Wednesday 23rd January 2019
(5 years, 10 months ago)
Lords ChamberTrade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Amendment Paper: HL Bill 127-II(Rev)(a) Amendment for Committee, supplementary to the revised second marshalled list (PDF) - (23 Jan 2019)
Lord Purvis of Tweed (LD)
My Lords, I seek some clarifications when the Minister responds, broadly in response to the constructive contribution from the noble Lord, Lord Lansley. With the withdrawal Bill, there was much debate in Committee and this House regarding how existing EU law will be migrated into UK law. There were 12 competences the UK Government believed were reserved and would therefore be fully within the competence of the UK Government, but that the devolved Administrations believed were either devolved or had a direct impact on devolved powers.
State aid was one of those areas where there was no agreement. That means that if there continues to be no agreement, then the amendment in the name of the noble Lord, Lord Stevenson, is absolutely critical. It means that for regulations brought for the continuity agreements, there needs to be far more enhanced consultation with Administrations that believe this is touching on their direct competences. If there has been agreement, then perhaps the amendment is less necessary for the continuity agreements; but as we come to further amendments, this sets the tone for what will be necessary for future agreements. When the Minister responds to this group, I hope he will be able to provide clarification on where the discussions are, regarding whether there is agreement on where state aid lies within this area of competences.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I join others in thanking the noble Lord, Lord Stevenson, for moving this amendment. In response to my noble friends Lord Trenchard and Lord Lansley, I think that the noble Lord intended this as a probing amendment, as he said, to give the Government the opportunity to put some issues on the record. It has been very timely, not least because under the EU withdrawal Act, mentioned by the noble Lord, Lord Purvis, on Monday we laid the regulations on state aid before the House. That 77-page document will now make its way through the rigorous scrutiny of the Joint Committee on Statutory Instruments and then the Secondary Legislation Scrutiny Committee. Then, of course, it will be subject—because it is by the affirmative procedure—to scrutiny later in this House. For that reason some of the specific issues referred to by my noble friend Lord Lansley and the noble Lords, Lord Purvis and Lord Lea, might be usefully dealt with in that area.
Clause 2 is not about making changes to existing agreements, and the regulations cannot be used for future free trade agreements, as my noble friend Lord Lansley rightly identified. In answer to the noble Lord, Lord Stevenson, we also need to recall that the Competition and Markets Authority has been given this responsibility domestically, across the UK jurisdiction. When it comes to free trade agreements and the EU, the Trade Remedies Authority would undertake that responsibility.
To provide further reassurance that we do not expect to need to use these powers to set up a domestic state aid regime, I can inform the Committee that we have laid the instrument I referred to. This instrument, the State Aid (EU Exit) Regulations 2019, will be made under the European Union (Withdrawal) Act 2018 and establish a domestic state aid regime that will work for the whole of the UK at the point that this is required. No doubt Noble Lords will be offered an opportunity to scrutinise this in detail.
Subsection (2) of the proposed new clause requires the Government to consult relevant stakeholders prior to laying implementing regulations under Clause 2 which make provision on state aid. We have been clear that proportional consultation is of the utmost importance to us. We have engaged with a large number of stakeholders through our programme of trade continuity. The Government will always consult stakeholders as appropriate, so to set out specific provisions concerning consultation on state aid is not needed at this stage. The Bill already requires the Government to lay reports before Parliament in which we will provide detail of any real-world changes to free trade agreements. These will be laid before the agreement is ratified or regulations are laid under the Clause 2 power in relation to that agreement, whichever comes first.
Any significant differences in agreements that are relevant to state aid would be identified in these reports and Parliament would then be in a position to take an informed decision in relation to the making of the regulations or the conduct of the ratification process. I say again that we do not expect to need to make regulations under this power in order to implement state aid commitments in existing free trade agreements.
I turn to some of the specific points that were raised. My noble friend Lady McIntosh raised the horserace betting levy and the tripartite agreement. This is something we will come to in Amendment 48 in a later group, so perhaps I can leave it to the lead Minister, my noble friend Lady Fairhead, to respond, but the relevant provisions of the horserace betting levy were notified to the Commission and approved by the Commission under state aid rules. I confirm that the TRA—the Trade Remedies Authority—will not be responsible for state aid prioritisations in FTAs. It will be a matter for individual free trade agreements to establish a dispute mechanism.
Lord Stevenson of Balmacara
I was going to ask the Minister about the TRA—I am glad that he tried to clarify what he had said, because he did raise a doubt about what was arranged. Have I got it right? I would be grateful if he could confirm that we are proceeding on a continuity basis and using the withdrawal Act to ensure that, under the statutory instrument he mentioned, the existing set of rules that currently apply, because of EU directives and regulation, will be applied under UK law after exit day. Therefore, that process does not require any further discussion or debate, because of the reasons he has given, and he is not saying that in future trade agreements there will be a specific role for state aid rulings by the TRA—that will remain with the CMA—but there will be an opportunity to discuss that broadly when we get to the point at which we are, post continuity, talking about the real world and what is actually going to happen in trade. Is that right?
Lord Bates
That is correct. I am grateful to the noble Lord for setting that out. My noble friend Lord Trenchard mentioned the Government’s commitment to the state aid system. That point is contained in Command Paper 9593, The Future Relationship between the United Kingdom and the European Union, which says in section 1.6.1:
“The UK has long been a proponent of a rigorous state aid system—this is good for taxpayers and consumers, and ensures an efficient allocation of resources”.
