13
Examination of witnesses
Sophie Hale and Dr Mattia di Ubaldo.
Q1 The Chair: Good afternoon, everybody, and welcome to the evidence session of the International Agreements Committee on the UK-India free trade agreement. This is the first of six such inquiry sessions. The meeting is being broadcast live via the parliamentary website. A transcript of the meeting will be taken and published on the committee website. You will have an opportunity to make corrections to that transcript wherever necessary.
I thank both our evidence-givers today and ask them to introduce themselves when they answer the first question, which I will ask now. What is your assessment of the final terms of the UK-India free trade agreement? To what extent do you think the UK Government have achieved their objectives, which they set out in their The UK’s Strategic Approach document? Perhaps Sophie Hale can answer that.
Sophie Hale: Hello. Thank you for inviting me. I am a principal economist working on trade at the Resolution Foundation.
Looking at the FTA as a whole and whether they achieved what they set out to do, we can talk a little bit about how important India is to the UK, but ultimately, what the UK Government set out in their The UK’s Strategic Approach document was to achieve what was, in essence, a deep free trade agreement with broad coverage. They had aims to have chapters on things like procurement, intellectual property, environment and labour standards, which are typical of a slightly deeper kind of free trade agreement compared to some of the more narrowly focused ones.
In that capacity, they basically succeeded in delivering a deeper free trade agreement with India. Some of these chapters are ones that we have not really seen in any form of Indian free trade agreement before. So that is a success against those objectives. An example of that is procurement. India is not a member of the Agreement on Government Procurement, so having even slightly less deep provisions within that chapter is still locking in or providing some transparency that maybe the UK was not able to have before.
We also have access being locked in on various digital and intellectual property measures as well. It delivers pretty broad and extensive tariff liberalisation. It delivers a couple of big wins that the UK Government were looking for, with notable examples being tariffs on cars and on whisky. We have offered broad tariff liberalisation in return, but with a few key sensitive areas protected.
The overall value will be dependent on two things: implementation and utilisation. On implementation, essentially, where the agreement creates a lot of scope for depth, it is creating pathways for things such as mutual recognition agreements and mutual recognition of professional qualifications in the future in various sectors where the UK and India are trading. Whether those materialise ultimately will affect the end value, because without those arrangements it is not particularly deep on any one sector.
On utilisation, one thing to flag is the rules of origin. I am sure there will be a further session where there will be a lot more detail on this, but the rules of origin in the agreement, particularly in some places, as the impact assessment on the deal acknowledges, are stricter than in some historical agreements. That means we might see quite low utilisation rates of some of those tariff preferences if UK suppliers cannot meet those rules of origin.
To refer back to the strategic objectives, this is maybe one of the areas where their strategic objective was to deliver simple rules of origin that reflect UK industry requirements and consider existing as well as future supply chains. Whether that could be deemed as a success is—
Q2 The Chair: We are having some issues with your sound. We will come back to quite a lot of those other issues in a moment and hopefully your bandwidth will cope.
Dr Mattia di Ubaldo, there may be something left to answer on that question but I will broaden it out to give you some scope, which really, in a sense is, how much does this affect our national interest and how significant is this when added up?
Are there things you would like to add to the point around whether or not this meets the strategic approach? Also, please try to put this in a context of significance as well.
Dr Mattia di Ubaldo: Good afternoon. I am a principal research fellow at the University of Sussex and a deputy director of the UK Trade Policy Observatory.
This is overall a fairly good and balanced deal. It is perhaps not as comprehensive as some of the other recent UK FTAs that were signed post Brexit. However, it is the biggest and economically most significant deal that that UK has signed after the TCA. It can also be considered a political achievement because India is notoriously highly protected, hard to negotiate with and has the highest tariffs in the G20. So it is definitely a good result.
On trade objectives, both countries’ objectives are complementary. In finance, healthcare and pharmaceutical, particularly, they are both global leaders. It is a deal of mutual convenience.
