Chris Bryant and Kate Thornley.

Q42 The Chair: Welcome to this session of the International Agreements Committee. We are delighted to have with us today Mr Chris Bryant, Minister of State for Trade Policy at the Department for Business and Trade—

Lord McDonald of Salford: Sir Chris Bryant.

The Chair: Sorry—Sir Chris Bryant. We also have Kate Thornley, chief negotiator at the Department for Business and Trade. We are very pleased to see you today. We look forward to hearing from you in relation to the historic agreement that has been reached with India.

The session is being broadcast. A transcript will be taken, which will be sent to you, and if you or your office want to make any corrections or if anyone wants to provide any supplementary evidence, that can be done, and we would be pleased to receive it.

I will start the questions, if I may. As I said, we are delighted to see the agreement made but it would be very helpful if you could evaluate for us the India-UK trade relationship and how beneficial the Government see this agreement being.

Chris Bryant: I do not mind about my knighthood. If I do not stand on ceremony, maybe you will not either, if that is all right.

Lord McDonald of Salford: That was my entirely my fault, so I apologise to the Chair.

Chris Bryant: Anyway, we are absolutely delighted. I can praise this deal because I did not strike it. It was struck by my predecessor and the previous Secretary of State for Business and Trade. It is a really good deal. It means that 90% of lines will be liberalised. You have to remember that India has been one of the most protected economies in the world. In many ways, it is difficult to do business with for a whole series of different reasons—some deliberate and some less so. We reckon that the deal will be worth something like £47 billion a year by the year end.

Of course, we are talking about one of the largest economies in the world, which is likely to be the third-largest economy in the next few years. On top of that, it will have the best part of a quarter of a million middle-class people with high disposable income to spend. It is a really important deal for us. It also has a geostrategic significance because India and the UK have, obviously, had historic relations, but we want relations based on the future, not just on the past, and this is an opportunity for us to do that. Some 72% of businesses in the UK have said that if there were an FTA, that would be an opportunity for them to export. One of my big driving instincts is that, at the moment in the UK, only one in 10 British businesses exports; three in 10 French ones do and four in 10 German ones. If we really want to talk about economic growth in the UK, part of the answer lies in enabling greater exports from the UK.

Some of that is about ambition. We need to be ambitious as a Government, and business needs to be ambitious too. There is a great Brazilian phrase—I am probably not allowed to use Portuguese in the committee—“Quem não arrisca, não petisca”, which means, “He who takes no risks gets no dinner”. That is the kind of ambitious understanding of risk that we need to apply and encourage our businesses in the UK to adopt.

Some of this is about goods and some of it is about services, but I think it is a really good deal that will stand the test of time.

The Chair: Thank you very much indeed. I was there last Friday—not having a discussion about this, but there is excitement about the deal.

Chris Bryant: Not for the cosmetics industry event in Mumbai?

Q43 The Chair: Oddly enough, no, I was not there for that. It was a bit of a legal do, which we might come on to later. I should make a declaration, because I have legal interests. I need to declare my interest in that bit of it. I have another couple of questions, if I may, before I turn to colleagues.

We heard in evidence that UK dairy, oats and a variety of food and drink sectors, as well as textiles, are likely to be open to immediate competition, while gaining little or no market access the other way, or over the longer term only. How will the Government mitigate the impacts on those affected industries? That is the first of my two questions.

Chris Bryant: First, you have to look at the whole package. Anybody assessing whether it is a good package has to look at the whole package to be able to come to that conclusion. Secondly, as a Welsh MP, I have a particular interest in some elements. I am delighted that lamb, for instance, will be going from a 33% tariff to zero from day one. That is a market open to us which has not been open to us historically.

We wanted to protect certain things, including milled rice and a few other things, and India also wanted to protect certain things. One of those debates was around cheese. I want to make it absolutely clear that when we liberalise an agricultural product of some kind, it does not mean that somebody can then export to the UK without getting the appropriate licence. They still have to do that; they have to compete on a fair basis with anybody in the UK. In relation to cheese, although we have liberalised the tariff, it was not very high. We have taken it down a marginal amount in the UK. None the less, we are not aware of a single cheese manufacturer in India that has a licence that would enable it to export to the UK at the moment.

Q44 The Chair: Thank you, that is interesting. The second question is simply: how will you measure the success of the agreement?

Chris Bryant: I should make a point that comes before that. It is great signing FTAs. Politicians love it because everybody comes along with their charabancs, the media are there, there are puff pieces in all the newspapers and all the rest of it. But what really matters about an FTA is whether you manage to use it. We are the first in the door in relation to India—this is the best deal that India has signed up to with anybody—so we are very keen to make sure that we have a very strong process of implementation and using it. We need to make sure that British businesses know that there are opportunities.

I was not making a facetious remark about the Cosmoprof event in Mumbai the other day. The cosmetics industry is a very large industry for the UK; we export a lot, and we had one of the nine international pavilions there. That is only because we have managed to get the cosmetics tariff rate down from 33% to nought, I think—Kate will remind me.

Kate Thornley: It was 22% to zero for most products.

Chris Bryant: Sorry. That is the kind of opportunity that simply was not there until now, but we need to make sure that the cosmetics industry in the UK knows about it and we build on it. You will know that we have had to cut the number of DBT posts we have around the world following the spending review. But one of the areas we protected was India, because we want to make sure that we take advantage of this deal.

There is one other thing I would say—sorry, this is a long answer. It is really important that people do not think that because we have done the deal it will now all just happen. This is a deal with the federal Government and many of the issues that lots of people have faced have been around not necessarily tariffs but facilitation of trade. Some of that is around states and provinces. That is why I am really pleased that we have a structure built in, with the first JETCO taking place on the day of entry into force, and then subsequent ones afterwards, and a whole series of different committees underlying that, which will enable us to look at tariff-related and non-tariff-related problems that people might have in being able to take advantage of the opportunities that the FTA affords. Kate, I do not know whether you would like to add anything.

