Wednesday 6th March 2019
(5 years, 1 month ago)
Lords ChamberTrade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Amendment Paper: HL Bill 127-R-I(Rev) Revised marshalled list for Report (PDF) - (5 Mar 2019)
19:44 - Division on Amendment 12 - Ayes: 215 / Noes: 168 - Amendment 12 agreed.
20:27 - Division on Amendment 13 - Ayes: 207 / Noes: 141 - Amendment 13 agreed.
The Minister of State, Department for International Trade (Baroness Fairhead) (Con)
My Lords, this House has debated many issues during the passage of the Trade Bill, none more important than the scrutiny of future free trade agreements. That was the subject of the Motion tabled by the noble Baroness, Lady Smith, seeking further details of the Government’s intentions in this respect. In response, last Thursday we published a Command Paper setting out further proposals for the parliamentary scrutiny of future FTAs. Those proposals drew heavily on the views put forward by Members of this House.
Noble Lords raised questions about Parliament’s role in future FTAs, the role of the devolved Administrations and legislatures, and public transparency. We listened, we considered carefully and we have acted. In particular, we hear concerns about transparency and scrutiny of negotiating objectives, transparency over negotiations themselves and the desire for Parliament to be involved at every stage of the negotiations and not just at the ratification stage. As a result, we have brought forward comprehensive proposals on public transparency and the role of Parliament and the devolved Administrations. I will not go into detail on those proposals now, as we will debate them fully during Report, but they give Parliament, and this House in particular, the reassurance that this Government are fully committed to effective parliamentary scrutiny and public transparency.
It is often said that no legislation passes the scrutiny of this House without being improved. From my perspective, this is unquestionably true here. Equally, it should be recognised that this House can and does influence and improve thinking beyond the strict confines of the Bills that pass through it. The Trade Bill focuses on continuity of existing trade agreements, but throughout its passage we have touched on issues of great importance outside of the scope of the legislative provisions before us and, as I said, none is more important than the scrutiny of future FTAs. It is perhaps not often that the Government welcome a Motion tabled by the Opposition on one of their Bills, but in this instance I can say that the Motion tabled by the noble Baroness, Lady Smith, served our common objective of ensuring that the scrutiny arrangements for future FTAs are robust, effective and informed by the passionate and expert Members of your Lordships’ House.
This Bill is essential to providing continuity and certainty for UK businesses as we leave the EU. I look forward to making progress on the Bill this afternoon and I beg to move.
Lord Hannay of Chiswick (CB)
My Lords, as one of those who supported the amendment of the noble Baroness, Lady Smith, I thank the Minister for her efforts in the meantime and for the publication of the Command Paper, which is a useful production and provides greater clarity on the Government’s intentions.
I shall make two small points. First, this legislation really matters. It could be—I hope it will not be—that within three weeks we will have left the European Union without a deal, in which case the Bill, by then perhaps an Act, will be the basis for Britain’s future independent trade policy. So we need to get it right. On the issue of parliamentary oversight, mandating and scrutiny, the Bill currently before your Lordships’ House on Report contains not one word added in that respect to the version we saw in Committee. The problem is the Government’s unwillingness to put in the Bill the provisions described in the Command Paper. That is at the heart of the debate we will have on Amendment 12.
Baroness Fairhead
My Lords, with the indulgence of the House I should like to welcome the start of Report. A number of points were made on the preceding Motion, but I believe that they will be picked up in our discussions on further amendments over the course of the day.
I have listened carefully to the thoughtful contributions that this House has made on the Bill so far—not just in our debates, but in meetings I have had with a great number of noble Lords over the past few weeks. I look forward to continuing to benefit from the experience, expertise and knowledge of your Lordships, and the continuation of the constructive dialogue we have had so far.
Lord Kerr of Kinlochard (CB)
I would like to ask one question of the Minister. I welcome the White Paper; it is full of commitments to transparency. What will be the tariff regime of the United Kingdom for imports on 30 March if we have left the European Union on 29 March with no deal? We know what the European Union’s tariff will be against us—it is the one we are currently applying—and we know that two months ago the European Union sent out instructions to the member states on how to apply the common external tariff against United Kingdom goods in the event of a no-deal Brexit. As far as I know, however, we know nothing apart from rumour about the regime that British importers will pay. Could the Minister enlighten us?
Baroness Fairhead
As the noble Lord will be aware, the Government’s aim is to achieve a deal. As this House will also be aware, we seek to achieve some important agreements on or before 12 March. We are therefore not planning for no deal, which is not our preferred option. If and when that occurs, that would be the appropriate time to publish those schedules, but as I have said before on the Floor of this House our objective is to achieve an agreement, at which point we will move into the implementation period.