Before going into the detailed terms of the deal, we can also speak to the importance of having guaranteed certainty of market access. Being able to simply bind currently applied policy can be very important and can give tangible benefits going forward.
In terms of economic importance, DBT’s impact assessment simulated about £5 billion extra GDP per year, both for the UK and India. It is probably of greater economic importance for the UK, taken as a whole.
On the main gains, in terms of goods liberalisation India gains probably less than the UK because the UK’s tariffs are already low to start with, and India was a beneficiary of the developing countries trading scheme. You might be aware of this sort of development-oriented policy whereby the UK offers preferential access to a number of developing countries. India currently benefits from that scheme, although it had lost access in a number of important sectors. So there is definitely also market access to be gained for India.
Where the agreement comes a bit short is perhaps on services. What the deal achieved is basically giving certainty of access and fair and equal treatment to UK firms in India. There could have been perhaps a more extensive liberalisation, with more ambitious provisions on digital trade, but then you have to consider also what the UK did not want to concede. We can talk about trade-offs later on, but this is probably one of the areas where more could have been done.
Other things that Sophie mentioned—public procurement and IP protection—are good achievements, and by and large the objectives were achieved. Perhaps one thing to mention is on the environment and labour chapters. The objectives were achieved perhaps because they were low to start with. We have to consider the partner with which the UK was negotiating this time. The chapters are less ambitious than those that the UK negotiated with New Zealand and with the EU, for instance. There are no binding commitments, but it is a first for India, so if you speak to Indian negotiators or experts, they consider this to be a big win for the UK. I will leave it at that.
The Chair: Thanks, that is a great start. I think we will be circling back on quite a few of those issues, but I will ask my colleague Lord Hannay to pick up on the questions now.
Q3 Lord Hannay of Chiswick: Good afternoon. I wonder whether both of you could suggest in what way the wider geopolitical context for trade, particularly in the latter part of the negotiations, influenced the trajectory of the negotiations or decisions made when a deal was struck at the end. In your view, has the current geopolitical context influenced the development of Indian trade policy, which in the past has been characterised by most people who negotiated with it as highly protectionist? Perhaps as a second, quite separate issue, could you address the question of whether this agreement can remain one that gives the UK genuine advantages—competitive advantages? Should subsequent deals be reached by India, for example, with the European Union, or perhaps with a Trump Administration who have changed course—they frequently do so—how would Britain’s advantage be retained? Could it be retained, and if so, how?
Dr Mattia di Ubaldo: In the current scenario of heightened economic uncertainty and security uncertainty—we all know the reasons, caused by the US and Russia as well as some concerns about the UK’s relationship with China—the UK is currently trying to seek closer relations with big partners such as the US and resource-rich countries such as China, but also growing markets like India. That is where India comes into play. India is currently not the main partner of the UK for critical technology or critical minerals, and it is not even the main export market, but, given the shift in the geopolitical landscape, we are moving away from a more normative value-based trade policymaking towards more realist policymaking where we are trying to get the best we can get under given circumstances. In that uptick, the UK has found a very important partner in the Indo-Pacific area that can provide stability. Also, because currently India does not participate in any of the big regional blocs such as the CPTPP or RCEP, the UK has privileged access to India. The current context, also thinking about Trump’s tariffs, certainly provided a big push to both parties to reach an agreement that can provide certainty of access, and it was a big opportunity to provide support to the rules-based trading system, of which both the UK and India are strong supporters.
A possible deal with the EU on India’s side clearly would undermine the UK’s advantage in India because, currently, even having secured preferential market access in important sectors such as cars could be diminished by India giving similar concessions to UK competitors. For example, I think the EU is the biggest competitor in the car industry in important markets abroad. Similar concessions could undermine the UK’s advantage.
Lord Hannay of Chiswick: I am sorry; the question I asked was not so much on whether an agreement that India reached with, let us say, the EU would reduce the margin of benefit to the UK, but to what extent it is possible for the UK to guard against the EU getting better terms then the UK has got.