Moreover, the political declaration which accompanies the withdrawal agreement points out in section XIV, paragraph 79:
“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards”.
That will all be fleshed out as the future economic agreement is worked on. Again, I thank the noble Lord for the opportunity to clarify some points on the record.
Lord Purvis of Tweed
Will the Minister clarify that since the Sewel convention continues to apply, the UK would not legislate ordinarily on devolved matters if the Government have brought forward this regulation? Last year, during the withdrawal Bill process, the devolved Administrations believed that this touched on their competences with state aid. Has there been agreement with the devolved Administrations that this is a fully reserved issue?
Lord Bates
Perhaps I could write to the noble Lord on that to make sure that I get that absolutely correct. I will write to him. Does the noble Lord want to come back on that?
Lord Purvis of Tweed
I wonder if the Minister is able to write before we get to the next grouping because this is going to be relevant. Whenever the Minister can provide clarification, it will be welcome to the Committee.
Lord Bates
I have a sneaking feeling that some clarification may be coming via my noble friend Lord Younger by the time we reach the next grouping. I am sure the noble Lord will have an opportunity to respond to that. Failing that, I will be very happy to write before Report. I thank the noble Lord and ask him to consider withdrawing his amendment at this stage.
Baroness Hooper (Con)
My Lords, your Lordships’ House has the privilege of having as Members a number of former European Union Trade Commissioners. I am very happy that a least one of them is here and able to contribute from his specialised knowledge to our debate.
The Minister of State, Department for International Trade (Baroness Fairhead) (Con)
My Lords, I will address Amendment 18 first. I thank the noble Lord, Lord Purvis of Tweed, and all who have spoken in the debate. The themes from the noble Baroness, Lady Jones, the noble Lord, Lord Fox, and my noble friends Lord Patten and Lady Hooper are similar points. I will try to address them as much as I can. I also recognise the assertion from the noble Lord, Lord Purvis, that this is a probing amendment.
This is an important issue and I fully understand the need to provide some reassurance. I will try, as much as I can, to do so. I start by reiterating that we value and benefit from our international agreements, and we want to continue to co-operate with our global partners across a range of issues—not just trade but air services, climate change, international development and nuclear co-operation. As such, we are working with countries and multilateral organisations worldwide to put in place arrangements to ensure continuity of those international agreements.
We have agreed with the EU that it will notify treaty partners that, during the implementation period, the United Kingdom is to be treated as a member state for the purposes of these agreements. We think that this approach is the best platform for continuity during the implementation period across all agreements, but it would be for those individual third countries and multilateral bodies to determine whether any domestic action, including amendments to domestic legislation, is required. We do not expect that such actions will be required in every instance, but we understand that some parties, as the noble Lord, Lord Purvis, said, will choose and be required to take some internal steps where they think that to be necessary.
Baroness Kramer (LD)
My Lords, could I ask the Minister for clarification? Has she just said that she believes that, 10 weeks away from leaving, potentially under a no-deal scenario, the UK Government still do not absolutely know what steps are necessary in each of those countries with which we expect to roll over those continuity agreements, do not have them timetabled and are not tracking them in detail but have basically just stepped away and said, “We just hope, generally”? I would have hoped our diplomats were on the telephone daily to get these steps in place if they were necessary. But from listening to her, it sounds as though no such action, no such monitoring or pursuit, is taking place.
Baroness Fairhead
I thank the noble Baroness, Lady Kramer, for the further question, and will try to reassure her. The Government have been engaging actively with those third parties on that approach since it was outlined as part of the implementation period arrangements at the European Council of March 2018. But we must consider that a decision for those third parties, those countries themselves. Any action or internal measure taken is for them to consider based on their own domestic legislation and practice. Indeed—this is a critical point—some internal measures, given their very nature, may not even be public knowledge. For this reason, let me assure the noble Baroness that we agree it is right that we engage actively both with third parties and with multilateral organisations and encourage them to consider the steps needed for their own domestic legislation. This enables the continuity that, as the noble Lord, Lord Price, said, in principle they all fundamentally agree with, because it is in their mutual interest.
Moving into the future and the next 10 weeks, if we go to a new deal, this will have to be even more revved up, because we are hoping and planning for an implementation period. But as the noble Baroness will be aware, that would require an agreement, and therefore we must also have plans in place for no deal. We do not think it appropriate for the UK Government to essentially monitor a list of the actions over sovereign countries and hold them accountable. It would also be practically challenging for the reasons I have set out.
Lord Fox
I do not think anyone on these Benches has said that the UK Government should be holding the other Governments to account for these actions. We are asking whether you understand what the necessary actions are. Are you tracking them? Do we really know the critical path each agreement has to take in order to reach the golden point of Dr Fox’s magic moment when they all become reality? I think you are saying that you do not know what the path is, that you are not mapping that critical path and that therefore you cannot say how long it is going to take because you just do not know.
Baroness Fairhead
I say to the noble Lord that we are actively working and engaging with them. It is for them to decide. They have discussed with us what they currently believe. Some they are actively working through, some the third countries and bodies do not choose to make public—to us or anyone else. That is what I am trying to explain. I do not want this House to be in any doubt or to give the sense that we were just asking them and walking away. We are actively engaging with all the parties I referred to.