Lord Kerr of Kinlochard
I understand that that is the Government’s aim, but it is also the case that the Government have deliberately kept no deal on the table. British importers, businesses and farmers do not know what no deal means for them. Is that fair?
Baroness Fairhead
I understand the point that the noble Lord is making. As we have always said, we will seek to balance the protection of our consumers and downstream users from the possible price impact of no deal. The tariff regime will be subject to the approval of the House, and secondary legislation to give effect to the tariff will be laid in line with the Taxation (Cross-border Trade) Act 2018. The Government aim to secure a deal, so we hope that that announcement will not be required.
Lord Lansley (Con)
Before my noble friend sits down, I draw the attention of the House to Amendment 10, in my name and that of the noble Lord, Lord Stevenson, which relates to tariffs. It permits a debate of the kind that I think the noble Lord, Lord Kerr, was hinting that he wanted. It seems to me that we do not start on 29 March without a schedule. We have notified a schedule to the WTO, and it is in line with the EU’s external tariff. On that basis, we should talk about it later rather than now. We know where we start from. The issue is to what extent we might vary—that is, apply a rate of duty lower than the EU’s external tariff at some point after 29 March were we to leave without a deal.
Baroness Fairhead
I thank my noble friend for his clarification. That is indeed true but I think he will also accept that, if we were aiming to have a deal, we would not need to publish. If we got to a stage where no deal looked likely, clearly we would have to provide the information that he and the noble Lord, Lord Kerr, mentioned.
Baroness McIntosh of Pickering (Con)
My noble friend will be aware that the Secretary of State for Agriculture promised, at the NFU Conference more than two weeks ago, that the tariffs would be published. It would be immensely helpful for the House to have that information before us for the purposes of the Bill today. I wonder if there is a reason why the tariffs have not been published now.
Baroness Fairhead
I hope I have addressed that. Should no deal appear to be what is happening, they will be published. We are focusing very much on achieving a deal, so we do not feel that this is the right time to publish.
I thank all the noble Lords for their additional contributions. I look forward to debating these and other issues as we progress through Report.
Baroness Fairhead
Baroness Fairhead
My Lords, as this amendment touches on the GPA, I inform the House that the UK has formally received an invitation to accede to the GPA. This was agreed by the GPA committee at a meeting in Geneva on 27 February, and I am sure that the House welcomes that news.
Government Amendments 1 and 2 have been tabled to clarify that the powers in the Trade Bill may be used to modify retained direct principal European Union legislation. These amendments are very simple in nature. They make it clear that the regulations made under either Clauses 1 or 2 may, like the powers conferred under the European Union (Withdrawal) Act, modify retained direct principal EU legislation. This will allow qualifications to be made which make retained direct principal EU legislation workable in the context of a UK outside the EU.
Baroness McIntosh of Pickering
My Lords, perhaps there is a report from the Constitution Committee that would answer the question I am about to ask, but what is the concept of direct principal European legislation? I do not recall it being referred to—perhaps I should. Is it the main pieces of legislation? Could my noble friend be more specific?
Baroness Fairhead
My Lords, the concept of retained direct principal EU legislation is that of EU legislation that will come into UK law upon leaving the EU. This amendment will make a clarification to ensure that the same wording is used as in the withdrawal Act. Just for further clarification, because I asked it myself, saying “retained direct principal EU legislation” includes minor legislation.
Baroness Fairhead
Lord Stevenson of Balmacara
My Lords, we have had a very good debate on an important and long-lasting topic which we need to draw to some form of conclusion. We have before us two amendments that cover the ground very admirably, although their approaches are rather different. Indeed, the essence of what we are trying to get at may become a little masked in the timing. That last exchange is a good example of the way in which aspiration, interests and enthusiasm can sometimes lead us to a position where the drafting does not support where we are trying to go to.
We should be clear that there is support around the House for putting into the Bill at an appropriate place a clear and unambiguous statement which reiterates what the Government have said on a number of occasions—and we will probably hear again in a few minutes when the Minister responds—that they are committed to not lowering domestic standards in the EU agreements that are transitioning into bilateral agreements or in any future trade agreements that they wish us to enter into. If we can hold on to that and find the appropriate words rather than the ones before us, which need to be merged if we are to get the best out of this, we might make a way forward. I hope the Minister will give us hope that there will be the opportunity for further meetings and discussions on this issue. It is worth trying to go the extra mile to get us to a point where, by Third Reading, we have an agreed procedure.