Dr Mattia di Ubaldo: If I understand your question, I am not sure that the UK could do much in the negotiation between the EU and India. It is something I do not have a straight answer to; I am sorry.
The Chair: Sophie, do you have some observations on that and the rest of Lord Hannay’s questions?
Sophie Hale: I agree to some extent that the UK does not play a role in the India-EU negotiations. India has made it quite clear in some of the statements that we have had that it sees the UK deal as a template for a deal that it could pursue with the EU. I do not think that means it is necessarily looking to make considerably more concessions than it did with the UK, but of course the EU is a bigger trading partner so there is more of an incentive if it wants to secure that access. India as a country has the same motivations it had to secure the deal with the UK as it does with the EU, which is that it wants to shore up market access in Europe to protect against the current US Administration’s tariffs and other kind of protectionist policies. It is motivated to secure that deal with the EU.
As I mentioned in opening, there are a number of ways that this deal can continue to become deeper. A number of pathways allow sectors to look to do further liberalisation, so pathways are created within this deal to make sure that the UK could continue deepening the liberalisation with India, both on the services side and on the goods side. I guess the one area where that kind of relative deterioration could happen is on the tariff market access side, and that is much less likely to get reopened, whereas if we are talking more about mutual recognition—more about the NTM side—the committees that have been set up should have some recourse to addressing any relative deterioration if an India-EU deal is reached.
The Chair: We now turn to questions from Lord Goldsmith. I should say that Lord Goldsmith is the Chair of this committee, and I have this job only because of the fact that he is in a remote location.
Q4 Lord Goldsmith: I want to first of all welcome on my own behalf our two witnesses and thank them for coming to us today. I am sorry I am not with you—or I am not completely sorry because I am actually in India at the moment, so it is entirely appropriate. I am sitting in Delhi, but in the evening in a hotel room.
I want to ask you a general question, and then I am going to come on to something a bit more specific, and I will make a little declaration at that point. I want to ask you principally to tell us what the main sectors are that, in your view, will benefit from the deal and, conversely, which sectors are most exposed. Perhaps we can start with that, first of all, and then move on to the more specific question.
Dr Mattia di Ubaldo: In terms of goods trade, we know where the big tariff cuts were: whisky and gin, cars, agri-food, medical equipment, cosmetics and toiletries. So those were the big winners. On the goods side, various quotas will apply to UK exports as well—for instance, to the car industry. All the liberalisation on India’s side will be staged. It will be less deep and also less extensive than what the UK has offered.
In terms of the main sector expected to grow, it is a positive story because we see most UK sectors as potentially growing, except for textiles. So exports are supposed to grow clearly in beverages, motor vehicles, some advanced manufacturing, chemicals, rubber and plastic. The competition in textiles from India will probably shrink the UK industry to some extent, although I believe a lot of the increased UK imports in these industries will come at the expense of other developing countries. So the actual degree of competitive pressure on domestic producers will not be as big as one could fear.
Lord Goldsmith: Sophie, do you have anything to add to that, particularly on which industries are perhaps most exposed by this, if any?
Sophie Hale: I largely agree with that assessment, textiles being the one industry that, as Mattia mentioned, is potentially exposed to increased import competition. It definitely looks as if it will become a lot more open to competition and traded—we see big increases in both imports and exports of textiles. But the sector does shrink, so that might be driving some productivity gains in that sector. The overall reduction in GVA is maybe not as negative from an economy point of view as it might look if you just look at whether it is growing or shrinking.
On other areas to flag, you might have mentioned chemicals. I think that in the impact assessment there is a reasonable growth in that sector and obviously service sectors as well. As Mattia said, there is not a lot of deep liberalisation but there is locking in certainty for UK service exporters. So we could see some real growth in certain service sectors and some competition in others. Communication is the one service sector where India is particularly competitive; I think the sector does not grow as much in the UK and most service sectors are expected to grow. That is both because it is able to export more to India and gaining from that, and as a general equilibrium—the country is becoming a bit richer and producing more services as well.