I now turn to Amendments 19 and 97. I will take those together, as they both—
Lord Hannay of Chiswick (CB)
Before the noble Baroness goes on to the next amendment, could she answer a question that I asked in the preliminary debate? In the event of us leaving without a deal, what tariff rates will the United Kingdom apply on 30 March to countries with which the European Union has a preferential trading agreement? That agreement will have lapsed as a result of our departure, so we will not be able to keep those tariffs at zero, as they are at now. The MFN rules of the World Trade Organization will say that we are not in a free trade area, a customs union or a preferential agreement with those countries. Have you told these countries what tariffs we are going to apply, and if so, could you tell us?
Baroness Fairhead
My Lords, I will try to do a little better than that. I can write to clarify, but my understanding is that in the Taxation (Cross-border Trade) Act arrangements were put in place for the GSP, the GSP+ and the Everything But Arms preference terms. As I keep saying, obviously our aim is to have an agreement and then an implementation period. Should there be no deal—which is not the desired outcome—the UK will need to determine what its policy is. That is not something that I am at liberty to discuss, as it has not been disclosed. Clearly it is not a place we want to go, but we will have to take that into account if we reach that point.
Baroness Kramer
I am sorry, but I must repeat a point that has been made by the noble Baroness, Lady Jones, and others. There are companies doing business that need to be signing contracts today, or fulfilling contracts on their books: they need to make financial provision, to put loans in place if suddenly they face unexpected costs, or to find alternative suppliers. There is a whole range of actions that those companies need to take. We cannot wait until we have gone over the precipice and then start to think about what we are going to do. We will have to have a regime in place at one second past Brexit. I do not understand the thinking behind all this. I do not know whether the Government have made a decision to keep this information from Parliament, for reasons that I do not understand but which may reflect some internal attitude towards secrecy and the way they want to handle Parliament, or whether they actually have not done the work and got any of the elements in place. Either is awful.
Baroness Fairhead
I believe that the noble Baroness has misinterpreted what I said. I did not say that we would wait until the end and that people would go into a chasm of not knowing. I said—I hope that I said it clearly—that our aim is to have an agreement and an implementation period. In the event of no deal, which clearly is not the preferred outcome, speed is of critical importance in trying to roll over the effects of the agreements that we have, to give that certainty and continuity to businesses.
The noble Baroness asked what would happen a second after midnight. We have published technical notices on the programme, we have attended multiple oral evidence sessions with the International Trade Committee, we have exchanged letters with that committee, which are in the Library, we have responded to all parliamentary Questions and we have made Statements in the House.
Baroness Fairhead
My Lords, I can confirm that that is why we want to have an agreement with an implementation period. That is why it is definitely the Government’s plan A, while a no-deal scenario will bring real challenges. I hope that your Lordships would not accuse me of saying that there are not complications or that we do not need to go through many agreements. As I said in this House at Second Reading, it would be extraordinarily challenging to get everything done by 29 March—and I do not resile from what I said.
The noble Baroness referred to the future tariff policy and what happens if we get to no deal at one second past midnight. We are working to develop an independent tariff policy, but no decision has yet been taken on what the applied tariff rates will be post an EU exit, notably also in the case of no deal. We are looking at a full spectrum of options and will consider carefully all the evidence available before making a final decision in the interests of British industry and consumers.
Lord Purvis of Tweed
I wish to have one final go on Amendment 18. It is predicated on what the Government are working to, which is to have an agreement. That agreement will come with a request from the European Union to those third countries to treat us as a continuing member of the international trading agreements. The Minister has told the Committee that the Government know of countries where that poses no difficulty but also of countries which have said they do have difficulties. This means that, even in the event of leaving with a deal, some of our trading arrangements will not be in place after exit because those countries cannot put them in place. Which countries have indicated to the Government that that poses no difficulty and they will treat us as a continuing member of the international treaty, as the EU has asked? Which countries have said that it poses difficulties, and which have said that they do not wish to make it public?
Baroness Fairhead
My Lords, if I may address the point made by the noble Lord, Lord Purvis, if we leave with a deal there is an implementation period until the end of 2020. There is much greater confidence, as I believe this House would accept and appreciate, about getting all the arrangements fully continued and rolled over within that time period.
There are two issues here. The first is the notification by the EU that the UK is to be treated as part of the EU during the implementation period. The second is what third countries need to do to enter into continuity agreements. The first is a matter of third countries accepting that they will treat us in that way; on the second, we are engaged in detailed discussions with individual third countries to try to help them ensure that they are in a position to enter into the agreements on time. I stress, as noble Lords have highlighted, the difficulty of the timing if there were no deal.
Lord Purvis of Tweed
I apologise, but can the Minister then confirm whether my understanding is wrong? I understand that they will be asked to consider us as being in an agreement during the implementation period—to carry on treating us as if we were a continuing member of that organisation—but the Minister has said that the Government do not know whether all countries will do that. So, even if there is an agreement with the EU and an implementation period, there may be countries where the international relationships that we will have will not be in effect after exit day because the third country will not be in a position to treat us as a continuing member. The Minister has said that to the House. So all we want to know is which countries they are, because it is very significant if, even in the context of leaving with an agreement, those relationships might not carry on.
Baroness Fairhead
My Lords, what I can say is that all the countries we have spoken to have agreed with the principle of continuity. Therefore, one could expect that if they agree with the principle of continuity, they would see that that was a key part of making sure that their businesses and UK businesses—their people and our people—are protected.