Kate Thornley: The hard work really starts now. We expect that when businesses start using the deal, it will not all be smooth sailing. There will be challenges. India is moving on a lot of things that it has never moved on before, so maintaining close government relations and addressing those issues as they arise will be really important, as will maintaining that dialogue with business.

Q45 The Chair: We have noticed in relation to other agreements that one of the questions can be: what assistance do businesses need from the Foreign Office or other parts of government to make the agreement work? Can you say something about that and what the plan is?

Chris Bryant: As I said, it would not be the Foreign Office, though it can be helpful. The Foreign Office leads the post, but we have DBT officials in in India who are specifically designed to do that. Those working with our industrial strategy—eight sectors in the UK, including financial services, life sciences and so on—are charged also with enabling people to take advantage of the FTA opportunities. We have a whole structure. We have already spoken to more than 1,000 businesses, and we intend to keep up that momentum towards the moment when we get to entry into force. There will be full ratification during next year and then entry into force will be some time in the summer, I guess, although in parliamentary terms, “summer” is sometimes stretched.

The Chair: I will go to Baroness Verma before Lord Hannay, just to pick up a small point.

Q46 Baroness Verma: Minister, you mentioned that the French and Germans are doing much more work with the Indians. It is a historical thing. Perhaps we need to look at how we ensure that the mission there—the high commission and our DBT colleagues—get much more support. Britain’s convening power is huge, and we have missed a trick or two over the past decade or so.

Chris Bryant: Yes, the point is extremely well made. What we are trying to do is focus as well as provide, and make sure that the support is there. You are absolutely right about the convening power. For instance, in the creative industries, fashion is a really important connection between our two countries. We held a great Diwali event here a few weeks ago with one of India’s most celebrated fashion designers. I do not think I could have afforded any of the jackets; they were covered in vast numbers of pearls, all very beautiful. The cultural relationship we have between our two nations is a real opportunity for us to build on.

I should say, incidentally, that one of the reasons that France and Germany export more might also be to do with the fact that 16,000 fewer UK businesses now export after Brexit.

Q47 Lord Hannay of Chiswick: Could we have a look at the broader geopolitical environment in which this agreement was negotiated and concluded and will now be implemented? Could you say something about the way in which the pretty violent upheavals in the world trading system that have occurred, in particular since President Trump announced all the tariffs at the beginning of April—there are other factors too, but that is the main one—and the consequences of them? How has that affected the way in which we negotiated and concluded this agreement and how we will implement and hope to benefit from it?

Chris Bryant: I have a very extended metaphor coming into my head, which I am trying to reject. Inevitably, trying to determine how much wind you get in your sails at a particular moment in an FTA negotiation process is difficult to determine—because, “Events, dear boy”. But it is certainly true that Brexit meant that we were in a position to strike a deal with India which we otherwise would not have been able to do.

The situation in the United States of America, with a completely different attitude towards the World Trade Organization and reciprocal tariffs—I think that is the term that is used—and so on, undoubtedly played some role in that. But I would point to the fact that even after all the turmoil of this year, roughly 72% to 74% of all world trade is done under WTO rules, so it is all the more important, as we look forward to March next year and the next ministerial meeting of the WTO, that we reinforce the rules-based order. Certainly there is an element for us of being able to show, by striking a really good deal with one of the growing nations of the world, that the rules-based order is worth adhering to and supporting.

Lord Hannay of Chiswick: Thank you. You have dealt almost exclusively with the geopolitical consequences for our policy, but what about the geopolitical consequences for Indian trade policy? After all, as you said yourself—quite correctly, I am sure—India was an extremely protectionist country. It has been accused on several occasions of scuppering multilateral trade deals. Now it has done this deal with us, which is unusual for India, to put it mildly. To what extent do you think geopolitical factors affected that, and the way that India has been treated by the US, both from the outset in April and onwards?

Chris Bryant: I hate to pull this card, but I fear that that would be speculating as to what is going on in the mind of Minister Goyal, and I am hesitant to do that.

Lord Hannay of Chiswick: I am sorry, but I am merely asking you for our analysis of the development of Indian trade policy up to now and into the future. We must have an analysis of that. We must be prepared to say that we think not only that India is a growing market but that it will be less protectionist than it was in the past. I am merely asking you what contribution to that you think geopolitical developments have made—not what the Indian Minister has in his head, but what they are actually doing.

Chris Bryant: The proof of the pudding is in the eating. We have a trade deal, which, two years ago, lots of people would not have expected us to have been able to strike. We have been able to strike it now. I am not aware of any moment at which India has said that this is because of the geopolitical situation in the world. More commonly, I have heard Minister Goyal say that it will be one of the biggest nations in the world—not just the most populous but the most economically significant. They reckon that its economic future lies in stronger ties with other countries, being able to trade more effectively with them, and being able to get significant economic advantage into their own economy by trading with others.

They have certainly eschewed that element of protectionism. They were also prepared to make a series of commitments in this, which could lead to ratcheting up the liberalisation rather than the opposite. All of that indicates that there has been a change of perception, which we welcome. Kate was more intimately involved in the negotiations so may want to say something.

Kate Thornley: I would agree, and add a few bits. The negotiation has been running for almost four years. The discussions about it started in the middle of the pandemic when supply-chain resilience and diversification were the main issues that we were thinking of in terms of our external trade policy, as well as what happened after EU exit. Over the past four years I have definitely seen a sense in the Indian system that some people think opening up is a good idea now. Protectionism has existed for a long time to protect a population that is, for the most part, developing; incomes are lower. The areas in the deal where we could not make progress were often in sectors where protectionism was still either politically or economically important. Farmers and lawyers were in those two camps. When you look at the deal, you can see steps forward in some areas but not others.

What we do not know is how that will translate to the WTO. That will be complex and challenging this year. It is a difficult time for MC14 to be happening but, at least on a bilateral basis, we have seen an opening that is quite unprecedented and a good step forward. My hope is that, in the decades to come, the deal will be continually improved. As the Minister said, a number of provisions in it—MFN clauses—mean that if India gives a provision to another country, the UK will automatically benefit, so the deal is somewhat future-proofed. We will have to see how the negotiations with other countries go.