The one sector that is worth drawing attention to is the vaguely named business services sector, which is a very large market in the UK and a very large exporter here. It is worth flagging that the UK is on various measures underperforming a lot in India at the moment. I think our assessment was that we account for about 1.8% of Indian imports of business services, and with a number of other markets in the same region we account for more than 3% of those markets, as we are one of the largest services exporters—in Indonesia, Singapore, Korea, even China. So there is high potential there to deliver that potential. It does mean coming back to those pathways for deeper liberalisation—can it deliver on mutual recognition of professional qualifications and go a bit deeper over time in the deal?
Lord Goldsmith: I want to ask you a bit further about this specific question. You have talked about some of the service sectors. I want to ask both of you about professional services in particular and what your assessment is of provision for professional services and how that is going to happen. I mention particularly legal services but that is the declaration I make because that is what I do—I am a lawyer who provides these services. How do you think this liberalisation in professional services will be achieved, and do you think it will?
Sophie Hale: The committees are put in place to deliver ongoing further liberalisation through the agreement. One of the areas is mutual recognition of professional qualifications. In legal services that is quite a big ask and not something that we have seen a lot of outside of the EU, basically, and even there it is with some restrictions, whereas we have seen it in our other agreements for engineers and architects and that kind of professional services sector instead. So there is possible further liberalisation in those areas if regulators and professional bodies can deliver that over time. But I would not expect it to be a quick and immediate area where we see a much deeper liberalisation.
Lord Goldsmith: I suggest that we go on to the next question, and if you want to say something at some point, Dr Mattia, please do.
The Chair: Lord Howell has a question that comes in on this issue.
Q5 Lord Howell of Guildford: Just following Lord Hannay’s excellent questions, one of the key ones was how the general geopolitical scene is affecting and has affected this agreement, the outcome and the follow-on. I would just like to press a bit further on that, because our advisers say that these disruptions of the world trade pattern are going on now as a result of President Trump’s changes of view. These talks are taking place, and we all know that India has been having a huge development of its energy exchanges and trade with Russia, and that generally India is trying to, as it were, balance its arrangements between east and west and between the different trading powers of the world in a way that it did not in the past. This seems to me to be an overridingly significant aspect, and I would just like a little more reflection from our visitors on how it must be changing the entire scene in a way that it has not done before.
Dr Mattia di Ubaldo: I will say something roughly along the lines of what I mentioned before: pressures have been imposed on the system by Trump’s tariffs—the 50% tariff imposed on India and the huge uncertainty about any of the deals that countries have made with the US in recent months. There is still uncertainty around those deals. It was definitely a big push for India and the UK to try to finalise a deal that was on the line for about three years. Negotiations had been a bit uncertain due to various political issues between the countries, and this was the right moment to show a political win on both sides. So that is what I think helped precipitate this deal in the last moments.
The Chair: Sophie, you appear to be nodding in agreement; do you have anything to add to that response?
Sophie Hale: I agree. I think we know that India was quite clear that its big ask and big push would be on mobility arrangements. Yes, there were some provisions on that and some prior agreements that moved the dial a little bit on mobility for India into the UK, but not substantially, which, which maybe suggests, as Mattia says, that that pressure from the US was a contributing factor to it agreeing to this FTA without much deeper commitments on that side.
The Chair: Perhaps that opens the way for Lord Boateng’s question.
Q6 Lord Boateng: A UK-India free trade agreement has been long sought after by successive British Governments. It was presented as a sort of holy grail in terms of agreements of this nature. The last Government—Lord Marland will remember this very well—singularly failed to achieve any agreement; this Government successfully did. So what gave? Is it all down to Trump in terms of the geopolitical pressures, or were concessions made by either side, and if so, what were they?