Amendments 19 and 97 both concern the publication of a trade agreement progress register, so I will take them together. As agreed in the other place, the Government have already committed to lay reports in Parliament to explain any changes made to continuity agreements. These reports are intended to aid Members of both Houses to understand our continuity agreements. It is critical—as the previous discussion has just highlighted—that we do not delay the ratification of the agreements and unintentionally create a cliff edge for our businesses through a process addition. There will simply not be time, particularly with no deal, to create a detailed progress register in advance of bringing the majority of provisions in the Trade Bill into effect. That would be the effect of Amendment 97. As I stressed, we want to keep Parliament informed. Although we are committed to transparency and clarity in what I have laid out regarding our process reports, we are also mindful that we need to deliver the programme to time, and this additional reporting requirement risks delaying it.
Our Clause 3 reports are proportionate and will provide Parliament the transparency it requires. I take fully the comments made by the noble Lord, Lord Purvis, about the number of agreements—FTAs, EPAs, MRAs and association agreements. I have also laid out to the Committee some of the more technical aspects that we will cover, such as what happens with tariff rate quotas and rules of origin. I believe we will discuss those later today. Extensive work has been undertaken to ensure the continuity of our agreements for more than two years. We are engaged with our international partners to deliver this in the event of no deal. We have been working to deliver successor bilateral agreements with third countries and treaty partners, which in the event of no deal we would seek to bring into force from exit day or as soon as possible thereafter. Progress has been encouraging. Ministers and officials are engaging regularly with those partner countries to support and complete the work. As I said in the previous discussion, all have supported the principle of rolling over, because it is in their mutual interest.
I reiterate that we are aiming not to have any significant changes. As such, we believe there is little benefit in having a report analysing our continued participation in the EU FTAs. The vast majority of the elements are already being implemented, and our businesses are already benefiting.
The amendment in the name of the noble Lord, Lord Purvis, would require us to provide detailed progress on private Government-to-Government discussions. To provide such updates would create a considerable handling risk with our partner countries. As the noble Lord will appreciate, there are commercial sensitivities, and regulations and procedures in third countries, and we would not be able to commit to providing those updates without first seeking the agreement of the relevant partner countries. Again, this could end only in slowing down the negotiations. We believe these amendments are inappropriate and I ask the noble Lord to withdraw Amendment 18.
Lord Hannay of Chiswick
Is the Minister familiar with the practice in the European Parliament which currently applies? The committees of the European Parliament are briefed in detail about negotiations being conducted by the Commission. During the negotiations, how do you think they overcome these insuperable problems which the Government seem to see about doing that here? Nobody is saying that it has to be done on the Floor in a plenary session of this Parliament, but surely there has to be some way in which the Government account to a committee, as they go along, as to how negotiations are going. That is what happens in the European Parliament.
Baroness Fairhead
My Lords, I know the European process in outline; I cannot say that I understand it in the depth that the noble Lord, Lord Hannay, does, given his experience in that area. I want to differentiate between the continuity agreements and future trade agreements. Because we are talking about rolling over existing agreements, we expect to replicate the effects as closely as we can, so as not to disrupt trading patterns, so this is a different type of progress report. The noble Lord makes an important and valid point about the scrutiny of future trade agreements and we will discuss that later in the debate.
Lord Stevenson of Balmacara
I go back to an earlier question asked by the noble Lord, about whether or not the Government are in a position to notify those who are directly involved in this in a no-deal situation, which we all hope does not happen but in which we are out of the EU at 11.01 pm on 29 March, to be accurate. What conditions need to be satisfied before those who are directly involved in trade on that day and at that time get access to information about the proposed tariff arrangements? Absent that, we are talking about a very short period for those who have businesses to organise, decisions to make and loans to raise, as has been said. The other half of this is that if we are talking about continuity arrangements at that stage, when will we be in a position to know exactly how many countries are ready to do a deal with us at 11.01 pm on 29 March, how many are not and how many will take time to get their own arrangements sorted? Without that information we are not really in a position to judge whether or not the Government are making a good fist of this.
Baroness Fairhead
My Lords, on the 11.01 pm—or one minute past midnight—point, technical notices have already been sent out and no-deal planning has been ramped up, as the noble Lord will have seen in the Prime Minister’s announcement. Communications are planned for businesses and there are training programmes to make sure that the Civil Service and various departments are ready with information as required. Clearly, our primary focus is on achieving plan A and a deal, and therefore this is contingency planning, but that planning has been ramped up in the event—that we do not want—that there is no deal. I cannot say the exact moment that those notices will come out but I understand the noble Lord’s concern, and businesses’ concern, about what will happen in the following hour. Obviously, that will be taken into account.
As for third countries and where they are, I do not think I can add to what I said, which is that we are actively engaged and if there is a deal followed by an implementation period, we will be an awful lot more comfortable about the process.
Lord Purvis of Tweed
My Lords, I am grateful to the Minister and to noble Lords who have taken part. The Minister said that the Government will keep Parliament informed. Parliament has not been informed until now. We have no idea, because nothing has been presented to Parliament, about notification of the status of the potential agreements. We were not informed in advance about Switzerland, which is the only one so far; we have been asked simply to ratify it and to consider whether or not we accept what comes with it.
I tried to probe the Minister’s comments on Amendment 18. She told us that in discussions with third countries, if there is an agreement and the EU asks them to consider the UK as a continuing member of the European Union for the purposes of international treaties and trading agreements, the Government will not provide the information to Parliament on which countries that poses no difficulties for, which countries have indicated that that may require them to change domestic law, and which countries are refusing to make the discussions public.
