International Trade Committee 

Oral evidence: UK trade negotiations: Agreement with New Zealand, HC 78

Wednesday 25 May 2022

Ordered by the House of Commons to be published on 25 May 2022.

Watch the meeting 

Members present: Angus Brendan MacNeil (Chair); Mark Garnier; Paul Girvan; Sir Mark Hendrick; Tony Lloyd; Anthony Mangnall; Mark Menzies; Lloyd Russell-Moyle; Martin Vickers; Mick Whitley; and Mike Wood.

Questions 83 - 106

Witnesses

II: Dr Barbara Allen, Senior Lecturer, School of Government, Victoria School of Wellington; Sue Davies, Head of Consumer Rights and Food Policy, Which?; Dr Jason Paul Mika, Association Professor, School of Management, Massey University and Sir Lockwood Smith, former New Zealand trade minister and former High Commissioner to the UK.

Written evidence from witnesses:

– Which?

Examination of witnesses

Witnesses: Dr Barbara Allen, Sue Davies, Dr Jason Paul Mika and Sir Lockwood Smith.

Q83            Chair: Welcome back to the second half of the International Trade Committee’s evidence session in our agreement with New Zealand inquiry. We have a panel of four, all virtual this time, from various corners of the planet, not just of London. I can see Barbara Allen, Sue Davies, Jason Paul Mika and Sir Lockwood Smith. Can you all introduce yourselves, name, rank and serial number? I will start with Dr Barbara Allen first.

Dr Allen: Hi. Yes, I am Barbara Allen. I am a senior lecturer in public policy and public management at Victoria University, Te Herenga Waka. I have been in New Zealand for six years, and previously in the UK for 10. I am Canadian before that. My area is primarily procurement and public policy. Thank you for the opportunity to speak.

Chair: Fantastic. Moving around the planet quite a lot indeed. Sue Davies.

Sue Davies: Good morning. I am Sue Davies, and I am head of consumer rights and food policy at Which?, the consumer organisation.

Dr Mika: Kia ora koutou, my name is Jason Mika, from Waikato University in Hamilton. I am an associate professor there at the Waikato Management School. My area of interest is indigenous business, and I belong to the Tūhoe, Whakatōhea, Ngāti Awa and Ngāti Kahungunu tribes in the North Island.

Chair: Thank you very much. And finally, Sir Lockwood Smith.

Sir Lockwood Smith: Thank you, Chair. You guys had to put up with me before, so I will not waste too much time of your time. I’ve been farming in New Zealand all my life. I’m a former academic in agricultural science, a former Minister for agriculture, a Minister for international trade and a Minister for education, a former high commissioner to the United Kingdom and a former ambassador to Ireland. Of course, I currently serve on your Trade and Agricultural Commission.

Chair: Thank you. Given the volume of witnesses that we have from New Zealand this morning, perhaps it might have been better had we gone to New Zealand ourselves, Committee. I am not exactly sure if you agree or disagree with that remark.

Lloyd Russell-Moyle: Maybe we still can.

Q84            Chair: Maybe we still can, there you go—there’s a bid if ever there was one.

This is a question to you all. The New Zealand-UK trade agreement includes level playing field chapters on issues such as gender equality, Māori trade and environment. What is the value of including chapters such as these in FTAs, and what difference do you think they make in practise? I am looking for brief answers from you all because we are looking to end at midday. Sue Davies.

Sue Davies: We are really pleased that the UK-New Zealand deal is the first deal that has a consumer protection chapter within it. This is something that Which? has been calling for the UK to promote across all of its trade deals. It is often easy to look at consumer interests as being purely about enhancing choice and lower prices, and certainly that has been the main focus of the Government impact assessment, but obviously trade deals will have huge implications for consumers across all of the chapters. We are pleased that rather than having some consumer protection measures within, say, a competition chapter, in this case, the UK and New Zealand have a more detailed consumer protection chapter that agrees to a range of co-operation on enforcement, consumer address and transparency about consumer protections, which we think will help consumers when they are shopping online or dealing with other types of commerce.

