufficient weight to ensuring that those commitments translate to economic outcomes? That is an open question, in a context where we are seeing some risks. The UK has cut overseas development assistance substantively, so bilateral trade aid to Africa has fallen back to 1970s levels. That might make several African Governments less well disposed to the UK. That is a risk to consider. On balance, yes, the UK is seeking out agreements with so-called middle powers, but what is going to happen with least developed countries? That is also a very important risk to think about, because this might work against development objectives. On its own outside the EU, yes, the UK is small and less important in a sense in the overall scheme of things, but it is difficult to advance interests either in trade or development without being seen as in collaboration with the EU. However, it is important that we connect trade agreements with funded implementation, with links made to complementary policies; investment agreements are a low-hanging fruit. That is something that we can do even with not too many resources. A programme which can generate evidence consistently, working with the FCDO, and providing links across different departments would speak to your question about how we make those institutional links. A strategy such as that would support UK interests by strengthening trade institutions and reducing uncertainty, which would speak for commercial interests, but which would also have development impact.
The Chair
Thank you very much. Tom, do you want to speak? No? Rosa? Any comments? Briefly would be helpful.
Rosa Crawford
I will briefly come in on economic partnership agreements. I absolutely agree on that point that the EU economic partnership agreements have not been a success. The TUC is still a member of the European TUC, and we were a member when the EU was negotiating a number of these agreements. The ETUC has made joint statements with global South partners being very concerned about these agreements because they allow for more imports from global North countries, which undermine domestic industries, and they do not have enforceable commitments around labour and social standards. We were very concerned when, under the previous Government, the EU EPAs were rolled over. We, as the TUC, wrote a number of joint positions with trade unions in global South countries such as Kenya against these rollover EPAs. We want unilateral trade preferences to these countries that are receiving EPAs, so that they can have preferential access to the UK market, conditional on upholding fundamental labour standards. We would not want them to have to open up their markets, because obviously there are historical imbalances which mean that their industries are at an unfair disadvantage.
Lord Boateng
Chairman, I wonder whether, with your permission, I could ask this. I would rather like to hear from Mr Wills in response. A fundamental weakness of traditional preferential trade arrangements is the assumption that removing tariffs will necessarily and automatically generate exports and improved livelihoods. Now, I am the grandson of a woman who farmed cassava and a man who farmed cocoa in the eastern region of Ghana. A Ghanaian agriculturalist, a Gambian food processor and a Kenyan textile manufacturer face immediate obstacles of inadequate electricity and transport, high costs of finance, difficulties meeting international sanitary and technical standards—some of which are set up as obstructors, actually, to trade—insufficient cold chain and storage facilities, and limited access to digital technology. How would, and how could, the UK introduce sector-specific development compacts that would work alongside trade agreements to address some of these issues? Without it, it is very difficult to see how that agriculturalist in rural Ghana, or anywhere else in Africa, or any of the other groups I have mentioned, would in fact benefit. Do you have any insights on this, Tom Wills?
Tom Wills
I completely agree with the spirit of the question. We need to be designing trade and development policies that reflect the realities of the supply chains that you are mentioning. We also need to make sure that the trade policies that we do have in place—EPAs, free trade agreements and rules at the WTO—protect the policy space of countries to pursue their own development pathways. We are now almost 30 years after the publication of Ha-Joon Chang’s Kicking Away the Ladder. We understand that the development pathways that have been successful for countries have not been free trade pathways, but have been where you are able to put up tariff barriers and are able to support and pick the winners in local industries. Now we are seeing—over the last, I guess, five or six years—an increasing trend in the global North towards industrial policy as well. Absolutely, I see those as two parts of the same coin in economic development.