The noble Lord, Lord Purvis, was right to try to drill down into some of the points that may need to be bottomed out. I will not repeat where there are difficulties but simply acknowledge that we need to be clear about whose standards we are talking about, where they are to be found in current statute, how they apply to UK interests and how they are limited in what they might say to any future Government about third-party Government arrangements, which are clearly not right.
Another point is to pick up how the WTO and other international agreements and treaties that we make covering the list in subsection (5B)(a) to (g) would fit best in a statutory form. That is the way that we need to go. I therefore hope that all parties will accept that this is not the time to force through either of these amendments but to come forward with an agreed position, if we can, in time for Third Reading.
Baroness Fairhead
My Lords, I appreciate the attention that this House has paid to the vitally important issue of standards at each of the Bill’s stages, and for the amendments tabled by the noble Baronesses, Lady Jones of Moulsecoomb, Lady Henig, Lady McIntosh of Pickering, Lady Brown of Cambridge, and by the noble Lords, Lord Stevenson of Balmacara and Lord Purvis of Tweed. I also thank their Lordships for the productive meetings that we have had on the subject.
The Government, like your Lordships, do not want and do not intend the strong environmental protection, food safety, and animal welfare standards that the UK is proud of to be lowered once we leave the EU. As I mentioned in Committee, the Prime Minister and Ministers from across government, including Defra and DIT, have made public commitments to the maintenance of the current protections and offered many assurances that we will not lower these rigorous levels of protection in order to secure trade deals.
Let us not forget that, first and foremost, our policy is one of continuity. We seek to carry over the effect of the existing EU agreements. Our trade continuity programme is rooted in our desire to deliver consistency to businesses and consumers as we leave the EU. This approach has been widely endorsed by partner countries, businesses and Parliament. The International Trade Select Committee report in March 2018, for example, stated:
“Almost no one who contributed to our inquiry suggested that the Government’s policy objective of seeking continuity was the wrong one”.
In relation to standards, I can confirm that, under the provisions of the EU withdrawal Act, we will start at a point of maintaining the high standards that we have benefited from as an EU member. This provides us with a strong basis to build on in future. This includes those provisions that the House will be aware of on chlorinated chicken or hormone-treated beef, which will not be able to enter the UK market. The UK has already transposed the relevant EU Council directive into UK law prohibiting the use of artificial growth hormones in both domestic production and imported products. This is now UK law. No products, other than potable water, are approved in the EU to decontaminate poultry carcasses, and this will still be the case in the UK when we leave the EU. EU food safety provisions will come across through the European Union (Withdrawal) Act 2018, where they will be enshrined in UK law.
The noble Baroness, Lady Jones, raised an issue about the unlimited duration of this clause. I would just like to clarify that there is a sunset clause for this power: unless it is extended by both Houses of Parliament, it will expire three years after exit day. That is set out in Clause 2(7).
I turn to the issue of reducing standards in future trade agreements. Our future trade agreements provide us with the greatest opportunities for the UK to develop its global trading position. The demand for UK goods, as I have seen first-hand, is based heavily on our outstanding reputation for quality and the British mark of excellence. The Government have no intention of harming this reputation. Indeed, we intend, as a minimum, to maintain the standards that we currently have, which are set out in our primary and subordinate legislation, and the high standards that we have led on maintaining as a member of the EU. We will continue to retain these as part of the retention of EU legislation, as we exit the EU, through the EU withdrawal Act. The desire to maintain the high levels of standards that we enjoy in the UK is therefore at the heart of the Government of this country and, more than not planning to reduce those standards, we have a strong policy of ensuring that those standards are maintained.
The noble Lord, Lord Purvis, raised a point about the WTO schedules and the fact that we are already suggesting that we might change them. I want to clarify that our WTO schedules will not change. These set out the maximum tariffs that the UK would impose. The UK, like any country, remains free to impose lower tariffs than those set down if it so chooses.
On Amendment 3, I thank the noble Lords for their amendment and for my conversations with them on this important issue. I fully understand the sentiment with which the amendment is laid and have already reiterated in my response the Government’s strong commitment to maintaining standards as we leave the EU. However, we feel that the amendment as currently drafted is problematic for a number of reasons.
First, the amendment comes with some uncertainties as to its scope. The term “standards” does not have a single legal definition which can easily be called upon. Any legislative commitment not to lower standards would need to make crystal clear what regulations are in scope. This amendment does not, and instead requires the Government to report against an open-ended list of potentially relevant standards, as my noble and learned friend Lord Garnier highlighted. This would require the establishment of a process to determine what constitutes “standards”, not only in each of the listed groups of standards but beyond. Outcomes of this process could then be easily questioned in a court and, until a court ruled on the matter, they would simply be the Government’s own assessment rather than legal certainties.