Chris Bryant: MFN means most favoured nation. The other point to add is that part of the deal is that in two years’ time, after entry into force, India will no longer be part of the developing countries trading scheme with the UK. That is another symbol of how India is changing its position in the world.

The Chair: I will come to Lord Howell and Lord Anderson in a moment but I just want to say, Minister, that you rejected any congratulations for yourself but, if you permit me, Kate has been involved in this throughout and perhaps some congratulations for her are justified.

Chris Bryant: Indeed. She is about to leave this post to go on to another one, so we absolutely wish her well.

Q48 Lord Howell of Guildford: It is a wonderful performance, particularly as you are standing on a moving platform. A number of countries, including ours, have signed up in desperation, almost, to the multilateral interim progressive arrangement—I can never remember the precise name.

Chris Bryant: The WTO. Yes.

Lord Howell of Guildford: Is India playing a part in that as well? Is it playing under the same rules?

Chris Bryant: I think the correct answer is no. If I have that wrong, I will write to you, but my understanding is that it is not.

Lord Howell of Guildford: That is one development that you must be worried about. The second thing is that we read that the EU representatives were in the door the moment we were out of the door; we got there first. Has it decided anything that reshapes or leads to reassessment? Thirdly, to reinforce Lord Hannay’s major question—

The Chair: Forgive me, Lord Stevenson will ask about the EU side.

Lord Howell of Guildford: May I just come to Russia? We understand that Mr Modi has been in Moscow and is still seeking a similar sort of agreement with the Russians. Will that change the shape of our own achievement?

Chris Bryant: To go in reverse order, I am not aware of Russia and India seeking to have any similar kind of FTA. I think they had a warm meeting last week.

Lord Hannay of Chiswick: It is the Eurasian Economic Union that is being talked about, of which Russia is a member.

Chris Bryant: Yes, I know, but I do not think it would lead to anything like the same kind of agreement. But we will see how that develops. The point I was going to make is that, although Ukraine is also a moving platform at the moment, we have been very keen to make sure that everybody understands our position in relation to Russia and overreliance on Russian gas, oil and, for that matter, military equipment. But India is an independent country that has made its own decisions around its long-standing military connection, for instance, with Russia.

In answer to the WTO question, we would like to see a series of things reformed at the ministerial in Cameroon in March next year. One of those is in relation to making sure that there is some form of dispute resolution system; otherwise, what is the point of having a WTO? Part of that is around what consensus means. If consensus means that every single person in the room has a veto, the danger is that the WTO will struggle into the future. These are all issues we want to talk about, not only with India but with many others as well. It is a very good sign that India is signing deals like this, because it is all within the WTO and it is all WTO compliant. That adds to the sense that there is a strong future for the WTO.

There was a third point about the EU and whether it is chasing us. The EU has now struck a deal with Mercosur after 25 years. I have had brief conversations with all four countries in Mercosur and they all said that quite a lot of the chapters in that deal might be very similar to a UK deal. It may be that quite a lot of chapters in the UK deal with India might be similar for the EU, but it might take much longer for the EU to get to an agreement with it.

The Chair: We will come back to the EU with Lord Stevenson. Lord Anderson?

Q49 Lord Anderson of Swansea: This is a good deal overall but inevitably there are winners and losers. For the losers, do the Government envisage any special protection or compensation?

Chris Bryant: I am not sure who you are thinking about but let us take one instance. Some people have said that this will be problematic for textiles. But it cuts both ways, because a company like John Smedley, for instance, will have access to textiles from India that it will then be able to export to India. Similarly, there has been some discussion about ceramics. A very small number of lines have been liberalised in the UK—11, I think, out of 43—and the liberalisation is taking down very small tariff levels, so we are not convinced that it will be as dramatic as some people think. To answer directly your question about compensation, I am not aware of anybody seeking financial compensation. I do not know whether Kate wants to add to that.

Kate Thornley: I just add that the deal includes a bilateral safeguard mechanism in the “Trade Remedies” chapter, which means that if any UK sector feels that it is being dumped on or flooded with products that are seriously harming its markets, a review can be conducted and Ministers can decide to put remedial action in place. That is a standard mechanism. It builds on what is in the WTO, but it is a bilateral one in this FTA.

Lord Anderson of Swansea: Minister, one of the losers is the UK dairy industry, which will be subject to no new market access in the agreement but will be exposed to additional competition from day one. For example, it is claimed that the impact of additional competition will be felt disproportionately in Wales because of the reliance on dairy products and its significance. What is your judgment in relation to the dairy industry in Wales? Was there adequate discussion with Welsh dairy interests, who still feel aggrieved having been let down, in their judgment, over the Australian FTA?

Chris Bryant: I am not responsible for the Australian FTA. That was some time not only before I came into this post but before we came into power. Everybody has had a go at describing that deal.

We sought to protect pork, chicken, eggs, sugar and milled rice. The Indians sought to protect dairy, oats and apples. That is what happens in all these trade deals. As I said earlier, there is a significant advantage for Welsh farmers in relation to lamb. A new market is now available to them in India. To be very clear about the cheese issue, you can import into the UK only food that does not breach our food standards and for which you have a licence. In relation to cheese, I am not aware of a single Indian cheese manufacturer who has a licence to import into Wales or anywhere else in the UK. I am not sure that the problem is as some have feared.

Lord Anderson of Swansea: The NFU said clearly to us in evidence that the effect will be disproportionate on the dairy industry in Wales.

Chris Bryant: I disagree with it, I am afraid.

Lord Anderson of Swansea: You know its interests better than it does?