This is an important precedent that we would like the UK to use in its other deals that are under negotiation. Mexico has obviously recently launched, Canada is under way, and there is India. But it is also about building on this as well, so that we are not just looking at consumer protection, but recognising that consumer interest extends to SPS measures. We know that food standards are a key priority for consumers, for example. there are also issues such as technical barriers to trade in terms of products and quality standards, data protection and also environmental protection. We think that setting out these key principles in a similar way to what has been done previously for SMEs is really important in showing that trade deals have an important impact for consumers.

Q85            Chair: Thank you. Dr Mika, can I call on you just to answer that as well please?

Dr Mika: Kia ora, Mr Chairman. Kia ora, Committee. There are two ways to look at the issue. One is, I guess, what Māori were expecting from the free trade agreement and what was ultimately provided for in the agreement. Based on research that we did with Māori enterprises last year, the expectations that they had, particularly Māori business, was for the free trade agreement to reflect the relationship between Māori and the British Crown, as treaty partners, so there was more than just an economic opportunity from the free trade agreement that was expected. It was actually to recognise that historical relationship between Māori and the Crown.

The other aspect is really around the opportunity that was presented by the free trade agreement. Māori enterprises want to do business and trade with the United Kingdom. A lot of our Māori people live and work in the United Kingdom. Māori aspired to diversify their markets, and also to offer the UK customer, or consumer, high-quality products and services infused with an indigenous element.

These were some of the expectations, but they are also concerned about the challenges: the possibility of misappropriation of Māori cultural and intellectual property, and concerns that Māori and indigenous treaty rights might be compromised or eroded. So there were also some concerns.

There was also an expectation amongst Māori that they would be at the negotiating table of the FTA, not just as a stakeholder, not just as an interest group, but as a treaty partner, as an indigenous people. There was both the opportunity and the challenge, but also a desire to be involved in every part of the process.

What transpired after that research was completed is the free trade agreement that is in front of us. Within that there is a Māori trade and economic co-operation chapter that does seek to advance Māori aspirations and Māori wellbeing, which is important. There is provision for it, but from a Māori perspective, I guess what Māori were expecting was to be involved in every aspect of the FTA in terms of its design, its implementation and its evaluation as treaty partners.

Q86            Chair: You mentioned a sort of recognition of the Crown-Māori treaty, and I am guessing from what you are saying that is not really in the trade agreement. Given that the Crown or monarch is Head of State both in the UK and in New Zealand, should it be expected to be in the trade agreement? It is not necessarily that a Crown-Māori recognition of each other would come through via the UK; it could come directly within New Zealand, because the Crown is the Head of State of New Zealand too. Am I understanding things correctly or misunderstanding them?

Dr Mika: No, you are right. The treaty of Waitangi is a recognition of the relationship between Māori and the Crown, as represented in New Zealand by the Governor-General, but from a Māori perspective, there is definitely that historical tie to the United Kingdom as the original treaty partners and signatory.

Q87            Chair: Okay, thank you for that. I will take the question to Barbara and then Lockwood. Dr Barbara Allen, please.

Dr Allen: I will be brief on that one. Just reflecting on what Jason is saying as well, from what I have seen, this is an evolution, and those extra chapters—the 22 on environment, the 24 on SMEs, the trade and gender equality, and then the weaving in of the recognition of the Māori interests and the need to develop a Māori economy—are there. It is an improvement; it is a start. There are some really good things here. In the Government procurement chapter itself, there are a couple of articles on environmental, social and labour considerations and participation by SMEs. There are a number of things there that take this trade agreement some steps forward, I believe, but as I am sure we will talk about, there is still a long way to go in terms of the Māori economy.

Chair: Thank you very much. Sir Lockwood Smith.

Sir Lockwood Smith: Mr Chairman, I would support a lot of what you have heard. Rather than seeing these chapters as so much level playing field chapters, I would argue that they are actually important chapters in their own right because both our countries have a real interest in so many of these issues. If you look at the environment chapter, it is probably the most advanced environment chapter in any trade agreement that I am aware of; it really does take things a whole step further. The way it deals with climate change is a real first in a trade agreement. I see it as progress towards a better and better outcome in a trade agreement.