Secondly, on the notion of “reducing” standards, how the Government would prove that they were or were not reducing them would be problematic. This contains a degree of subjectivity, which would create considerable legal uncertainty if it were to be added to the Bill. Again, the term “standards” can mean a voluntary, best-practice way of doing something. Standards are often not set by Governments but developed by consensus among relevant stakeholders. Of course, there are minimum levels of safety, quality and environmental protection—for example, where voluntary approaches are not effective. These rules and regulations are mandatory and enshrined in our laws, which, of course, are subject to parliamentary approval.
We sincerely believe that the best way to influence standards in other countries is to forge strong trading relationships where we can positively influence those countries through the reputation of UK businesses. Through such relationships, we can insist on the proper treatment of workers and their rights, so that UK consumers are assured that the products they buy from reputable UK businesses are from suppliers whose practices those businesses have assured. In order to achieve that, we need to have trade agreements in place.
On human rights, which are referred to in paragraph (g) of the amendment, noble Lords will recall that the Government have already reaffirmed that the UK is a signatory to the ECHR and will continue to uphold human rights in the UK under the Human Rights Act. The Clause 2 power cannot be used to amend the Human Rights Act, and it would be unlawful for any regulation under the Trade Bill to be incompatible with the rights enshrined in the ECHR.
Baroness McIntosh of Pickering
I have been looking at the continuity agreement reached with the Faroe Islands. I understand that it could potentially result in an implied annual increase in total duties of up to £11 million. It goes on to say that that is unlikely to be true, but I wonder: will there be scope to discuss these continuity agreements—as the noble Lord, Lord Purvis suggested? Perhaps we could do so in an afternoon session and take them all together. This agreement raises issues which will be of interest to the House.
Baroness Fairhead
My Lords, as I tried to explain, the Motions laid by the noble Lord, Lord Purvis, will be dealt with in the usual way. We look forward to those further discussions taking place.
Lord Purvis of Tweed
I may be able to help the noble Baroness. I am grateful for the response from the Government Whips’ Office and its suggestion of tabling time for these to be debated. I will not pre-empt these exciting debates on Faroe Islands fisheries, but they look likely to happen next week.
Lord Mackay of Clashfern (Con)
My Lords, I suppose I ought to take some part in this discussion. I hope to do so briefly, because I was a strong dissenter, on my own, against the decision in Pepper v Hart. I did not believe it was right to allow extraneous matters to be taken into account in construing an Act of Parliament. That Parliament had used the words, and that some Minister had said something in explanation, should not, to my mind, be used to deal with ambiguity. However, I was overruled then, and I am waiting for that judgment to be overruled in due course. Certainly, that judgment does not include statements not made in Parliament by people who are trying to say what they want to happen in the Act of Parliament, and the Explanatory Notes in no sense come within the judgment in Pepper v Hart. I have no doubt at all that the correct way to restrict a power to impose penalties is by putting the restriction into the Bill.
Baroness Fairhead
My Lords, I thank the noble and learned Lord, Lord Judge, and the noble Lords, Lord Pannick and Lord Beith, for tabling this amendment and for highlighting what is clearly an area of genuine concern—not just from them, but from the Constitution Committee.
I start by reassuring the House that the Clause 2 power will be used only to implement non-tariff obligations of our continuity trade agreements. For example, we will have to implement procurement obligations in several of our agreements, including the Chile agreement we signed recently. Without the Clause 2 power, we would not be able fully to implement such obligations under these agreements.
I stand before this House not professing to match in any way the legal brains and experience of noble Lords—and, indeed, noble and learned Lords—but I will give the Government’s position. Explanatory Notes are always admissible aids in the construction of an Act. Exceptional circumstances, as in the Pepper and Hart case, are not required. Indeed, I am asked to refer to the House of Lords case R v Montilla and Others in 2004, in which it was said:
“It has become common practice for their Lordships to ask to be shown explanatory notes when issues are raised about the meaning of words used in an enactment”.
Lord Pannick
I am very grateful to the noble Baroness. Under the Pepper v Hart principle, what matters is not the Government’s intention but the Government’s understanding of the scope of the provision they are putting before the House. I am asking the noble Baroness to say on the record, in Hansard, that it is the Government’s understanding and intention that the Clause 2 power does not give them a power to create or extend criminal offences, impose fees, amend primary legislation other than retained EU law or create new public bodies. It is not about the intention, but about the Government’s understanding of what they are putting before the House.