Chris Bryant: I am just trying to explain the situation, which is that, as I say, Welsh farmers will have an opportunity to access the lamb market in India, with a 33% tariff going down to nil from day one. It is right that cheese is liberalised in the UK. I cannot remember what the cheese tariff is in the UK, but I think it is around 3% to 5%, so it is a very small change. I am not aware of a single Indian cheese manufacturer who has a licence to sell cheese in Wales or the rest of the United Kingdom. I am happy to review that; if the NFU has more evidence, I am happy to look at it, but I think I disagree with it.

The Chair: That is a very clear answer. Lord Marland?

Q50 Lord Marland: I am very sorry to hear that you are leaving us, Kate, but hopefully the dotted line will be signed. Thank you for talking about the bilateral safeguard. How would that practically operate? We have heard evidence from industry across the piece, some of which is in favour and some of which is not. How would that practically happen? You mentioned that the Minister could call for evidence. What would be the trigger points? Could you go into a bit more detail on that?

Secondly, you have obviously taken certain industries, rather than others, into your confidence, Minister, which in some ways is a very good thing but not in others. You had a “room next door” policy. To what extent do you think that will happen again on new trade deals?

Kate Thornley: I am very happy to explain the bilateral safeguard mechanism. It is in place for the first 15 years of the deal being in existence, so that, as industries adjust to tariff reductions, there is space for them to raise concern to the Government and say, “We are now facing a huge amount of competition or a cheap product that is damaging our industry”. What would happen is that a British business would come and raise that concern, probably directly to us, and it would be for UK Ministers to ask the TRA—the Trade Remedies Authority—to do an investigation, with evidence being collated and advice eventually being put forward to Ministers, who could decide to reimpose tariffs or do something to stop the flow of goods.

There is also something in the deal called a provisional measure, which means that, while that investigation is happening, if a Minister wanted to impose something sooner, ahead of the investigation concluding, they could. The only issue is that, if the investigation eventually says that there is no issue, the UK—in this case—would have to pay back whatever had been blocked from the other trading partner. Those remedies, if put down, tend to be in place for two years, and each two years could be reviewed if necessary.

Chris Bryant: On the question of consulting, we had a 14-week call for evidence which helped us establish our mandate and negotiating position. You are absolutely right that with some sectors, such as the automative sector, we effectively drew up the whole pattern of the way it works so that we were absolutely certain that we got it right. There is a double edge for people if they want to be involved in the process. Some have said that they do not want to know what we are up to, as it were, because then they cannot criticise it so readily at the end. But the number of people that we have brought into the process has grown steadily through all the FTAs that we have done in the past few years, and I suspect that that will continue to happen. Inevitably, we need to keep our cards relatively close to our chest because we do not want to surrender too readily our negotiating position to people on the other side of the table. That leads to a constant balancing act.

Q51 Lord Boateng: The Government’s own impact assessment says that they expect “detrimental short- to medium-term effects on some developing countries’ exports to the UK”. This is at the same time as the FCDO has cut its budget to a number of those developing countries. Traditionally, we have been a great help in trade facilitation and capacity building. I wonder how the Government propose to work with those most affected countries to support trade and development and to improve standards and working practices. Sri Lanka and Nepal, which are direct neighbours, will lose £0.1 billion in GDP by 2040. What will the Government do about that?

Chris Bryant: It is a bit higher for Nepal, in fact. I think you have been given the statistics because they are in our CGE model—

Lord Boateng: How high is it for Nepal? Help us with that.

Chris Bryant: I think it is 0.21%, which means we are talking about a £70 million change. It is 0.09% for Sri Lanka.

Lord Boateng: I think it said that the total loss is £0.1 billion. Be that as it may, it will affect them badly. The wind in our sails is taking the wind out of theirs. What are we going to do about it?

Chris Bryant: I do not think it is very dramatic, but I accept the amount. That is one reason why, in July—again, before I came into office—when we launched the trade strategy, we announced changes to the rules of origin scheme to make it more liberal for garments, helping exporters use the scheme in the countries that you are talking about. In addition to that, as part of this deal, India will come out of the DCTS—the developing countries trading scheme—two years after entry into force. In the end, we think that the long-term—rather than the short and medium-term—effect will be positive for those other countries rather than negative.

Lord Boateng: I will push you slightly, if I may. Because of your previous experience and real contribution in this area, you know that a number of the affected countries are, in any event, quite fragile, and you know that our influence has been for the good in those countries. What are we doing to address what could be seen as a loss of influence in those developing countries whose economies have in fact been undermined by this agreement?

Chris Bryant: All those countries already have low to no tariffs in the key sectors that we are talking about, precisely because they are members of the developing countries trading scheme—and ours is the most generous there is. That, along with the changes that we introduced in July, shows that we are determined to do whatever we can to minimise the problems there might be. But all of this is predicated on an assumption that we will do no additional trade with those other countries. I have spoken to our trade envoy in Bangladesh. Vietnam is a member of the CPTPP, where we are trying to push as much as we can to increase our trade with those countries, which can be beneficial.

Lord Boateng: Are we giving more resources to that effort?

Chris Bryant: Through the CPTPP, we certainly do with Vietnam. Vietnam takes chairmanship of the CPTPP in January, and we will work closely with it. I hope that we will have a meeting with Vietnam on Thursday evening. I do not know whether Kate wants to say any more about any of the others.

Kate Thornley: I do not have much more to add other than to say that India is also aware of this and is considering what its supply chains will be, particularly in the textile sector, where it knows that some of its neighbouring countries depend on textile exports, and quite solid flows of products that go into garments go over those borders already. We cannot say the numbers are there. There is a reason for those numbers, but the DCTS, along with a commitment to monitor it and look at what else we can do, is important.

Chris Bryant: One of the other countries in the list is Indonesia, which is a CPTPP candidate country, and we are eager to get it to join. I had a good meeting only yesterday with my Indonesian counterpart, who, fortuitously, was educated in Manchester.

Lord Marland: On Lord Boateng’s point, presumably you will want to do a trade deal with Sri Lanka? It will certainly want to do a trade deal with us. We want to be friendly with it, particularly given the tragedy it has just had.