Baroness Fairhead
My Lords, I have to rebut the statement made by the noble Lord that it would enhance relations with third countries if we reveal the status of the discussions and negotiations with them. It would be against the nature of most discussions with third countries. Many third countries have policies in which they do not permit disclosure of the discussions that are taking place. I just do not think that is a correct assertion. As for Switzerland and other—
Baroness Kramer
All these countries have negotiated deals with the EU. In the process of those negotiations, there was full transparency and exposure. It is not a case of reporting to the European Parliament; it can be read on the website. In relation to these exact trade deals, they are used to providing full disclosure every step of the way. They are not being asked to do something that is out of the norm. The secrecy is out of the norm, not disclosure.
Baroness Fairhead
Again, when countries are in the middle of negotiations, blow-by-blow accounts or reporting stages are highly irregular. I hear and understand this House’s concerns and I will see what more information can be given.
With Switzerland, it will not just be a case of ratification, then all done. As we committed to, parliamentary reports will be laid before the House so that it can see whether any changes have been made and, if so, what their impact is. Today, it was announced that a free trade agreement has been reached in principle with Israel. I say this not because two out of 40 is the vast majority but because I want to provide reassurance that progress is being made. As noble Lords will be aware, the agreement with Switzerland is one of our most important FTAs with the EU—in fact, it is the most important.
I hear the concerns and challenges from noble Lords across the House. We have provided information and I cannot say that there has not been transparency; we have been reporting to the ITC and through ministerial Statements. I will seek to find out what further information can be provided before or during Report.
Lord Purvis of Tweed
One element that concerns us is when Ministers move seamlessly from saying that this is merely a technical exercise to roll over existing agreements to, in the next sentence, saying that they are engaged in confidential negotiations—but what are they negotiating? If this is simply a technical legal exercise to ensure the translation of legal competences into UK law, what are the Government negotiating? As soon as Ministers say that confidential negotiation is needed, that should trigger the existing, proper processes of transparency. As the Government said, these agreements are existing agreements with the European Union. They could not have been made without regular updates to democratically elected bodies. That is what we are asking for; it is a modest request.
The Government’s response is concerning and has not provided the degree of clarity sought, especially since the public justification for why these agreements have not been brought forward to Parliament by the Secretary of State is to blame other countries. If we get to the next stage of the Bill, much more information must be provided by the Government because this issue is significant for our trading relationships. Until that point, we on these Benches will reserve our position. At this stage, I beg leave to withdraw the amendment.
Baroness Jones of Moulsecoomb
My Lords, I should have stood up earlier, but I was being polite. It seems the system set out in this Bill has been rendered obsolete by the passage of time and the sheer urgency with which the Government now have to act. The amendments from the noble Baroness, Lady Henig, do a good job of trying to plug some of the gaps, but I really think the Government have to go back to the drawing board on all of this. A government amendment is needed on Report that proposes a realistic set of procedures that can be used without undue delay while ensuring proper safeguards and accountability. This should not be a battle but something we can all work on together. This Bill has dragged on for so long that we all have the benefit of hindsight. A quite prescient question has emerged: where will the Government ever find time to use the procedure set out in Clause 3? I really think we need a lot more drafting on this Bill so that at some point we might get it on to the statute book.
Baroness Fairhead
My Lords, I begin by addressing Amendment 20, tabled by the noble Baroness, Lady Henig. The Government agreed in the other place to lay reports in Parliament to explain the changes made to continuity agreements in advance of any continuity agreement being ratified or in advance of the Clause 2 power being used. This amendment, which requires an independent body—albeit one with the stature the noble Baroness refers to—would place a considerable time constraint on the delivery of these reports, which would in turn have a really serious impact on our ability to bring those continuity agreements into force. The reporting requirement placed on the Government is intended to be an aid to Members of both Houses to understand the continuity agreements as the agreement text is also laid in Parliament for ratification.
The noble Baroness also raised the issue of standards and the potential to lower standards. We had a very long, detailed and comprehensive debate on standards on the first day in Committee on this Bill, and I want to reassure noble Lords again. EU standards come directly into UK law. We will remain party to international standards bodies under international law, as we are today. This Government have reiterated their commitment to high standards, which are both demanded by our consumers and the right policy for our country.
I turn to the idea of an independent report. Noble Lords with experience of trade matters will appreciate that these agreement texts are lengthy. The CETA text with Canada, including annexes, is about 1,600 pages long. The reality of the situation is that it is simply not feasible, in the time available, to generate independent reports before our agreement needs to be ratified. I again refer to what we have said: continuity is what businesses and our consumers are asking for. I appreciate the points that the noble Baroness, Lady Henig, makes. Our reports will provide relevant analysis on the impact of any changes made to those agreements. I hope these reports are helpful, both to the noble Baroness and to this House.
Lord Purvis of Tweed
I wonder if the Minister might just be able to clarify what may be my misreading of the legislation. The Minister said “any changes”. My reading of the legislation is that it is “any significant differences”. I wonder if the Minister might be able to say, because they are not the same.
Baroness Fairhead
My Lords, if the change is literally a cut and paste, I am not sure it would help your Lordships to have a report saying “‘EU’ changed to ‘UK’”. It would be changes seen to be of any significance. If there were any economic impact, that would be included in the report. The reports are designed not to take time in an exercise of proofing but to identify the significant changes and those of value for the House to be aware of. As the noble Lord correctly says, it does refer to “any significant differences” in “trade-related provisions”.
The continuity agreements will be subject to the procedure under the Constitutional Reform and Governance Act. This House will be able to use the contents of these reports to inform their engagement with that process.