Lord Garnier
Can I press my noble friend a little further? Why does she not simply arrange for Amendment 3A to be included in the Bill?
Baroness Fairhead
My Lords, there is a genuine difference of legal opinion here. My proposal is that we reflect on this and have a meeting, if your Lordships are content to do that, because we have to work through this.
Lord Cormack (Con)
I apologise for interrupting at this stage, but is my noble friend prepared to say on the record that this matter can be referred to at Third Reading, if necessary?
Lord Judge
May I respectfully ask what, in that case, would be the purpose of the meeting with the Minister to which she referred?
Baroness Fairhead
My understanding is that we have a clear legal position which is strongly believed, and the meeting would be to see whether we can reach a mutual agreement.
Lord Judge
If we can reach a mutual agreement on it, it is at least possible that the Government may decide to amend their Bill.
Baroness Fairhead
There will be other opportunities; perhaps we could have a meeting before the second day on Report.
Lord Judge
Provided it is understood that the resolution of this issue will abide or at least wait for a meeting between those of us who wish to meet the Minister—I would certainly be one of them—and those whom the Minister wishes to meet, that is fine. But I cannot leave the House in the position that we will now leave this for ever, and if the Minister deigns to do us the kindness of giving us what we want, we will have it. We have to know exactly where the Government stand on this. I know the argument, but where do we stand procedurally in the House?
Baroness Fairhead
I have heard a very well-argued case—the first time I have heard the impact of that case. I can commit to writing a detailed letter on our position, having a meeting and bringing this back on the second day on Report, if that is what this House would prefer to do.
Lord Pannick
I suggest that this matter cannot be brought back on the second day, because this is an amendment to Clause 2, which we will have passed. Given that the noble Baroness, fairly and properly, has accepted that what she has heard today requires further discussion, and that the Government may wish to consider further this matter after they have met with noble and noble and learned Lords who are concerned about this, surely the way to proceed is for the Government to accept that it is appropriate for this matter to be raised again at Third Reading to see whether any progress can be made.
Lord Stevenson of Balmacara
My Lords, we are in a very similar situation to where we were in an earlier debate. Clearly there is an issue which needs to be resolved between the Minister and those who feel strongly about it. She is putting the mover of the amendment in a difficult position, because the only right thing to do at this stage is to test the opinion of the House, and I am sure that that is not where we need to go on this. We need to give the Minister time to reflect on the issues and to be convinced, if she has to be convinced, by further points made, and, if necessary, to come back at Third Reading. That is not an onerous consideration.
Baroness Fairhead
I thank the noble Lord, Lord Stevenson, and I agree with that position.
Lord Judge
My Lords, I am grateful to the noble Lord, Lord Stevenson. I think that calling for a Division at 5.24 pm when we have so many other things to deal with might not have been very popular, although I suspect we would have won. I also thank the noble Lord, Lord Wilson, for enlightening me as to where Explanatory Notes come from.
I thank everybody who has spoken in this debate. I will leave it at this: the Executive accept that these powers should not be given. There should be no difficulty whatever in putting them into legislation, rather than leaving them in an Explanatory Note. Although the noble Lord, Lord Pannick has sought—and graciously been given—an assurance of the Minister’s position, I do not think that is enough. For the time being, at any rate, I shall not press this amendment.
Baroness Henig
I absolutely agree. That is precisely my concern: that there is an effective scrutiny process in place to replace what we will lose at European level. In later amendments, we shall discuss future arrangements, but my concern is that in the rollover of the existing deals, we have effective scrutiny so that everybody knows where we are in the negotiations.
Parliament and business leaders should not be seen as the enemy from whom important national secrets must be kept, which seems to have been the way things have been going. Our businesses, exporters and trade bodies need to plan. They need to work in tandem with the Government. Of course we accept the need for confidentiality in trade negotiations. We all understand that, but the level of secrecy we have experienced in the past 18 months has been totally counterproductive.
My amendment would put some basic scrutiny arrangements in place to cover the period for which these deals are being rolled over. It enables Parliament, businesses and the wider community to know what stage they have reached and when they may be completed. Reporting once a Session is hardly an onerous requirement on the Executive. After all, our current Session is now nearly two years old. That seems to me a basic requirement for effective parliamentary scrutiny.
I hope that the Minister will tell me that the amendment is unnecessary, as the Government will bring forward something similar at or before Third Reading, but meanwhile I beg to move.
Baroness Fairhead
My Lords, I thank the noble Baroness, Lady Henig, for tabling Amendment 5. It gives the House an opportunity to revisit the issue of how the Government will update Parliament on the status of negotiations on the continuity agreements. We enjoyed a useful discussion on this in Committee.