Baroness Anelay of St Johns
Earlier this year, we had evidence given to us by the then Secretary of State on these matters, Peter Kyle, and he confirmed to us—I quote him—that “we are entering a period where we are moving not just to FTAs, but to other forms of negotiations, agreements and MoUs”. All three of you so far have been referring to different types of agreements. Can you explain your position about whether you think that really matters—that the Government go after one and not a different one? Against the background of that, from what you have seen so far from the Government in these two years, have they got that balance right? Perhaps we can start with Tom this time.
Tom Wills
We are absolutely seeing a shift away from these traditional comprehensive, all-singing, all-dancing free trade agreements towards different types of trade instruments. I guess there are two things to say on that trend. One is that, where agreements do contain binding provisions on tariffs or quotas or standards, our position is that they should also contain equivalent binding provisions on labour and environmental standards. That is a core precept of everything that we argue for. Ultimately, it is the way of delivering trade that is sustainable, resilient and values-driven. There is also a democratic deficit that we are at risk of here. As we move away from the processes, which in our view were inadequate, of understanding, scrutinising and approving free trade agreements, we are moving into a bit of a Wild West. The UK in the last few years has finalised 16 critical minerals agreements with partners around the world. We finalised three separate agreements with Trump’s America. None of those is a binding traditional free trade agreement. They are all interesting, important, and potentially deeply consequential to our economy and our society, but none has had any kind of scrutiny from parliamentarians. They have not been subject to debate, amendment, approval or any vote. That seems a huge democratic problem. I guess the clearest indication of why that is a problem is the UK-US pharmaceutical agreement from last December. That was agreed with Trump, as committee members will know. It entailed the NHS making changes to the prices that we were willing to pay for US medicines and, according to some very credible academic analysis, could lead to 229,000 excess deaths by 2035. That is more than in the whole Covid pandemic in the UK. It was never subject to any kind of parliamentary discussion or debate. What we are now seeing over the last couple of weeks is six parliamentary committee chairs in the Commons writing to the Government and the NAO. The NAO has started its own investigation into that agreement. It has taken 11 months, but we are starting to develop some slightly ad hoc processes to hold the Government to account for this. That is obviously not a sustainable model for how we should be scrutinising agreements going forward. We need to update our democratic processes to ensure that, where there are relevant agreements, they are properly scrutinised by parliamentarians.
The Chair
Thank you. We are very interested in what you said on the US pharma deal particularly and could not agree with you more about the other points. We would be keen to hear any follow-up thoughts you have on that. Rosa?
Rosa Crawford
The TUC shares the concerns that TJM has outlined about the lack of scrutiny around the UK-US agreements, and also the critical minerals agreements. For us, the UK-US agreement has created a lot of uncertainty for the unions in the manufacturing sectors that we were talking about earlier. In particular, the pharmaceuticals agreement not having a legally binding nature means that there is a lot of uncertainty for the members about what that commitment means. There is uncertainty in other sectors as well. It is quite a worrying trend to be going into this area of non-binding and non-legally binding agreements. We want legally binding commitments, particularly when it comes to labour standards but not just in that area. We are concerned that the critical minerals agreements have not been focusing on the often appalling labour rights conditions in the mineral extraction sectors. They also do not consider the issue that we were looking at earlier about value addition; we want that factored in, and them being made legally binding and subject to trade union scrutiny. I should say, to go back to the earlier point about the UK-EU negotiations, that is a completely different approach that the Government are taking. Obviously, we anticipate legislation in Parliament to give legal effect to what is agreed at the UK-EU summit and any future agreement that is made with the EU. That has been a very comprehensive approach and, as I say, an approach that involves trade unions as well as businesses and other stakeholders. It is our most important trading partner. That has been a very welcome approach that we, as TUC, want the Government to be building on more rather than non-binding agreements, which have created more uncertainty, with no strong commitments on labour rights.
Baroness Anelay of St Johns
It seems to me that you are saying that the trade unions have not, with this Government, been able to make any headway in the discussions that they have been having on non-binding or indeed binding commitments? Is that true, or have you had a way in—feeding the sample into the process?