Chris Bryant: Indeed. On free trade agreements in general, one of the challenges for us is that they are very resource intensive. Kate had a great team and a significant investment for four years—five, in effect, because it will go all the way through to entry into force and then we want to implement it and so on. Starting new FTA processes is a very significant investment. At the moment we are thinking hard about whether we ought to be looking at other countries. For instance, I have already referred to Mercosur, and Thailand is another possible country. Indonesia would like us to do a free trade agreement and no doubt Sri Lanka would too, though I have not seen that specific request. We have to be careful to protect our own resources and make sure that we have the capacity to deliver properly and effectively. We already have in train the GCC, Korea, Switzerland, Türkiye, Greenland and others.

Lord Marland: We have seen them, do not worry—but not Greenland yet.

Chris Bryant: The point is that that is a very significant commitment from the DBT and, of course, something that we were not doing prior to Brexit.

Kate Thornley: I will add one quick point to that, if I may. If you are thinking about doing an FTA, you are thinking about bringing tariffs down. For many of these countries, the tariff is already zero under the DCTS, without the UK having an FTA. It is not that these countries are losing their preferential access; it is just that India might become as competitive or more competitive than them. Some of these numbers are also modelled on the fact that these countries buy a lot of services and goods from India, and some of those things will get more expensive as a result of India trading more with the UK. Quite a complex economic picture has contributed to these numbers.

Q52 The Chair: Thank you. I want to pick up on another point, Minister, in relation to the quality control orders that the Indian Government could implement, which could of course affect shipments of UK goods. How are we going to monitor and maybe even engage with that?

Chris Bryant: This is another area where we are hopeful that India will rely less on quality control orders, because in effect it is a form of non-tariff barrier to trade. There are quite a lot of them. There were 800 in use; 14 have just been withdrawn and 55 were suspended in the steel sector. This is one reason why I am very pleased that there is a whole structure, as part of implementing and taking forward the FTA with the JETCO, which will come on day one of entry into force, and so on. These are all issues that we need to drive forward. One of the really important engagements with business is that people need to tell when they come up against either this or any other kind of barrier; otherwise, the danger is that it undermines the FTA. I do not think India wants the FTA to be undermined, so it is in everybody’s interest to try to move away from these kinds of processes.

The Chair: That is a good segue to Lord German’s question.

Q53 Lord German: I want to pick up on the issue of managing to use this deal, as you put it at the beginning. We have had substantial evidence from our witnesses that if we do not ensure that the agreement is well utilised, it is not worth having in the first place. I know that you agree with that. You told us that you were putting in place “a comprehensive support network” for potential exporters, with “regional advisers, dedicated export support services”, “easily accessible information to guide businesses through the process”, and “demystifying the agreement” through workshops. How is all that going?

Chris Bryant: It is going well. We have spoken to a lot of businesses of a variety of different sizes. One of the conversations I had last week was with UK Export Finance, which historically has tended to be much more focused on big businesses rather than SMEs. I have charged it specifically with looking at how it can provide more support to SMEs, for instance, in India. It is great if we sell frigates to another country with UK Export Finance support, but I also want to make sure that smaller companies, such as Walker’s biscuits or Irn-Bru—maybe they are too big to be SMEs—are able to prosper. That is why sometimes it is about supporting trade fairs in the key sectors that we are talking about, such as the cosmetics industry I referred to earlier.

Lord German: I am interested in the demystifying that you mentioned—Kate is nodding. Could you give me a picture of where you have got to so far in all those categories of things that you said you were going to do?

Chris Bryant: I shall give way to Kate in a minute but there is one other thing I would add. Inevitably—you will all know this, of course—there are several moments in the process of an FTA being agreed. There is the moment when you conclude negotiations and you tell the bosses, “Right, we’re ready”. Then there is the fireworks moment when everybody goes on telly and says how wonderful it is. Then there is the legal scrub, then the signature, then the entry into force. Then there is a ratification process, which we still have to go through both here and in India, which makes it more difficult to be precise. One of the criticisms I have heard from industry is that people want to know when this is going to start, and we cannot be precise about that yet, because there is a ratification process here and in India. That is one area that we have not yet been able to demystify, but Kate will talk about the other areas where we have demystified.

Kate Thornley: I agree that it has been brilliant to work closely with so many businesses in this deal, but it has really brought home to me that trade policy-speak is quite a different language to how businesses speak. We talk in tariffs, PSRs and authentication systems, and businesses see paperwork. At the moment we have teams up and down the UK who are going out to promote and in many cases debunk some of the ideas about doing business with India. Quite often you speak to SMEs and they just say, “Too tricky. I’d rather start with France or somewhere else that’s a little bit easier”.

Then there is the detailed explaining and translating. One of my team was on a call with a company that produces high-end medical devices, which will benefit from tariff reductions, and they were talking it through the exact process it will have to go through to export, how it will register as an exporter with India, how not to get tangled in customs procedures and the timelines for things coming in. There is quite a lot of hand-holding to be done. It is quite labour intensive, but it should be worthwhile. Going back to the points we made earlier on, including the point about quality control orders, I do not think that this will all be smooth sailing. It is about continuing that close discussion and asking, “Is it working? Has someone put in a new bit of regulation that suddenly stops this?” That is going to be really important going forward.

Lord German: You have a data recording unit that does all this. Is it well resourced? Are there enough people to count the numbers?

Chris Bryant: I think so. It feels like a very active and lively team. This matters because this is not just about what happens in London and the south-east; it is also about what happens in all of the different regions of the UK, which have different specialities. Take Yorkshire and the Humber in respect of the medical devices to which Kate referred. The tariffs have been cut from between 8.25% and 13.75%; they are being halved over the next few years. That will be really important in Yorkshire and the Humber, where there are so many businesses that work in this area, whereas, in the East Midlands, it will be aerospace companies and so on that stand to benefit. We are trying to make this as granular as we possibly can by talking not just to trade bodies but to businesses up and down the land.