First, let me reiterate that Parliament plays a crucial role in scrutiny of free trade agreements, and we intend that to continue. It is right that Parliament should expect to be updated by the Government. That is why the Government have already informed Parliament on progress of our continuity agreements through a Written Ministerial Statement. As your Lordships will be aware, they have already gone through a process of scrutiny in becoming free trade agreements with the EU.
We have also laid our first free trade agreements for scrutiny in Parliament ahead of ratification, which we believe is the right level of scrutiny, along with their accompanying parliamentary reports and explanatory memoranda, in which we have committed to giving explicit information about any significant changes, should any occur, making clear where they are, and any economic impact, should there be any.
Unfortunately, we cannot give a running commentary on the progress towards signature of our other continuity agreements. We believe that doing so would create a handling risk with our partner countries. Some partner countries may not wish to share such information, and a commitment to do so might prejudice the prospect of a successful negotiation. We are trying to get the best possible outcome for the UK.
However, let me assure the noble Baroness that, as we are aiming for continuity, we do not expect there to be significant changes. I therefore argue that the detailed reporting required by the amendment would be unsuitable for the continuity programme. For the future free trade agreements programme, the Government have committed to publish updates on the conclusion of each substantive negotiating round and to publish an annual report on all future trade agreement negotiation programmes under way. In this way, we will ensure that Parliament is kept fully updated on progress as we pursue new FTAs with partner countries.
Although I understand the desire to know what progress we are making towards transitioning continuity agreements, I hope that the noble Baroness, Lady Henig, understands the Government’s position and therefore request that the amendment be withdrawn.
Lord Berkeley (Lab)
Before the Minister finishes, I do not think that she answered my noble friend’s question about comparing the Government’s policy on non-disclosure agreements and secrecy with what the European Union has done for many years. That applies not just to these trade agreements, but to most discussions with industry and everyone else to do with the whole Brexit process. People seem to be required to sign NDAs before they get any information at all. Is that now the Government’s policy—that no trade agreements or anything similar can be achieved unless the industry concerned signs NDAs? That seems a pretty draconian change.
Baroness Fairhead
My Lords, the engagement we have with civic society, businesses and trade unions will be critical as we develop our future trade agreements, and we will continue those discussions. We have already talked about creating a strategic trade advisory group, which will contain members from civic society, trade unions and business organisations. We have also agreed to have expert bodies, so I hope that will reassure the noble Lord that we are intent on continuing very active engagement.
The difference here is that these are continuity agreements that have already been negotiated and scrutinised through a process, and we are aiming for continuity here. Therefore, we believe that the appropriate level of scrutiny by Parliament is for the Government to bring forward the reports when they have been signed, alongside a detailed report on the changes, if any, and the economic impact. Of course, ratification will be required, and that will go through scrutiny in the normal way.
There is a very different position on future free trade agreements, on which I wholeheartedly take on board the points made by the noble Lord and the noble Baroness.
Baroness Henig
I have listened carefully to what the Minister said. She talked about a “running commentary”, and I do not think that is what my amendment sought. It sought a report once every Session, which, I respectfully suggest, is not quite the same thing. As has been said, these are continuity agreements. What I—and, I am sure, many other Members of this House—seek is continuity: when we are no longer members of the EU, we want the same level of information as we were getting from the EU. We seek a level of information; we do not want a dilution of processes, with more meagre information and more difficulty in finding out what is going on. That is what lies at the heart of this.
I have listened carefully to the Minister, and I do not propose to pursue the matter at this stage—but I am sure that I and many other Members of this House will keep the Government’s feet to the fire on the issue of getting hold of information and making sure that everybody, particularly businesses, commercial organisations and people throughout the country, know where we are and what is going on. They should not have to rely on leaks from newspapers for their information. Having got that off my chest, I beg leave to withdraw the amendment.
Baroness Fairhead
“Post-ratification report
(1) This section applies where—(a) the United Kingdom has ratified a free trade agreement, and(b) the other party (or each other party) and the European Union were signatories to a free trade agreement immediately before exit day.(2) Before the end of the period of five years beginning with the date of ratification, a Minister of the Crown must publish a report giving the Minister’s assessment of the impact of the agreement on trade between the United Kingdom and the other party (or each other party) to the agreement.”
Baroness Fairhead
My Lords, this group includes Amendments 6 and 7. With the indulgence of the House, I shall speak now to Amendment 6, and then respond to Amendment 7 when my noble friend Lady Neville-Rolfe, who tabled it, has spoken.