Rosa Crawford
We do engage, as the TUC, with the Government, and that has been welcomed; the Government have been open to that engagement. We have a seat on the Trade and Labour Forum, which is consulted on trade policy. We also have a seat on the Trade and Sustainable Development Domestic Advisory Group that considers non-EU trade agreements, so there is engagement on non-EU trade policy. But we want the Government to go further and take more steps because we are not getting the labour provisions we want in the critical minerals agreement. We are not getting the binding and certainty that we want to see in a UK-US trade agreement, and we do have trade agreements with partners such as Gulf states that are abusing fundamental labour rights. We do need to go further but there has been engagement, just to be clear.
Amrita Saha
I will just add something very briefly, if that is okay. The form of agreement does matter. It is quite important, and my view aligns with my colleagues’—it affects certainty, enforcement and accountability. I also argue that legal status alone does not necessarily determine the effectiveness of an agreement. We can see that a binding FTA can contain provisions with limited enforcement. There is the UK-New Zealand gender chapter, as well as the UK-India development chapter, which exclude the general dispute settlement. Maybe the important question to think about is: how could we use the right mix of agreements, which essentially speak to international trade being—sorry, I am not going to divert from the topic—about honest mutual gain? As a general principle, the UK should adopt a “do no harm” policy, and work with trading partners to really think about the consequences of our domestic policy for foreign countries.
Baroness Bonham-Carter of Yarnbury
Picking up on your mention of the democratic deficit, I believe that you and Rosa Crawford have a concern about trade and investment rules constraining government’s ability to oversee labour and environmental standards. How well do current UK trade agreements strike the balance between promoting trade and investment on the one hand and preserving government ability to regulate in the public interest on the other? I think you are probably going to be a little bit critical, so what is the way forward?
Tom Wills
It will not surprise you to hear me say that the balance is currently struck extremely poorly. That is particularly relevant when it comes to the UK’s 80 agreements that contain investor-state dispute settlement. Rosa mentioned earlier that ISDS offers investors an avenue to sue their host state for compensation if they are able to convince the tribunal of three private lawyers that public policy decisions made by that state have unfairly damaged the value of their investment. Our position as the Trade Justice Movement is that, in privileging the protections given to investors to continue to make a profit over the freedoms afforded to democratic Governments to enact policies in the public interest, ISDS really strikes that balance poorly. The UK takes a case-by-case basis position on ISDS, which is a frustration given that the arguments in favour of ISDS now seem remarkably defunct. The arguments in favour of ISDS that have been put forward by government officials and Ministers in recent years rotate around two key points. One is that it encourages foreign direct investment. That might seem to make logical sense—an investment agreement leads to investment—but actually it is not backed up by any academic analysis. The most exhaustive academic analysis—one of 74 separate studies—produced in 2022 found that the impact of ISDS on foreign direct investment was so small as to be considered zero. There is no upside. However, the UK also argued for years that it had never been sued and therefore was only a beneficiary of the ISDS system. That again is now a defunct argument. Over the last 18 months, the UK now faces three ISDS lawsuits, which between them perfectly demonstrate the absurdity and anti-democratic nature of this system. One is from the investors behind the proposed coal mine in west Cumbria. That had its permissions rejected in the High Court. The investors have come back saying that they were unfairly treated, asking for £300 million from the Government in compensation for a mine that does not exist and never had permissions to go ahead. We are facing an ISDS case from a Russian oligarch, Mikhail Fridman, one of the richest men in Russia. He is contesting the sanctions that were placed on him after Russia’s full-scale invasion of Ukraine. We do not know how much he is suing the UK state for, but he has a separate claim against Luxembourg for $16 billion, which is more than his entire net worth and half of that country’s national expenditure. That has actually caused the EU to take Fridman off the sanctions list. The threat of an ISDS claim has led to this extraordinary situation in which the EU has rewritten its whole sanctions policy, which demonstrates the power that this system gives to investors over, ultimately, national security policy in the EU. The third case is a threatened case being brought by the Chinese steel company Jingye relating to the bringing of the Scunthorpe steelworks into public control. That is reportedly £1 billion—
The Chair
Sorry, I am going to interrupt and ask a supplementary question as I am quite interested in this, because investors need to be protected or they will not make investments. ISDS works both ways. Vodafone in India is a very good example of where a country came out of the ISDS process and then behaved in its own way according to the assets of a corporate entity. Are you suggesting we should not give protections to investors? If you do not have property rights and the rule of law, then you cannot have a good investment climate, which means you cannot have a good, strong economy. My question to you is: is the ISDS structural process different from normal compensation? If the Government take my house, I should be given compensation. If they take my company because they change the law or decide not to pay a subsidy, then there is clearly financial redress—there is a contract. Are you seriously saying that we should not do that? Maybe, if there is a confusion over the terms, could you clarify why ISDS is different from a normal commercial compensation claim, to which most companies would be entitled, and the Government are being sued all the time? Maybe you could help us understand that.