Likewise, it is the first trade agreement New Zealand has signed with an animal welfare chapter. Again, that is real progress. As Sue said, this is the first trade agreement to have a consumer protection chapter in it. As Jason has pointed out, the chapter on Māori trade and economic co-operation, while it may not be everything Māori and New Zealand were seeking, it is progress. I see each of these chapters as being really important in the way they take trade agreements forward.

Chair: Thank you. I will call on Mark Garnier to perhaps push on that a bit more.

Q88            Mark Garnier: Yeah, I will. It is very interesting looking at the Māori trade chapter, which is, I think, a first for New Zealand. Dr Mika, you have been very helpful with your views on this and, Sir Lockwood, you were starting to talk about it. Sir Lockwood, do you see the Māori chapter in particular, although you mentioned some of the other firsts in terms of chapters, as putting a line in the sand for what New Zealand will be negotiating in every other, subsequent trade deal? Do you see this as a benchmark agreement upon which you will build in the future, or is this—particularly the Māori chapter—just a one-off for the UK?

Sir Lockwood Smith: I would say the Māori chapter is not just a one-off with the UK; it was particularly relevant that this was the first agreement that included a chapter on Māori aspirations, because of the treaty of Waitangi, which was signed way back in 1840. It is the only treaty the UK has like that; there are no other treaties. In fact, when you are commemorating the 800th anniversary of the 1215—I am trying to think of the—

Mark Garnier: Magna Carta.

Sir Lockwood Smith: Yes. The Treaty of Waitangi was actually shown alongside it in one museum in London. It is a unique treaty.

Trade agreements differ with different countries, depending on countries’ aspirations, and what made this agreement quite special is that the UK and New Zealand have quite similar aspirations in terms of animal welfare, environmental aspirations, the unique position of the treaty of Waitangi. All these things made this agreement quite precedent-setting.

But it will not be possible to achieve everything that in this agreement—for example, in the agreement New Zealand is trying to negotiate with the EU and some other agreements. It is just not possible to get some of these provisions into those agreements, but we do make progress.

Look at the first agreement New Zealand signed with China; the environment was a sort of side letter. When that agreement was reviewed some years later, there was a full chapter on the environment included. We do make progress, but it is a matter of getting good progress in an agreement like this, because it helps to be precedent-setting.

Q89            Mark Garnier: Dr Mika, just on that point about the uniqueness of the agreement with the Crown and the treaty of Waitangi, does that mean that this Māori chapter is not going to form the basis of future trade deals? For example, would you want to see a Māori chapter in the EU trade deal, or do you think it is not going to happen, because there is not a similar treaty that goes back to, whatever it was, 1840?

Dr Mika: I hope that it is the start of what will become a normal expectation and quite a standard provision that there will be Māori and indigenous trade provisions in free trade agreements. As the panel has already said, this is a start, but it needs to go further. As to just quite what that looks like, well, that is for the future.

Q90            Mark Garnier: Sir Lockwood, did you want to add anything, although very briefly, because we are pressed for time.

Sir Lockwood Smith: I agree with what Jason just said. I was not implying at all that New Zealand will not be trying to get a chapter like this on Māori trade and Māori aspirations in the future agreements. I think it will become something New Zealand will be seeking to do on all future agreements.

Q91            Mick Whitley: My question initially is to Dr Mika. The New Zealand Government said that there is a broad range of Māori interests in terms of trade between New Zealand and the UK. Broadly, what are these interests and how important is it that they are reflected in this FTA?

Dr Mika: Kia ora. As I alluded to in my opening remarks, the interests are twofold. One is that the treaty of Waitangi relationship between Māori and the Crown is recognised, and Māori rights and interests are provided for and protected. That is one side of the interests that Māori have.