Lord German: May I ask two very specific questions off the back of that? One concerns the issues around HMRC. Has it made progress towards establishing the communication systems needed to co-ordinate with the Indian customs authority on the rules of origin formalities? Secondly, will the Government publish the data on tariff preference utilisation rates with India? Obviously, that is an important issue in terms of the Government telling business what to do.

Chris Bryant: On your first question—has HMRC completed that process?—the correct answer would be no, but we have made good progress. It has to be in play and fully completed by the time of entry into force; that work is ongoing. We help HMRC but it is progressing at a pace that we are happy with, so there is no reason why that should provide additional delay.

Secondly, we would like to be able to exchange preference utilisation rate data. That depends on strong, reliable data, some of which is available in India at the state level and some of which is available at the national level. So there are complications in making that available, but it is one of the things that we are striving to achieve.

The Chair: Lord Hannay wants to pick up a point; we will then go to Baroness Verma.

Q54 Lord Hannay of Chiswick: You have spoken mainly about the help that you are giving to small and medium enterprises in this country. That is very important, obviously, but there is also support that you can give on the ground in India from both the high commission in Delhi and the other posts in Mumbai, Chennai and so on. Are you satisfied that the squeeze on costs and resources for both the FCDO and business will enable you to do that for small and medium enterprises through our posts in India?

Chris Bryant: I would say two things on that. First, yes, it is true that the DBT has had to cut the number of posts around the world from roughly 1,600 to something like 1,000—that process is ongoing—but we have protected the teams in India precisely because of the FTA and the need to be able to deliver that on the ground via posts throughout India. I have forgotten the second thing that I was going to say.

Lord Hannay of Chiswick: What you are saying, I think, is that you rob Peter to pay Paul—but correctly rob him, because India is a big opportunity. However, there is a squeeze coming in somewhere else.

Chris Bryant: The squeeze is already happening. For instance, when I was in Argentina and Brazil, in Latin America, I had to talk to staff where we are making significant cuts as a result of the spending review. The decision was made before I came into post but it is right that we focus.

I have remembered the second point that I was going to make. I am enormously impressed by the DBT officials I have met all over the world who are securing better deals, introducing people to new business opportunities and so on. The one thing that they sometimes say to me is, “I wonder whether I was just sitting there when a deal was done and whether the deal would have been done even if I had not been sitting there”. This is why we need to make sure that our teams are adding value—that is the focus to which everybody is very devoted—and why, in this specific relationship, it is very important that we protect the Indian team.

Q55 Baroness Verma: What additional access will UK service providers benefit from under the agreement with India?

Chris Bryant: This is always one of the more difficult bits to arrange with the country, especially if it has been protectionist, because there might be a series of professions where it is difficult to achieve this. We will come on to legal services in a moment, no doubt, but we have made some significant advances. For instance, if you had asked me about this in relation to telecoms two years ago, I would not have thought that it would be achievable—I would not have thought that we would get it over the line—but we have gotten to 49%. Investment can be from the UK without permission or restriction of any kind; it can be up to 100% with government permission.

We have gotten support for construction services and a guarantee of national treatment, so nobody will be able to be treated in a discriminatory way by virtue of not being an Indian business. We also have the most favoured nation provision, which we referred to earlier and which applies to 40 different sectors. That is a very significant advance.

There are elements that we would have liked to get over the line, not least in relation to legal services. There are many countries for which this is very difficult because they point to legal services being a noble profession; that view is felt particularly strongly in India. We would have liked to get that over the line, but we did not manage to do so.

Baroness Verma: You have alluded to legal services on a number of occasions—you, Kate, also did so in your opening remarks—but the Bar Council and the Law Society have told us that they consider the absence of substantive provisions for legal services a real missed opportunity to support the bilateral services trade. How will we look at addressing this in future?

Chris Bryant: Go on, Kate—you were intimately involved in it.

Kate Thornley: Yes. As I have said many times here, we tried very hard but India does not consider legal services a tradable service. There was a principled, fundamental challenge there.

However, what this deal has done, alongside ongoing engagement through the high commission and the Ministry of Justice, is mean that we have a close and good working relationship with the Bar Councils in both countries. Outside of the deal, we have been able to bring professionals together to talk about the opportunities, the openings and what the UK is looking for: the ability to practise international and foreign law in India. I would love it if, in 10 or 20 years, legal services could be brought into the deal, but, as long as there is this block to it being considered a tradable service, that will not happen.

I can see—I hope that this will happen—progress being made outside of the trade negotiation space on a bilateral basis between Bar Councils. You may have experienced this last week, if you were there, but there are definitely elements of the Indian system that see advantages to opening. There are Indian companies that want foreign lawyers to practise there. So the pressure is building; I like to think that it is a question of “when”, not “if”. Indeed, during the negotiations, India changed its regulations, and, when it made a public announcement, it gave credit to the UK for the sharing of expertise and dialogue. These are small steps forward but I am hopeful.

The Chair: Wearing an entirely different hat, I first raised this in India 30 years ago, so you are quite right about the longness of the debate. Did you have another question, Baroness Verma?

Baroness Verma: Yes—a very small one, just to follow up on that. To what extent will the lack of provisions facilitating data flows have an impact on the ability of UK service providers and exporters to deliver services in India? How do we get closer to that?

Chris Bryant: This is another one area where, obviously, the ask on our side was significant and was not something that we managed to get over the line. I should say that it is difficult in all FTAs to get this element over the line, for a whole series of reasons. India is considering how it is going to move forward with its own data laws. Obviously, we may look at some point at a data adequacy bridge or a regulation between the two countries, but, if anything is agreed by India with another country in relation to data localisation, this is something that we will be able to put back on the table.

Baroness Verma: One area on which we could push a little harder is data sharing, and perhaps do it through smaller singular agreements on certain sectors.

Chris Bryant: We will take that away and think about it.

Baroness Verma: Particularly on security.