Tom Wills
We are not saying that investors should not have protection. Investors are able to access protection through domestic legal means. They may take out political risk insurance. They may access state-to-state dispute settlement mechanisms. What ISDS provides is this extraordinary additional power for investors over the freedom of states to operate in the democratic interest.
The Chair
Sorry, I do not want to dominate this conversation. We are not prohibited from exercising our democratic interests. We are prohibited from confiscating someone’s assets because the politicians want to do it. All these laws are to protect the investors from a contract undertaken by a Government, like a treaty, which then the Government change and have to pay compensation—unless there is something specifically different with ISDS, which may be the case.
Tom Wills
ISDS provides extraordinarily broad protections. It is not simply something that applies to, for instance, direct expropriation of assets. ISDS treaties contain national treatment provisions—fair and equitable treatment provisions. Over the years, we have seen those provisions interpreted extremely broadly by tribunals, leading to some absurd outcomes. For instance, $80 billion of public money has been paid out to fossil fuel companies over the last 10 years. We are not suggesting that investors should not have some degree of protection, but it is clear that at this point the balance has been struck completely in the wrong direction. Increasingly where states do strike agreements, the majority of those exclude ISDS, because states are starting to wake up to the danger of ISDS for their public policy. Over the last 10 years, 300 ISDS agreements have been terminated by states, including by the UK, which withdrew from the Energy Charter Treaty on the basis that—this is a quote from the Minister at the time—“Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalise us for our world-leading efforts to deliver net zero”. That is a quote from a Conservative Minister from three or four years ago, understanding that the protections given to energy companies in that case were not compatible with the kinds of policy decisions that the UK wanted to take.
The Chair
Thank you very much. That is helpful. Do you want to go next, Rosa? We are coming to the end of our session so if we can—
Baroness Bonham-Carter of Yarnbury
I think the Chairman has done all the supplementaries.
Rosa Crawford
I will just add that, on the UK’s relationship with the EU, we do feel that the right to regulate is protected because there are specific carve-outs in that agreement. But with the other trade and investment agreements—the ones that Tom has mentioned, and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—we are very concerned about ISDS being present because of the threats that Tom has described, where it has undermined abilities for the Government to move away from high-carbon industries, to have an active industrial policy and to pursue foreign policy objectives. In the past, ISDS has been used to challenge the renationalisation of public services and also increases in the minimum wage, so we see it as a privileged route to justice which is not available to any domestic investor, worker or any other entity, and which has been used in a very dangerous way, as Tom has outlined. I just want to focus on the CPTTP, because the Government are currently reviewing that agreement in the light of the potential accession of a number of new members, including Indonesia and the Philippines. We want the Government to use that opportunity also to review the ISDS clause in that agreement, because Australia and New Zealand wrote out the ISDS commitments for themselves in that agreement so they were not bound by it. Australia has now committed to not include ISDS in any future trade agreement. We want the UK Government to take the same approach as Australia and New Zealand, negotiate side-letters with other CPTPP members and write themselves out of these ISDS commitments which are posing such a critical threat to workers, to industries and to public services. We do see an opportunity around ISDS and look forward to engaging with the Government on that.