The other side is to do with trade. The opportunity for Māori enterprises to do business internationally and within the United Kingdom is also a key aspiration that Māori have in order to grow the Māori economy, but also to advance Māori aspirations for wellbeing of their people and their environments, so those are key interests. However, there is also the interest of building Māori enterprise capacity to be able to do business in the United Kingdom, so that there is an equitable opportunity and outcome for Māori in respect of trade with the United Kingdom.

Q92            Mick Whitley: Thanks for that. I have a couple of supplementaries, Chairman. This is to Sir Lockwood. What difference will this agreement make to UK businesses that trade with New Zealand?

Sir Lockwood Smith: You mean UK businesses exporting to New Zealand?

Mick Whitley: Yes.

Sir Lockwood Smith: I listened to some of the session before on your excellent streamed parliamentary television, and the last person to speak there about your wine and spirits industry mentioned, for example, the wiping of tariffs on gin exports to New Zealand. There are so many goods and services that New Zealand imports from the UK. They might have quite a low level of tariff, but for most of those services and goods, this agreement just wipes those tariffs. So there is going to be significant opportunity for increased trade with New Zealand.

But I do accept that New Zealand only has five million people, so it is not a big market for the UK. To me, where this agreement is so helpful to the UK, is that it is a stepping-stone to CPTPP, and CPTPP does offer real market opportunity for the UK because it introduces you across a spectrum of countries in the Asia-Pacific, and some of those countries have big populations, growing middle classes and real interest in the quality products and services that the UK produces. So, to me, this is a strategic agreement and, in some ways, it is a stepping-stone to that bigger one.

Chair: Thank you. It is a great pleasure to bring in Martin Vickers at this point.

Q93            Martin Vickers: Thank you, Chairman. Initially, I will put this to you, Sir Lockwood, and then to Sue: why does the FTA go further on environmental protections than the recent agreement with Australia, and which should be the model for future FTAs?

Sir Lockwood Smith: It is difficult for me to answer that because I was not in any way involved—well, apart from on the Trade and Agriculture Commission reviewing the Australian FTA. The reason why there is a difference is that New Zealand’s and the UK’s interests coalesced in this area, and there was greater commonality than there probably was between Australia and the UK. It is probably fair to say that New Zealand is a bit further down the track, especially in how agriculture is to deal with climate change. For example, methane emissions and ruminant animals in New Zealand have to be priced in a trading scheme by 2025, and Australia is not that far advanced—neither is the UK, as far as I am aware. But at the least there was a coalition of interest here that saw this chapter become the most advanced that I have seen in a trade agreement. That is a good thing. We will see whether you could achieve the same thing with CPTPP. You would not get quite as much progress there, I do not think, but, as I say, each agreement depends a bit on each party’s interests. In this case, the environmental interests really coincided, and that is why it made such good progress.

Q94            Mick Whitley: Thank you. Sue Davies, would you like to come in on that?

Sue Davies: Yes, thank you. As Sir Lockwood said, clearly this was an area where right from the start of the negotiations both the UK and New Zealand said that they saw this as a priority, and therefore we have ended up with a more comprehensive chapter than we had in the Australia deal, particularly in terms of some of the provisions relating to climate change, for example, and going further on some of the issues that we know are important to consumers in practical ways: working on the transition to electric vehicles, sustainable financial services, sustainable agriculture. Within the deal there are lots of commitments to co-operate, and whether that is successful will really depend on what comes next, on how concrete those discussions are and on the committees that are set up to take that forward and whether they actually do result in something meaningful.

We know from our consumer research that environmental protection was a real priority when we talked about all of the issues that could be part of trade deals, so people have high expectations. It is also important to look at all aspects of the trade deal, not just the environment chapter, which is an obvious point, and that includes the market access provisions. The discussion in the previous panel was really important, and although there is an emphasis on co-operation on sustainable agriculture within the environment chapter, obviously we need to be conscious of differences in standards and what the increased trade in products is going to mean for the UK’s own transition to a more sustainable system of agriculture. That is where we really supported the calls from the Trade and Agriculture Commission and the Committee on Climate Change that, when the UK is negotiating trade deals, it should have a set of core food standards in place that it is going to apply to all deals. That is important for New Zealand but is also going to be really important for the trade deals to come. I think that can build on this environment chapter, but it needs to go further in some important respects too.