I thank noble Lords for their contributions during the discussion on post-ratification reports during the Committee stage. Once again, the debate demonstrated the value of this House and your Lordships’ expertise and knowledge. In the light of that debate, I can confirm that the Government accept that post-ratification reports are important tools for understanding the real effect trade agreements have on the economy. They are useful not only in informing our discussions in joint committees but in refining our strategies for future trade negotiations.
Having had the benefit of this House’s wisdom in Committee, the Government have tabled an amendment that would require a Minister of the Crown to publish a report on the impact on trade of each of our continuity free trade agreements. These reports will need to be published within five years of ratification of the agreements. The reports will assess whether trade flows between the UK and the other signatory or signatories have changed since the agreement began to be applied. If there has been a change, the reports will then discuss how much of that change can be attributed to the agreement itself.
Given that these reports will consider impacts across the whole of the UK, this will include an assessment of any impacts on the devolved nations. We will of course share these reports with the devolved Administrations. I hope the House will support the amendment.
Amendment 7 (to Amendment 6)
Lord Purvis of Tweed
That is helpful. However, my question to the Government remains as to what the status of the Bill would be, under the amendment, with regard to the reporting mechanism. Japan is one example among the vast majority of examples also in this category. A degree of clarification on that would be helpful.
The second issue is: why five years? Under the regulations, the agreements have to be renewed by Parliament after three years. One could therefore have a situation whereby an agreement could be renewed twice, lasting nine years, but with only one report. Would it not be better if the Government brought forward their report prior to the conclusion of the three-year life of the agreements? It would be no more burdensome for there to be a reduction from five years to three, and the report would be one of the key documents that Parliament would use when considering whether or not to renew the regulations after the three years; otherwise, they would be significantly out of kilter and either the report would not be helpful to the extension of the regulations or we would be unable to have a meaningful discussion on their extension in the absence of a report on the impact on Britain of the agreement.
Baroness Fairhead
My Lords, I thank my noble friend Lady Neville-Rolfe for Amendment 7, which brings reporting on future FTAs into scope, and her support for Amendment 6. The engagement I have had with my noble friend, as with others in this House, has been invaluable.
My noble friend asked why we are not agreeing in statute to lay the reports before the devolved Administrations. The UK Government, as a point of constitutional principle, are not responsible for laying documents in the devolved Parliaments. However, I recognise the importance of ensuring that the devolved Administrations are appropriately involved. That is why we are proposing that the Minister will make a commitment in the House that the Government will send the reports to the relevant Ministers in each of the devolved Administrations. We hope that that solution addresses the objective and the constitutional agreement.
Lord Purvis of Tweed
From my experience of the Scottish Parliament, there is nothing to prevent any UK Government submitting to the Library of the Scottish Parliament or Welsh Assembly documents similar to those laid in the Library of this House, so that MSPs and AMs can be informed and do not have to rely on their Governments submitting them.
Baroness Fairhead
That is a helpful interruption, but we would probably like to have a more formal process for handing the reports to Ministers and devolved Administrations.
As my noble friend may be aware, the Government published a Command Paper on 28 February on our processes for making free trade agreements after the UK has left the EU. In that paper, we outline our plans for transparent scrutiny of future FTAs, including publishing a scoping assessment prior to launching negotiations. We will also publish full impact assessments of new FTAs once negotiations are concluded. It is important to note that we have not yet begun negotiations on new FTAs, but the Government would be willing to consider publishing similar reports for future FTAs to those required by the amendment or continuity free trade agreements.
As regards our helpful discussion on the agreement between Prime Ministers Abe and May, the UK undertook to make an enhanced agreement with Japan. My noble friend Lord Lansley was correct in saying that the Japanese Government have agreed that, subject to there being an agreement, the EU-Japan agreement will continue during the implementation period, as with all our other continuity agreements. The Command Paper on scrutiny and transparency sets out our overall approach to scrutiny and consultation in relation to trade agreements. The UK and Japan have agreed to deliver a bilateral trade agreement based on the EU-Japan EPA, enhanced in areas of mutual interest, as I said. In scenarios such as this, the exact approach that we take on scrutiny and consultation will obviously depend on the nature and potential impact of the agreement that we seek.
The noble Lord, Lord Purvis of Tweed, asked whether the reporting requirements referred to in the proposed new clause would apply to Japan. The answer is that they would. The reporting requirements apply to all agreements with third countries that sign an FTA with the EU before exit day.
I hope that with that assurance my noble friend Lady Neville-Rolfe will feel able to withdraw her amendment.
Baroness Neville-Rolfe
I thank my noble friend for her very helpful assurances and have pleasure in withdrawing my amendment.