I turn to Amendment 21, which requires the Government to provide updates to Parliament on the status of negotiations. I stress again that we do not expect significant changes. I have referred on many occasions to the technical changes on TRQs, rules of origin and other such changes that we will need to cover later. That, together with this very tight timetable—as I think we all agree—would mean that the level of reporting is unnecessary in relation to that programme.
The continuity programme is separate from our programme to develop a future trade policy. On that, there has been very active engagement with businesses and trade associations. We meet on a very regular basis because it is trade policy for them and therefore it is absolutely critical. For example, we launched four consultations on possible future trade agreements. The window for consultations has recently closed and we are currently considering stakeholders’ views, so there is active consultation both in person and through that. Any future trade agreements with new partners will follow a separate scrutiny procedure. It was set out in outline by the Secretary of State for International Trade on 16 July 2018, but I ask for the House’s indulgence because in group 19, later today, we will be discussing exactly the scrutiny of future trade agreements.
I understand that the Committee is keen to know what progress we are making on transitioning the continuity agreements. The noble Baroness, Lady Henig, referred to the ISDS update that was given by Europe. On the DIT website, we provide updates of the meetings that have taken place and of any working groups. I have a list here of all of the working groups and, where we can, we say what was discussed there. We are able to provide that level of transparency. I do not want to go back to the discussion that we just had about the private Government-to-Government discussions. I stand by the commitment that I made to the Committee on that last measure to say that I will look to see what further can be done. My understanding is that it could create a considerable handling risk for those countries.
I have listened with interest to the arguments and points raised by the noble Lord, Lord Stevenson, concerning Clause 3. As has been set out in great detail and discussed over the course of these debates, the Government are seeking to roll over the effects of the EU’s trade agreements as much as is practically possible. This is particularly important in relation to pre-ratification reporting requirements, as any potential delay could risk a cliff edge in those trading relationships. In supporting this process, we are producing reports which will explain any significant changes—as I said to the noble Lord, Lord Purvis—from the effects of our existing agreements to the new ones. We believe that this provides the transparency that Parliament has called for while also being proportionate. These reports will help Members of the House, businesses and the general public to better understand the impact of the programme.
I trust that the Committee will accept that this provides balance, but I repeat my commitment to see what further information we can give. Our amendment to produce these reports received support in the other place as a proportionate approach to providing transparency to Parliament. I hope that this reassures the Committee, and I ask the noble Baroness to withdraw her amendment. Additionally, I hope that noble Lords will agree that Clause 3 should stand part of the bill.
Lord Stevenson of Balmacara
My Lords, once again I support the amendments of my noble friend Lady Henig; I will also speak against Clauses 4 and 5 standing part of the Bill. Counterintuitively, I will deal with Clause 5 stand part first, simply because it follows exactly in the same vein as the reasons I gave for suggesting that Clause 3 should not stand part. Clause 5 deals with reports to be laid with regulations under Section 2(1). In an expanded, more amplified and better and more rounded policy dealing with both the continuity of free trade agreements and the new free trade agreements, we would have a completely different system sitting in place, so Clause 5 would be otiose, which is why I put this forward. I will not press this and I do not need much response from the Minister because we will return to this issue later in group 13.
However, I wonder about Clause 4. It seems at a superficial level to give the Government a “get out of jail free” card in relation to any reports that they might feel obliged to make, particularly if they are expanded in terms of my noble friend Lady Henig’s original proposal under Clause 3. Clause 3 states:
“Before the United Kingdom ratifies the proposed agreement, a Minister … must lay before Parliament a report which gives details of, and explains the reasons for, any significant differences between—
(a) the trade-related provisions of the proposed agreement, and
(b) the trade-related provisions of the existing free trade agreement”.
But Clause 4 states:
“Section 3 does not apply to a free trade agreement if a Minister of the Crown is of the opinion that, exceptionally, the agreement needs to be ratified without laying before Parliament a report which meets the requirements”.
I stress that phrase,
“a Minister of the Crown is of the opinion that”,
and the use of “exceptionally”, which is an interesting word. In other words, you do not have to do it if you have sufficient gravitas and the ability to convince Parliament that you are not of that opinion and that it is exceptional, so you can get away with it. That is not satisfactory drafting.
This is not a good clause to be in a Bill of this nature. It certainly does not meet the questions that we have been raising about proper transparency, accounting and independence of reporting. When the Minister comes to reply, I hope that she will consider taking this away. If she cannot bring herself to agree that this needs redrafting, perhaps she can write to me explaining why it does not.
Baroness Fairhead
My Lords, I too will try to give a short response to the amendments before us, and first on Amendment 22 tabled by the noble Baroness, Lady Henig. Clause 4 creates an exemption from the reporting requirement so that, in exceptional circumstances, the Government may seek to ratify an agreement without having first published the associated report on changes made to it. Let me categorically reassure noble Lords that we intend to draw on the reporting exemption provided for in the Bill only if we are in exceptional circumstances.
I am sure the Committee will agree that we may find ourselves in exceptional times. We cannot predict the speed with which continuity agreements will be ready for signature. Moreover, the exemption is narrow. It does not remove the requirement for a report to be laid. It simply provides a little leeway to enable a trade agreement to progress to avoid a cliff edge. The Government would still be required to lay a report as soon as possible following ratification. I hear the noble Lord, and will reflect on the drafting, but in a sense it was because of the uncertainty about the speed.