Q56 Lord Howell of Guildford: Governments are not always totally in tune with the interests and priorities of professions. But in this case, it is encouraging to see there has been some professional recognition. I see that yoga trainers, chefs and classical musicians got especially favourable acknowledgement, which is encouraging. One hears that it is international organisations such as the Commonwealth that pay particular attention to the links with other professions, because they tend to bypass the Government and simply go straight to the profession to establish new links. Did you have any of that sort of flavour in the negotiations, or was it entirely through the eyes of the Government that the whole matter was handled?

Chris Bryant: The issue around chefs and classical musicians is more a question of mobility, which was one of the key asks that the Indians had for the deal and which we were happy to agree with. There is no formal process for us reaching mutual recognition of professional standards, something we try to achieve in FTAs if we can. We are trying to work through the professional bodies to see whether there is a means of opening this up in the future. Kate, perhaps you want to come in on this?

Kate Thornley: FTAs do not typically bind our regulators to recognise the qualifications of another country, because the regulators want to maintain that autonomy. It is a point of interest for both the UK and India, but for different professions on both sides. The FTA creates a space for dialogue. It might be that we bring regulators together and they mutually decide to formalise recognition of qualifications. The FTA is more facilitative in that space, as opposed to forcing any regulator to do that.

Q57 Lord McDonald of Salford: What is the status of the bilateral investment treaty under negotiation? Do you expect that such a treaty will, in the end, be concluded?

Chris Bryant: It is not part of what we have got over the line, as you as you will know, and we would have liked to have been able to replace the 1995 bilateral UK-India investment treaty. The negotiations on this element stalled. We have not given up hope of trying to do that, but that will be a separate negotiation process which we would need to start at some point if we are to be able to get that over the line.

There are key things that pull in both directions. We are obviously very keen to make sure that any UK investments made in India have protection attached to them, just as we would with nearly any other country in the world. We do not want other countries to capriciously expropriate UK investments. You need to have some form of dispute resolution system in that.

Lord McDonald of Salford: So it is too early to address the substance of such a dispute resolution, from the sound of the state of negotiations.

Chris Bryant: We are not presently negotiating on this—or are you Kate?

Kate Thornley: It is open. We could not conclude it at the time of the FTA, because it was not good enough for what the UK wanted. If India wants to return to the table, we will happily do that, but we are not actively negotiating at the moment

Lord McDonald of Salford: What I am hearing is that, when you do go to the negotiating table, investor state dispute settlement will be high on your mind.

Chris Bryant: We are an investing country. One of the key things that we offer to the world is financial services. We want to make sure that, if UK investors are making an investment in another country elsewhere in the world, they have some form of protection for that investment and cannot be treated capriciously by a Government who decide to throw all the cards up in the air.

Q58 The Chair: Before we go to Lord Stevenson, I have a question about that. From time to time we see different agreements, and questions arise about what arrangements there are in relation to investor protection. I have to declare an interest again, because this is an area in which I personally practise. I note that it has been unclear, to me at least, what the policy of His Majesty’s Government is to including ISDS arrangements in treaties, and if at some stage it was possible for that to be stated—I am not asking you to do it at this moment—but it might be helpful for us to know where the Government are heading on that area.

Chris Bryant: I could just note that and move on, but it would be more honest to say that we proceed case by case, because in different countries there are different sensitivities and different concerns.

I am conscious that, for instance, membership of the CPTPP involves a particular set of arrangements. We have five potential candidate countries for the CPTPP, so we will have to deal with those case by case. Obviously, we are far more sensitive around this in countries where we are likely to be making significant investments elsewhere. But sometimes the other country is equally concerned about what provisions there might be to protect their investments made in the UK.

The Chair: Thank you for not just noting it and moving on. I turn to Lord Stevenson, finally.

Q59 Lord Stevenson of Balmacara: It is wonderful to hear you talk up a success and speak so warmly about it. I think we all agree it is an amazing achievement—and that is not me saying something in order to then say “but”. However, there are other players in this game. Have you thought through what might happen in worst cases if there are EU or US developments with India? Presumably you do not want to give up where you have got to. You have put in place a lot of measures that would protect those who are already committed to it. But have you thought through some of the games that might be played against you? What are your thoughts on that?

Chris Bryant: I am not aware of worrying about people playing games against us. We try to be as eyes-wide-open as we can in all our negotiations.

For instance, I am conscious that, because the EU has now done a deal with Mercosur, that means that it will have lower tariffs than for British goods which might look remarkably similar to EU goods, and that may now put us at a disadvantage.

I have always been a supporter of free and fair trade. For me, the more there is competition for free and fair trade around the world, the better. I am not, except in certain circumstances where you have to protect sovereign capability—for instance, in relation to steel—I am not a protectionist. I want to see the nations of the world able to trade as freely and fairly as possible. If there is competition around the world, I think that is a good thing, rather than a bad thing.

Lord Stevenson of Balmacara: So you have no plans in place that you are prepared to discuss at this stage for what happens in the worst-case scenario.

Chris Bryant: What is the worst-case scenario that you are considering?

Lord Stevenson of Balmacara: Unfortunately, my notes do not help me on this. What we are talking about is the US popping back on to the negotiating table, so that suddenly it looks a lot easier for India to negotiate with it on a number of things, and our hard-won proposals drop down the list. That would be a real shame, given where you have got to. There must be a reality and you must be thinking about it.

Chris Bryant: That has not been a worry. There is many a slip twixt cup and lip. I am conscious that we have not gone through the ratification process here, let alone in India, and we want to get to entry into force.

It is a good deal for India and it is a good deal for us, so I do not think it is in anybody’s interest to try to dismantle either elements of it or the whole. On top of that, there are so many aspects of it which enforce a continued discussion about trade between our two nations.

It is a very well-struck deal, and I commend Kate enormously for all the work that she has done. I know that Kate would say that it is not just her—that it is the whole of her team as well, and that is true. For that matter, we have had immensely strong support from the FCDO. Obviously the FCDO has many other things to consider as well at the same time, but there are so many elements of this deal which are good, including measures around international labour standards, gender, environment and so on, all of which give us an opportunity to have a continued dialogue with India, which can only strengthen the relationship between our two countries, and we are determined to take advantage of it.