Baroness Bonham-Carter of Yarnbury
So write ourselves out totally?
Rosa Crawford
Of all the ISDS clauses that we are bound by.
The Chair
Baroness Lawlor has a supplementary question.
Baroness Lawlor
It is a very interesting session. I would like just to pick up on something Rosa Crawford said. Might I ask you to think about pushing for what unions want, in respect of Lord Johnson’s question about the proportion of the workforce in unions in this country who would be involved in, if you like, the production of tradable goods, given that only 22.4% of the UK workforce, I think, is in a trade union and most of them are in the public sector, which does not make productive goods? What is at discussion here is really, to my mind: why should certain members of the UK workforce—really rather privileged trade union manufacturing members—push for certain rights in developing countries which may mitigate against working people, many of whom will not belong to unions in parts of the world which we have been discussing, where there are no water supplies or that cannot properly meet the requirements of trade agreements? Much more useful emphasis for the trade union movement there would be to concentrate on providing help and practical support—electrification, digitisation, all these things matter. Requiring Governments to impose it as part of a trade treaty will mitigate against the very people whom we want to help. Could you take that on board when you are writing in in respect of Lord Johnson’s supplementary?
The Chair
Thank you. We do not have too much time. Did you want to just briefly answer that point, which some people may be considering in the sense of: is it right to have trade deals that include anything other than very straightforward commercial terms? That is what has been presented to us. Your three agendas are obviously a substantial expansion on that, using trade as a policy to pursue ambitions. But in 30 seconds, do you want to come back to Baroness Lawlor on her comments?
Rosa Crawford
It is fundamental to trade that there is a level playing field and you do not allow unfair advantage to be gained by abuse of labour rights, as well as other unfair trade practices, such as unfair subsidies. For us, it is integral to a fair and well-functioning trade system that you do have binding and enforceable labour rights. It is not an either/or in terms of interests of the workers in the UK and interests of workers in developing countries, if that was the suggestion. Workers internationally obviously want protection for their fundamental rights. That is why we work closely with global South trade union partners. For us it is about manufacturing, but well-functioning public services are also fundamental to a well-functioning economy, so public sector unions’ perspectives are also important in this as well. The connection is there between protection for labour rights and well-functioning trade policy on economic criteria as well.
Baroness Lawlor
But this is to prefer unionised labour over non-unionised labour, perhaps at the expense of non-unionised labour for the workforce who cannot or do not want to belong to unions. If you skew trade deals in the interests of one sector, you will see emerging an aristocracy of labour which collars government and is no more than a vested-interest arm of government. That is a great danger to the real emergence of prosperity and support for people who want to make a go of entrepreneurial activities and be part of a labour market.
The Chair
This is quite a big topic. So that everyone is aware, we have heard from a cross-section of entities; we are hearing from you. David, did you want to ask a supplementary?
Lord Hannay of Chiswick
Could I ask one short one on an already answered question?
The Chair
Maybe when you answer it, just weave in a bit about the legitimacy of the unions to have such a strong voice in trade policy.
Lord Hannay of Chiswick
I may not have caught it right, Rosa, but I got the impression that what you were saying about the CPTPP was that those clever Australians and New Zealanders had signed up to certain provisions and had now managed to opt out of them, and that was a jolly good thing and we ought to do the same. But the Government spend their life telling us that the CPTPP is a great and wonderful thing, because it provides a level playing field right across not only trade in goods but quite a lot of trade in services. If you are going to have a opt-out when you feel like it, there is not going to be much there, is there?
Rosa Crawford
All trade negotiations and trade agreements are a product of negotiations—
Lord Hannay of Chiswick
Yes, but we signed up to this one.