Q95            Martin Vickers: If you feel we could go further, what would you say were the principal missed opportunities?

Chair: Good question.

Sue Davies: As I said, the food standards and what the implications of opening up our market to more lamb, dairy products and beef could be in terms of our own transition to a more sustainable food system, is one of the key questions. The other issue is the mechanisms for how they are taken forward. It is positive that there will be advisory groups established to help monitor the progress of the environment chapter, and I would hope that there would be consumer representation within those.

It is obviously also positive that the UK and New Zealand are really committing to work together through multilateral forums and discussions to drive forward this agenda. We would like to see very transparent reporting and monitoring so that we can actually see that what looks like a quite a comprehensive range of aspirations translates into some meaningful change over the longer term.

Q96            Mark Menzies: Sue, will the measures on consumer protection have any impact beyond the symbolic inclusion of a chapter?

Sue Davies: Yes, there is an important symbolic aspect to having a consumer protection chapter. As I said, consumer interests are often looked at in a very narrow way, and actually emphasising how trade deals are really important to consumers and the underlying protections is really key. The measures in the consumer protection chapter could be really positive for consumers. Consumers are increasingly trading across borders, dealing with multinational companies and buying from online platforms, and the chapter establishes some important principles, including having greater transparency about the protections available to consumers. That will be useful if you are booking a holiday and something goes wrong, if you are booking a hire car, or if you are ordering goods online and then find that they are not what you expected, that they never arrive or that you were misled about the price. So the chapter is making that more transparent.

There is also a commitment to building and working on more effective redress mechanisms. That can be really positive, but it depends on how it is actually done and whether it leads to something meaningful. We do not really have very effective redress mechanisms in the UK, even when dealing with domestic businesses in some sectors, and that is why we are pleased the Government is coming forward with a draft digital markets, consumer and competition Bill. We hope that can strengthen ADR, so having that co-operation will be important.

The really positive thing as well is about the co-operation between enforcement bodies. Again, that is an aspiration, so the issue is, what does that mean in practice? Hopefully these measures will take us further. At the moment, there is a lot of informal co-operation through global networks like the International Consumer Protection and Enforcement Network, where New Zealand and the UK play a fairly active role. Is that going to mean, potentially, joint enforcement actions? Will it be easier for consumers to deal with problems with a business in New Zealand, or vice versa, with their own authorities? There are lots of opportunities within this. It is what the concrete things that stem from that actually amount to that will determine whether it really makes a difference.

The other thing to emphasise is that the important principle is established that online consumer protection should not be any less than the protections that you get through other forms of commerce as well. There is a strong emphasis on that, and I would hope that through the commitments to co-operate internationally, the UK and New Zealand can really try to tackle some of the big gaps in consumer protections in areas like online marketplaces, where we keep finding so many unsafe products and problems with fake reviews and scams. A real international effort is needed to tackle that.

Mark Menzies: Sue has actually covered the supplementary I was going to ask in her answer, so I am happy to leave it there. Thank you.

Q97            Mike Wood: Obviously, this agreement contains a chapter on good regulatory practice and regulatory co-operation. The UK Government’s impact assessment suggests that this will lead to a reduction in red tape and bureaucracy for businesses across the UK. Dr Allen, how significant do you think the provisions in that chapter are around regulatory practice and co-operation?

Dr Allen: The principles and the way they are laid out in that particular chapter are very high level, abstract, with a lot of “may include” and “may happen”. When you are talking about the procurement regulation per se, there is a lot of potential there, because obviously what the UK is going through in terms of transforming its public procurement, coming out of the EU and everything, means that there is a lot going on there. The agreement certainly covers the classic regulatory provisions that have to do with non-discrimination, use of electronic means, the conduct of procurement, rules of origin and offsets. So that is all in there.