I sometimes think that our relationship with India has been a sleeping giant waiting to be woken up. As you know, I used to be a Culture Minister. Some of the best books written in English have been written by Indians in English, and it may be that we could apply the same to many other industries in the future.

Q60 Lord Anderson of Swansea: Minister, obviously the EU has more weight in trade negotiations than we have. Do you fear that we would lose any preferential advantages that we have under this agreement if the EU were to reach their own deal with the EU? Is it correct that they may well reach a deal before the end of this year?

Chris Bryant: Well, now. I am going to Brussels tomorrow to talk about a variety of things, including steel, with Maroš Šefčovič. Whether they will get to a deal with India by the close of play this year I do not know; that is the honest truth. The genius of what Kate and her team have achieved is that even if the EU came back with a better deal, in lots of these areas there is effectively a ratchet clause which means that we get it as well. So, no, I do not.

As you know, Lord Anderson, I was a remainer and I remain a remainer; I think that Brexit was probably not a great idea. None the less, we want to use everything that we possibly can to be able to achieve good trading outcomes for the UK. I also want us to have a better relationship with the EU because, as I said earlier, it is a nonsense that 16,000 fewer UK businesses now trade in Europe. For many British businesses, the most likely place to export is to a European country. We need to revitalise that whole possibility, and that is one of the things that Nick Thomas-Symonds as the Minister in the Cabinet Office is trying to do.

Q61 Lord Hannay of Chiswick: Could I ask you two quite short questions? The first is that we have not heard anything about the British consumer. Do you think there will be any benefits to the British consumer from the entry into force of this agreement and the cutting of tariffs on Indian exports to us? The second point is really: how would you defend against a criticism that says that this agreement is very heavy on the area where India benefits the most, which is trade in goods, and very light in the area where 80% of our economy exists—trade in services—and that therefore, although a good agreement, it is an agreement that is inherently quite unbalanced?

Chris Bryant: First, if you just take the savings to the UK in tariffs, if there is no additional trade at all and we continue the quantity of trade that we are doing now, I cannot remember what year it gets to £400 million but it gets to £900 million of saving a year in 2030—I think. Kate will get these numbers right in a moment for me. Similarly, if we were to use the whole of the automotive provision for the UK, the saving in tariffs is £1.56 billion. So there are very dramatic savings to UK business in this deal. Of course, one of the imbalances is that historically India has had very high tariff rates and we have tended to have fairly low tariff rates. We might be liberalising a similar number of lines, but we are taking them down from 3%, 4% or 5% to zero, whereas they are taking them down from, in the automotive case, 110% to 10%, or, on whisky, from 150% to 75% and then after 10 years to 40%. We have talked about cosmetics; for biscuits, it is 33%; and so on and so on. These are very significant gains, I would argue, for the UK. Kate is going to put all my statistics correct now.

Kate Thornley: They were good.

Chris Bryant: They were good. I got it right—hurrah.

Kate Thornley: On paper, it looks like India has a better tariff deal because the UK has liberalised almost 100% of lines and India has liberalised just over 90%. But, as the Minister said, it is the value of those lines. Our estimate is that, ignoring any increase in trade, the UK would save £400 million in tariffs in exports in year 1, going up to £900 million by year 10. India would save £220 million on imports into the UK. The flip argument there is that that is great for UK consumers. That is cheaper produce. It is a lot of household things. It is clothing, it is food products, it is things that affect the cost of living for people. But when you are looking at the tariff reductions, it is actually very beneficial for the UK even though the coverage is slightly less. When you add on top of that the expected growth in trade as well, it would be even more significant.

Q62 The Chair: I just want to round this off really. You touched before, Minister, on a bit about future relationships. I wonder if you can say a little now, really in conclusion, about the Government’s priorities and strategies for the relationship going forward. If you could, is there any plan within that to look for future sectoral agreements which might help to deepen the bilateral relationship?

Chris Bryant: Specifically with India?

The Chair: Yes.

Chris Bryant: There is one thing I am very keen on trying to do; we have not quite managed this trick yet. We published three strategies this year—the small business strategy, the trade strategy and the industrial strategy—and I want to integrate the three of those together more effectively. For instance, we have identified life sciences as one of our key sectors in the UK that we want to make sure that we are able to export more effectively around the world, and we want to make sure that SMEs can prosper in that field as well. Those eight key sectors are ones where we really want to develop more in our relationship with India. The classic instance is advanced manufacturing. That is why it is good that we have managed to deliver such a good deal in relation to the automotive sector, and that builds on the deal that we have done with the United States of America as well.

Those are the sectors that we are predominantly focused on, because we think they are the ones where we can achieve the most economic gain for the UK and drive economic growth. In one instance, which is the creative industries, it also adds to our soft power in relation to being able to enable other things as well. We export more books than any country in the world. There are only two countries in the world which are net exporters of music, us and the United States of America. It is the same for high-end television and so on. It is really good that, with India, we have been able to do that.

Might I just end with an anecdote? It is great that two big Bollywood films are going to be made in the UK next year. I know that this had cut-through in the UK because I received an email the day after it had all been announced, saying, “I gather you are the Minister in charge of all of this, and I am an Indian actor living in the UK. I wonder whether you could get me a part”—but I am not in charge of auditioning people.

The Chair: Sir Chris Bryant—

Chris Bryant: My Lord!

The Chair: No, no, seriously. Thank you very much indeed for your evidence. I want to thank Kate as well. If I may, Kate: well done on this. That has been said several times during this meeting, but we wish you very well with whatever happens to you next—what the Minister said.

Chris Bryant: It is going to be in France, working still for the DBT.

The Chair: Ah, excellent. We are very pleased to hear that. Thank you very much indeed. That concludes our session. The members will stay, please, for a private session. But we are very grateful to you, Minister, and thank you very much.

Chris Bryant: Thank you very much for having me.