Rosa Crawford
It is a live agreement. It is under review, in a session of future trading partners that might join CPTPP, so there are opportunities to change the terms of it, as Australia and New Zealand have done, and we are engaging with the Government on the possibilities for that. We think there are possibilities in the future to change the agreement. On the question about trade unions and all workers, we stand for the rights of all workers, whether you are unionised or not unionised. There are fundamental rights that we want all workers to have and protections we want all workers to have. Obviously, we hope more workers will join trade unions, but we do not make a distinction about whether you are a union member or non-union member. We will fight for your rights for dignity and decent pay.
The Chair
Maybe in your written response you could take some of Baroness Lawlor’s comments. That would be very helpful.
Rosa Crawford
I would be very happy to.
The Chair
People may ask, “Why should the Trades Union Congress have an overweighted place at the table?” Obviously, your feed-in is very relevant.
Lord Stevenson of Balmacara
Chair, this is getting a bit out of hand in terms of what we are trying to debate. The points made have been extremely well made. They can be amplified in comments, but we have not decided any of this, and it is not actually germane to what we want to say to the Government about their future prospects.
The Chair
Thank you for that point as well. Baroness Lawlor is entitled to her question on this. It is not unreasonable, in my view, to hear about the different types of trade policy you can enter into, which is why having these three here is a good thing. We have heard only from commercial entities so far, which is why we were very keen to have a different view on how trade policy can be expanded. There is also an assumption that could be made that fundamentally free trade deals are a good thing that should be pursued at all costs, and your input in that is very relevant, because there are costs to other sections of the economy and on to the partners we are doing trade deals with. That has been very helpful. Are there any other final points?
Lord Boateng
Only this, I suppose: would you agree with me that there are some good examples at a municipal level in economic development in which chambers of commerce, trade unions and local authorities have come together to share good practice around economic development that has benefited both North and South? I saw one example of this myself in the link between Durban and Leeds. It promoted local economies in Leeds and in Durban. We ought to be more innovative in our thinking in this area and not get tied into patterns of thought, and sometimes institutionalised conflict, that do not actually put the interests of poor people and the delivery of the SDGs first. Do you see some sense in that? Can you share any observations in relation to it?
Tom Wills
I do not know about the example that you shared, but I absolutely see international trade as an engine for growth and for development, if it is done on a basis of shared standards and dignity for workers—absolutely. One of the reflections that we have about the last five or six years of UK trade policy has been the focus on signature of trade agreements and less focus on how those trade agreements actually are used by businesses operating in the UK and in partner countries.
Rosa Crawford
I have a very good example of exactly that kind of municipal-level engagement in the North with the South. Just last week, our regional secretary of the northern region of the TUC was on the Government’s trade delegation to India, where northern mayors met our trade union sister centres in India, and talked about exactly that sustainable growth and sustainable investment from UK businesses in India and Indian businesses in the north of England. That is a really good example of unions, employers and politicians getting together, North and South. As the TUC, we are very hopeful that we can continue with that engagement with other global South partners.
Amrita Saha
That is a very good point, because there are clear emerging examples of such co-operation. The UK supported what was called Supporting Indian Trade in Africa, which was a triangular co-operation programme—so the UK with India in Africa. It essentially had that bottom-up approach that you have rightly explained. I very much align with my colleagues today: trade can be an engine of growth and development. While of course we are talking about trade policy, which is very macro, connecting it up to the micro and meso levels is really powerful in ensuring that trade brings benefits which are more inclusive.
The Chair
Wonderful. Thank you very much indeed, Amrita, Rosa and Tom. I am very grateful to have had you with us. That was a very full and varied conversation which I think we are going to find enormously useful. Please do send in your written thoughts as well, not just on the questions that were asked, but other thoughts that you think might allow us to get to a good conclusion about working out how we should pursue Britain’s best interests in trade.