Sophie Hale: As previously mentioned, mobility was the big ask for India. I am sure there will be follow-up sessions that go into a lot more detail on what was delivered in mobility provisions but it looks like potentially the UK has given up a bit less here than certainly would have been asked. That is potentially one area. There were a number of strategic exclusions on the Indian side on tariffs that I am sure the UK would have pushed for but eventually settled without, but that is pretty par for the course in free trade negotiations. Similarly, the areas that we have already talked about around maybe having something slightly deeper on services market access would certainly have been a UK priority that may not have been delivered to the very furthest point that the UK might have been aiming for. But, again, it does not look like huge trade-offs were made at the end on the UK side to get it over the line, from my assessment of the deal.
Dr Mattia di Ubaldo: I agree with Sophie. The UK got away with a pretty good deal here. There were concessions made on the tariff side; India lowered its tariffs on the main goals for the UK—cars, beverages and advanced manufacturing—and the UK made concessions on textiles and other sectors that are important for India such as chemicals and iron and steel. On services, I think the deal got a bit stuck, as Sophie said, probably because of the UK’s inflexibility on visas and the immigration regime. But then gains were made in access to government procurement in India, which is a significant gain for the UK. It is reciprocal, but this is a first for India.
The Chair: That bell indicates another vote, I am afraid. We will suspend proceedings and I hope you are both okay for us to come back in 10 minutes or so.
Sitting suspended.
The Chair: Welcome back and thank you to both our evidence givers for pausing while we went for a vote. Lord Marland has the next question.
Q7 Lord Marland: First, let us congratulate the Government on getting this over the line. I am not going to make cheap political points, as have been made before. It is fair to say that neither the Civil Service nor the previous Government ever thought this would happen, so congratulations where they are due. Clearly, both countries work at a different pace in terms of carbon footprint and climate change significance. To what extent did India seek exemptions from CBAM measures on its exports and what induced it to reach an agreement without this? Is it likely to be an issue for future relationships?
Dr Mattia di Ubaldo: The CBAM is set to launch in 2027 in the UK, and will impose a levy on imports from countries that have lower carbon pricing than the UK in targeted sectors. The agreement makes no mention of that, so in a way India did not get any concessions here and it could undermine the benefits that India will get from the agreement. This is also perhaps one of the reasons why the agreement on the environment features no binding commitment for India either. The countries basically reaffirmed their support for the objectives of the Paris Agreement, but they mostly made just soft obligations.
The one more significant commitment that India made is a so-called non-derogation commitment. It basically agreed that it will not reduce its domestic level of regulation in environmental areas to attract foreign investment, but there is no binding dispute settlement to enforce this commitment. In a way, the agreement is really not very ambitious in this area and not much was achieved, but, as I was saying at the beginning, this is the first time that India has agreed even to put something like this in an agreement, so probably it is partially a win for the UK.
Sophie Hale: That has covered the main points. The only thing to flag is that a lot of the countries that India is competing with in importing into the UK will also be affected by the carbon border adjustment mechanism. There may be some exemptions—and countries which are paying for their carbon will not be—but, particularly in the sectors where we are expecting to see a big increase in imports from India, the competitor countries that we are seeing trade diverting away from to allow that expansion of Indian imports are very likely to be hit by the CBAM as well, so it will not necessarily create much of a relative deterioration for India.
Q8 Baroness Lawlor: Can you identify any benefits or drawbacks for consumers arising out of this agreement, in particular the benefits or disadvantages for consumers of services trade? Financial services, for instance, have a big impact on the whole economy and the implications for consumers are big. Professional services, particularly legal services, have been mentioned, but there are also digital services. I am interested in data rules, transactions and the localisation of data, which I do not think India is moving on, and all kinds of things to do with privacy of data where there are third-party transfers. Perhaps you would like to comment on that.
Sophie Hale: On services, I will come back to data localisation but I guess it is worth flagging that a lot of international trade in services is business-to-business services exports so, whether that is legal services or anything else, it is typically provided from a business in India, say, to a UK firm as opposed to consumers—not in its entirety but one step removed.