Amendment 23 would ensure that, if this exemption is invoked, the report would have to be laid no later than 10 days after ratification. Again, to be clear, we have drafted this exemption for use in only the most urgent of circumstances. If we were to need to rely on this, it would be necessary to ensure that we could continue to operate in the most uncertain of contexts, and avoid that cliff edge.
Clause 5 will ensure that the Government lay their report 10 days in advance of using the Clause 2 power to implement any obligations of a continuity agreement. That will ensure that Parliament is wholly informed about how we intend to deliver continuity for an agreement before it is required to consider implementing legislation. If we removed Clause 5, as the noble Lord, Lord Stevenson, suggested, the Government would not be bound in any way to report, so we should set that aside.
Before I conclude on this point, I would like to inform the Committee about an amendment that the Government will bring forward on Report. As the Committee is aware, the purpose of the Government’s trade continuity programme is to seek continuity of the effects of existing EU free trade agreements as far as possible as we leave the EU. The vast majority of these existing trade agreements, which we are part of as an EU member state, are already in operation and have been scrutinised by Parliament. Let me make it clear to the Committee that we do not expect to need to change existing domestic equalities legislation as part of this programme. In the unlikely event that we choose to make minor or consequential changes to this legislation, we will aim to ensure that this does not result in reduced protection against unlawful discrimination or diminution of equality rights.
However, to ensure suitable transparency and accountability on this particularly important issue, we intend to provide that a ministerial Statement is made alongside any draft statutory instrument laid under the Clause 2 power. The Statement would outline whether the statutory instrument repealed, revoked or amended any provision of the Equality Acts 2006 and 2010 or any subordinate legislation made under them. In addition, I am happy to confirm that the reports under Clause 3 will explain any changes that would be required to equalities legislation as a result of our shift from an EU to a UK agreement if, and I stress if, any changes are needed. My officials have agreed to work together with the Equality and Human Rights Commission—and I put on record our thanks for its efforts in helping us to design the process so far—on designing the content and templates for these reports.
I hope that that reassures the Committee and I ask the noble Baroness to withdraw her amendment. Additionally, I commend that Clauses 4 and 5 stand part of the Bill.
Baroness Henig
I thank the Minister for her response, and particularly for the additional information that she has just given us, which I am sure we welcome. As I said, they were probing amendments on my part and I was trying to get some more detailed information about the Government’s thinking, which I think we have had. On that basis, I am happy to withdraw my amendment.
Lord Liddle (Lab)
My Lords, I will briefly express my support for the amendment. It is very important in the present political situation that we in the House of Lords demonstrate that, on a cross-party basis, there is some way forward out of the impasse we are in. For that reason alone, I support it.
The amendment obviously is not a complete solution to the Irish border problem. We would also have to have some arrangement of regulatory alignment. That, of course, is why the withdrawal agreement contains about 60 pages’ worth of EU rules that will apply in Northern Ireland but not in Great Britain, and why there would have to be some regulatory checks between Great Britain and Northern Ireland to make sure that rules on technical standards, health and safety, sanitation and that kind of thing would be adhered to. For there to be no border on the island of Ireland, that issue would have to be addressed, as well as the customs union. But the customs union is a large part, once you have made that step—and I do not think it is too far a step—of going on to deal with the regulatory questions.
On Labour’s position, it depends who you listen to. I am a great supporter of Keir Starmer, who talks about it in a very practical and common-sense way. But the truth is that sometimes people talk about a customs union as though it would be a relationship of equality between the United Kingdom and the EU 27 —which would, in effect, be trying to give the United Kingdom a veto over the Union’s autonomous trade policy. That will not work. It is not a runner. We could, as a big economy, negotiate very strong consultative arrangements, but I do not think that we would be granted a veto under any circumstances. Since we are in a position where we have to clarify these things in the next week—that is why have spoken frankly about this—it is important to acknowledge that that aspect is a non-starter.
So let us agree this amendment, refine it if we can on Report, and show that there is a spirit of co-operation in this House, which unfortunately there is not elsewhere.
Lord Bates
My Lords, this has been a fascinating debate. The noble Lord, Lord Stevenson, was very brief and succinct in introducing it. I will try to be pretty much the same in winding up. With the right reverend Prelate’s presence here and his questioning of a customs union, this is one of those debates where, after the past two years, I am not expecting to create many converts. Positions have been stated with great eloquence by my noble friends Lord Patten and Lord Lansley, and the noble Lords, Lord Kerr and Lord Hannay, but they are not ones that have differed, because of the veracity of the arguments and beliefs that they hold.
The noble Lord, Lord Liddle, came up with a great line which I scribbled down. I hope I have got it correct, because of course I do not have Hansard. He said that “on Labour’s position”—which of course my noble friend Lord Ridley asked about—“I suppose it depends who you are talking to”. I think I am right; I do not want to quote him incorrectly. It was an interesting point, because it would be fair to say that the Opposition’s position has differed between a customs union, a permanent customs union and a comprehensive customs union. It has oscillated between the crucial words “a” and “the”.
The noble Lord, Lord Purvis, applied a great deal of forensic scrutiny to this. His conclusion, and that of his party, is that they would be in favour of staying in the customs union, which makes it interesting that he has put his name to this amendment, which talks about “a” customs union. I cannot believe that there is now confusion even in the Liberal Democrats about what might be meant by this.
Lord Purvis of Tweed
The Government’s position, already stated, is that they intend the future customs arrangement to be based on those aspects of the Northern Ireland protocol which require agricultural and goods regulatory alignment with the European Union.
