Lord Sharpe of Epsom (Con)

My Lords, I thank the Minister for the Statement. The economic prosperity agreement between the United Kingdom and the United States is a welcome but limited first step towards a comprehensive free trade agreement. As such, it signifies a positive move towards strengthening the special relationship with our most important ally. Indeed, it was particularly refreshing to see that the special relationship was explicitly acknowledged as one of the three core objectives. If the relationship is to endure, it must be based, as the document says, on fairness and reciprocity. The United States is the UK’s largest bilateral trading partner outside the EU, with trade in goods and services valued at over £310 billion in 2023. Following the costs imposed by the increase in employers’ national insurance contributions, this agreement brings some relief to sectors in our economy. For example, tariffs on UK vehicles have been reduced from 25% to 10%, benefiting up to 100,000 vehicles annually, as well as attendant auto parts. With UK car exports to the US worth £7 billion last year, this is an important development and will provide some relief. As Mike Hawes of the SMMT noted: “The agreement announced today to reduce tariffs on UK car exports into the US is great news for the industry and consumers. The application of these tariffs was a severe and immediate threat to UK automotive exporters so this deal will provide much needed relief, allowing both the industry, and those that work in it, to approach the future more positively”. We take Mr Hawes’s words at face value. Similarly, the removal of tariffs on steel and aluminium, which had disrupted £400 million-worth of exports, is welcome news for our manufacturing sectors. But can the Minister say what exactly will the fact that the US is constructing a quota at most favoured nation rates for UK steel and aluminium products mean in practice, and particularly for the troubled British Steel? In agriculture, US beef export quotas to the UK have increased from 1,000 to 13,000 metric tonnes, and negotiations are expected to continue on pork, poultry, rice and seafood—sectors where the United States has significant export interest and capacity. The US Agriculture Secretary has made it clear that these areas are priorities in their trade agenda. As further discussions progress, it will be important that they take into account the structure and needs of the UK’s own farming sector. Although there is broad support for open and competitive markets, we know that some British producers, particularly in poultry and seafood, have raised questions around production practices and the cost implications of different regulatory approaches. The agreement acknowledges that both countries will “comply with the importing country’s sanitary and phytosanitary … standards”. Can the Minister therefore update the House on the nature of conversations held with domestic farming representatives so far, and on how the Government expect ongoing negotiations in this area to progress? Are there any major areas, apart from the frequently trailed chlorine-washed chicken, which may cause difficulties? There is also very limited detail on digital trade, despite the Government’s ambition, set out in their AI opportunities plan, to position the UK as a global leader in emerging technologies. We would welcome clarity on how this agreement supports the goal in practice but acknowledge the commitment to negotiate an ambitious set of digital trade provisions. Can the Minister update the House on what discussions are under way regarding the future of the digital services tax? Moreover, the agreement states that the UK will receive preferential treatment if new tariffs are not imposed as part of the US Section 232 investigation into pharmaceuticals and other products. It is perhaps worth reminding ourselves what that means. Section 232 of the Trade Expansion Act 1962 provides the President with the ability to impose restrictions on certain imports based on an affirmative determination by the Department of Commerce that the products under investigation are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security. So preferential treatment sounds positive, but we are awaiting clarity on what it means in practice. Will it mean lower tariffs, exemptions or more lenient treatment than other countries may receive? This is crucial for the UK’s pharmaceutical sector in particular, and we need transparency on the details of this arrangement. How will that impact our relationship with Ireland, which is home to a number of pharmaceutical companies with extensive operations here? On the subject of Ireland, can the Minister enlighten us as to exactly how Northern Ireland will be affected by this deal? Note that security of supply chains in our exports is explicit in this agreement. China has expressed concern, suggesting that it could lead to the exclusion of Chinese products from British supply chains, and it may risk breaching international trade norms. In light of the Government’s stated intention to reset and stabilise relations with China, it is important to understand how these concerns are being managed. What steps are the Government taking to ensure that progress with one strategic partner does not inadvertently compromise engagement with another? Furthermore, in the context of the UK’s economic and financial dialogue agreement with China, which includes co-operation on pharmaceuticals and financial services, how do the Government assess the potential impact of this new US deal on future negotiations in those same sectors? I appreciate that the Statement refers to other sectors, including copper, lumber, film production, semiconductors and critical minerals, but the themes of national security and defence run through this document, and obviously they represent the foundation of the special relationship. However, I note that no mention is made of the defence sector, so could the noble Baroness perhaps update us on discussions in that space? The agreement states that: “Both countries intend to build on an existing set of Mutual Recognition Agreements … by negotiating additional agreements … across certain industrial goods”. How does that square with the Product Regulation and Metrology Bill, which is currently in the Commons? Superficially, this would suggest that the Government should have accepted some of our amendments in this area, but I say to the noble Baroness opposite that it is not too late. While tariffs on UK exports have been reduced, the US baseline tariff of 10% remains higher than pre-President Trump levels. We should acknowledge the progress but also recognise that this still represents a return to a less favourable environment for UK exports. What this country needs is a comprehensive free trade agreement with the United States to alleviate these challenges to our businesses. It would be remiss at this point not to mention that small and medium-sized enterprises, which are the backbone of our economy, need clarity on how they will benefit from this agreement. Tina McKenzie from the Federation of Small Businesses pointed out that practical measures to boost SME access to the US market remain unclear. In conclusion, while this agreement represents important progress, it is clear that much remains to be done. The Government must now focus on expanding the deal to include services, investment and small business support, ensuring all sectors are given a fair chance to thrive. I have one last question, which has been asked and evaded every day this week. Will Parliament have a say?