Baroness Lawlor: Would you not say that, on the financial services, a lot will depend on how accessible for consumers, for instance, lending and mortgage rates are—the whole area of how financial services impact consumers—and, say with professional services, the availability of lawyers, competition in the legal profession, and so on? We have 1.9 million or 1.6 million people in this country whose origins are in India. Will they be moving their business to Indian-trained lawyers, and so on? Would you like to comment on any of those issues, Dr Ubaldo?
Dr Mattia di Ubaldo: Unfortunately, the agreement does not go very far in increasing opportunities for providers of services in these areas. We know that the finance industry still faces a gap in terms of investment in India, and the professional services still face the problem of mutual recognition. The agreement comes a bit short in these areas, so I do not see many benefits for consumers.
Baroness Lawlor: Do you see that as a give by the UK—that we lost on that?
Dr Mattia di Ubaldo: I do not think we lost on that. We locked in our current level of access to India and vice versa, which is important in itself considering how uncertain things are. So this is of value, but I do not think the deal goes much further than that. There are other advantages for consumers that come from any liberalisation. You are probably aware that whenever things get cheaper it is good for consumers, and we have several goods categories where it happens in this deal. We also get cheaper access to Indian inputs in important industries such as chemical, iron and steel, which will feed into downstream industries and which will also eventually perhaps benefit consumers. But that is where I see most of the benefits for the consumers. I do not see many drawbacks either.
Baroness Lawlor: What about the rules on data privacy, when you transfer data to a third party?
Dr Mattia di Ubaldo: I am afraid that I am not an expert in that area.
The Chair: I think we will come back to this in a different session, so it may be that you can anticipate that sometime in the future.
Q9 Lord Howell of Guildford: Behind tactics is strategy, or it is meant to be, and sometimes strategy is in more general conversations in the coffee break, and so on. I would like to ask about the sort of issues that came up both informally and formally as you two had your discussions. First, we have had elaborate defence arrangements with India. There was a point not long ago when we were going to sell it a lot of ships, but I do not know whether those orders actually went to Moscow or Beijing instead. But certainly there were some big orders going a few years back. What happened to them? Is it relevant to the provision of critical materials and so on that India is both a civil nuclear power and planning enormous expansion, which presumably we could be involved in? It is also a big existing nuclear power, and therefore a participant in any development of the non-proliferation treaties. These sound distant from trade but they are trade—they are the big numbers—and this is where we need to know how we are going to be favoured and how our own strategy will be strengthened.
I have two final questions. This goes still further back into strategy. Did anyone mention anything about UN reform and the British Government’s wish to see India a part of a revised permanent Security Council? That is in the air, but of course we never make any progress because the Russians and Chinese always stop us. But a great many Indian conversations I have had always come back to that point.
The Chair: Lord Howell, maybe given the time we have, can we focus in on the industrial-military area rather than the entire diplomatic scheme?
Lord Howell of Guildford: They all lie behind each other and are all intimately related. My last question is: you may have noted—some of us only just noted—that the British Government has joined the general abandonment of WTO due to it being stymied on the appellate court side and have set up a new organisation called, I think, a multi-party interim something, MPIA; I do not have the full title here. We were sent round a note that 57 other countries are going to join this. Did India have some views on that? It is a fairly significant step that is not much discussed in Britain at the moment, but if you think about it—
The Chair: As I say, I am pushing because we have time constraints, so perhaps they can start to tackle your shopping list.
Dr Mattia di Ubaldo: I am afraid I am not an expert on defence and in the industrial-military area, so this is an area that, unfortunately, I would rather not provide an answer on. I cannot say much about that. I can say something about the WTO. This is a period where the WTO is under such strain that a deal that is fully compatible with the WTO rules is definitely very welcome. The UK has recently joined this new arbitration arrangement or plans to join the arbitration arrangement in the WTO, which is there to replace the lack of an appellate body. India is currently not a member of that but, again, it is it is unfortunately an area that I do not have much to say about.
Sophie Hale: Similarly, I am just not an expert on defence at all, so I would not have much to add on that area.
The Chair: Perhaps we will take on board those questions and think about future sessions, Lord Howell, in order to tackle some of them.