Lord Bates
We have been very clear about this; we want a deep and special facilitated trading arrangement with the European Union which allows all the benefits of free trade while allowing us to take advantage of the new opportunities which are emerging. According to the EU’s figures, 90% of growth over the next 10 to 15 years will be outside the EU—in India, China and the United States. That is what we need to tap into. That is what we need to be focusing on. We need to have the freedom to negotiate those independent trade agreements. If you go for a customs union, you are going to surrender that opportunity, and we are not prepared to do that. You would also surrender the right to shape the rules that you are going to have to implement.
Lord Kerr of Kinlochard
A brilliant description of the disadvantages of being stuck in a backstop.
Lord Liddle
Surely the best alternative way of benefiting from the growth outside the mature economies of western Europe—remember, this is catch-up growth; it is not a criticism of the European Union—is to be participants in the EU and its extensive trade deals with the emerging economies of the world. Why would we have a stronger negotiating position as 60 or 70 million than as an economy of 350 million or 400 million?
Lord Bates
Because 17.4 million people decided that they wanted to leave, and that is what the Government are committed to doing. I want to be careful not to be flippant about the subject we are dealing with; it is very serious, and the positions have been well argued. Nor do I want to be disrespectful to people for whom I have huge admiration, such as my noble friends Lord Patten and Lord Lansley, and the noble Lords, Lord Hannay and Lord Kerr, whose expertise I respect. But the position of Her Majesty’s Government is very clear. We have a deal. We should take advantage of that deal. A customs union would have all the disadvantages with few of the benefits. That is the reason we do not accept the amendment.
Lord Purvis of Tweed
Before the Minister sits down, I wonder whether he could advance this clarity. The noble Baroness, Lady Neville-Rolfe, states that we have now agreed with Israel to roll over our existing trading relationship with Israel. Israel does not have a free trade agreement with the European Union, or with us now. It has an association agreement, which has been in force since 2000. That is part of the pan-Euro-Mediterranean cumulation on rules of origin. This means that if we are replicating our existing relationship with Israel, we are replicating the rules of origin relationship that Israel has with the European Union. It also has common rules of origin procedures with Turkey, so if the Government’s position is that we are simply rolling over all of our current trading relationships through an association agreement with Israel, it means that we are now going to be bound by common rules of origin procedures with the western Balkans, the Faroe Islands and Turkey in the pan-Euro arrangement.
I am not sure why the Faroe Islands is part of that, but the reality is—and this is the point I was trying to make in my contribution—that we have to be open. If you want complete independence of trading relationships in the way the world trades now, that is impossible, so the Government have to have some limitations on it. If it is replicating the Israeli agreement, it is replicating exactly the same rules of origin alignment that we currently have with Turkey, and Turkey is part of a customs union with the European Union. That is quite simple, too.
Lord Bates
The Committee will come to rules of origin shortly, but on that point, that is the reason why, in the agreement that we are proposing—the deal that is on the table—we propose that to ensure that trading goods between the UK and the EU remains frictionless in the UK, there will be no routing requirements for rules of origin on trading goods between the UK and the EU. What we are talking about with Israel is consistent with that.
Lord Stevenson of Balmacara
My Lords, it is impossible to summarise what has been a very wide-ranging discussion. It certainly ended up in a rather more heated and fetid atmosphere than I expected when we set off. I have to say to the Minister, for whom I have the greatest respect, that it is fine to listen to what he is saying about what we ought to be doing and how we should do it, but he should point behind him when he is talking, because we do not get the arguments in the same way.
We started off with a description of hell, and what it might be to be listening to the same debates and discussions. I think we have justified the argument that we have moved on. The interesting thing that I took from this debate was how positions are being nuanced and changed as we move forward. There is an attempt from all sides to try to find common ground, and I wish that had reached all of our speakers. We are in a place that might be redolent of hell, with the colours that surround us and the flames leaping around, but I actually quite enjoyed being here. I am bound to go to hell anyway because of my previous life, so if this is what it is like, I quite like the prospect. But not yet—not yet. I call on the aid of the right reverent Prelate at this moment.
So what have we got out of this? We have got a sense around the Committee that there is something here that needs to be pushed to the next stage, and the Government should take away from this that this is a matter that will not go away, irrespective of what happens next week. By the time we get to Report, I am sure this will still be bumping around. I hope that by that stage we will have picked up on some of the points made by the noble Lord, Lord Lansley. We are getting hung up on what we mean by “customs union”, when we should be thinking behind the name—thinking about the process. It may be that we are likely to be close to, if not necessarily aligned with, EU current practice—and we ought to be, because, as my noble friend Lord Liddle said, size matters in these negotiations. Size matters, and always will, in any trading arrangement.
We are not really talking about tariffs. Tariffs are probably the 20th-century problem. The 21st-century problem is the regulatory barriers, and working on services to try to ensure that there is proper and fair trading, and that the issues at the heart of negotiations are rights and responsibilities, and the opportunities for providing benefits all round—a sort of development agenda meets trade, and coming together for the benefit of both.
The short, sharp intervention by the noble Viscount, Lord Ridley, was the most difficult to answer. I hope that, if he has the time, he will come back for the next group, when we will talk about some of these issues in more detail, and I will be able to give him a response. However, the truth is that I am quite happy with where the EU has got to with some of these trade deals. They are very good, and they would not be achieved by any smaller country on its own. We must not lose them, whatever arrangement we finally come to.