Q10 Lord German: We have touched upon the mobility issues earlier. Just for the record, it might be worth your stating which side you think has got anything out of this. I notice that as far as I can see, apart from yoga teachers, chefs and classical musicians, there was not a great deal of give on the British side. But is there anything that we needed from the Indian side that we did not get on mobility? At the same time, there is the other piece, which is the double contributions convention, which we have applied. Which of the partners will that benefit? Who will receive more in social security payments? Will we get more or will the Indians get more?
Sophie Hale: On what we have seen on movement of persons both in the agreement and before, it is worth flagging the India young professional scheme visa. That was not part of the FTA but it was launched in the process of negotiating the FTA. On the business visa, as you alluded to, in terms of the expansion it was quite small and limited to 1,800 people a year and quite specific professions. But it also locked in some access and gave some kind of future predictability to Indian business visitors into the UK. Likewise, it was locking in the access that the UK can have moving over to India. Where probably more was achieved from the Indian side was the double contributions convention. On your question of who would gain more, net migration into the UK from India is pretty large. So from that perspective, there will probably be more people not paying national insurance contributions in the UK rather than the other way around, but how the values compare obviously depends on how large those contributions are.
Dr Mattia di Ubaldo: I think this is a win for the UK, given the very deep request that India had on visas and access to the UK. There are costs, as Sophie mentioned, and benefits. This system will reduce employment costs on both sides; it might generate more activity and you hope the net effect may actually end up being positive. It is also worth saying that this arrangement already existed. It was for just up to a year and now it has been extended for up to three years, though it is actually of shorter duration than similar arrangements that the UK has with other countries.
On the whole, I do not think this will affect migration patterns significantly, especially not in the long term. All these temporary workers will still need to get a visa and be subject to various requirements, so they will not undercut British workers. It is a simple arrangement that will basically help the contribution records not to be interrupted on both sides if these workers are still employed by firms based in their home countries. If they get employment abroad, this will not apply. This is something positive the UK got from the deal.
Q11 Lord Stevenson of Balmacara: I think we have covered most of the ground in my scheduled questions, so I will finish up on procedural issues. A lot of what we have been talking about and what is in the document is quite dependent on a large number of committees being set up. Is that a common feature of FTAs and will we see that as a mechanism for going forward? If they work, presumably there will be quite a volume of material coming forward in future years. I think the Government are giving an agreement that this will be done under CRaG. Can you see that working in practice? If so, could you give us a headline of where you think the developments that we will see in future will come from?
Dr Mattia di Ubaldo: I agree that a lot of what has been written in the FTA defers action to the future. There are lots of provisions on technical co-operation that will create work going forward or a future negotiation altogether. This is fairly typical in such comprehensive FTAs of this size. From a procedural point of view, this is pretty standard, but a lot of what is in the FTA has inevitably created more work for the future.
Sophie Hale: The trade strategy pretty much set out that, post the India FTA, a lot of the focus and energy of the department will go into delivering these mutual recognition arrangements and using these committees that already exist under the free trade agreements that the UK has signed to progress liberalisation with our largest trading partners. Maybe that is a bit of a symptom of the fact that there is not a lot of market access left on the table in seeking new free trade agreements. It is also about making sure that we target the areas that are important to the UK, such as services, where it takes that slower approach because you need institutions and arrangements to deliver that later liberalisation. We have seen the UK delivering on that in certain sectors, such as in those MRPQs that we have seen with countries such as Canada and New Zealand. India might be a bit of a trickier negotiation, but it is good to see them focusing on that.
The other encouraging thing in the trade strategy is some funding for regulators to pursue these conversations, because obviously it is an extra task and having a lot of these committees across a number of agreements is very time consuming. To get to the depth that you need to deliver something meaningful on liberalisation, you need the resource available, so it was positive to see that reflected in the trade strategy.
The Chair: I think that draws us to the end of our questions. I thank our two experts for a comprehensive and thorough response in this first of six sessions that we have. Thank you both for your help.