Lord Bilimoria (CB)
I emphasise how important this issue is. From my experience, the UK has arguably the finest legal services in the world. As the founding chair of the UK India Business Council, I am aware that foreign lawyers are not allowed to practise in India. That makes it very difficult for our lawyers to provide advice not just to British companies in India but to Indian companies, and that is a huge loss for India and our British legal services. The ability of our lawyers to practise abroad is crucial. The EU is another area where we have taken mutual recognition for granted. All sorts of situations could arise in a no-deal scenario—situations involving not just advice to companies but disputes. What about consumer rights, for example? British consumers will no longer be able to sue in relation to a European product here in the UK. It will have to be done in the country of origin in the EU and, if our lawyers cannot help out, that will be to the detriment of our consumers. Therefore, this is a very important point that cannot be taken for granted and should be included.
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I thank my noble friend Lady McIntosh for presenting this amendment and for giving us the opportunity to put on the record further remarks on where we are with regard to legal services. As she reminded us, legal services contribute around £25 billion to the UK economy, with a trade surplus of around £4 billion. They directly employ well over 300,000 people in the UK, two-thirds of whom are outside London. The UK is a world leader in the provision of legal services, as the noble Lord, Lord Bilimoria, also pointed out, and English law has a reputation for excellence across the world. We are determined to continue to build on this success.
We acknowledge that leaving the single market might have implications for market access and that some UK and EU service suppliers will not enjoy the same rights as they do today. That point was made by my noble friend Lady McIntosh when referring to Implications for Business and Trade of a No Deal Exit on 29 March 2019, published by the Government on 26 February—specifically paragraph 40, which sets out a case study on legal services. In a sense, that underscores that the Government see this as a key priority in the future economic framework negotiations.
That is why, in the political declaration on the future relationship between the EU and the UK, there will be comprehensive arrangements on the trade in services, covering a wide range of sectors, including legal services. The political declaration includes a commitment to conclude arrangements for services and investment that go well beyond WTO commitments and build on recent EU free trade agreements, as well as a commitment to make appropriate arrangements for professional qualifications.
The Government want to secure positive outcomes for the professional business services sector, including legal services. However, as my noble friend will be aware, our future trade relationship with the EU is subject to negotiation with the EU. A trade deal must be negotiated before its terms can be set out in law. I am aware that this is perhaps a probing amendment that seeks to get some points on the record, but clearly the Government’s view is that what my noble friend proposes is not the correct vehicle.
I am aware that in previous debates on this Bill and on some no-deal secondary legislation my noble friend has raised concerns about the impact of a no-deal outcome for lawyers. We do not want a no-deal scenario but, as a responsible Government, we have to prepare for it.
The no-deal SI relating to the practising rights of European lawyers in England and Wales and Northern Ireland, which this House debated in January, and was made on 13 February, provides transitional arrangements for EU-EFTA lawyers. The purpose of this no-deal SI is to clarify the position of EU qualified lawyers who are practising in England, Wales and Northern Ireland immediately before exit day, so that they can be secure in the knowledge of what their position will be in the event that we exit without a withdrawal agreement.
Lord Stevenson of Balmacara
I rise briefly to support the amendment in the name of the noble Lord, Lord Lansley, which I have signed up to. The meeting that he referred to was extremely helpful in drawing out some of the confusion that emerged during our first debate in Committee. The issues of how countries get on to the lists, how the lists get managed and shaped, and how the changes might come forward were all explored carefully; we now have a much better understanding. In these lists, there are bound to be curious decisions which do not seem to match up to one’s perspectives. I was in Tanzania on holiday recently and it certainly did not come across as one of the least-developed countries, although clearly there are issues around how it will progress and develop its own trading arrangements.
The point behind the amendment is to get on record some further points that have emerged. The noble Lord was kind enough to suggest that we might have further questions, but his all-encompassing knowledge and brilliant, incisive questions are quite enough for me.
Lord Bates
I thank the noble Lords, Lord Lansley and Lord Stevenson, for moving the amendment standing in their names and giving us another opportunity to discuss this important area. We are moving to a stage where we can consider how having an independent trade policy could provide opportunities, particularly to the least developed countries in the world.
I also thank the noble Lords, Lord Lansley and Lord Stevenson, as well as the noble Lord, Lord Fox, and the noble Baroness, Lady Neville-Rolfe, for the debate we had in Committee and for then participating in what I was glad to hear reported as a helpful meeting. I join noble Lords in saying that I found it an incredibly helpful meeting, which improved my own understanding not only of the barriers and hurdles but of the opportunities that are there.
I should perhaps deal directly with my noble friend Lord Lansley’s questions, rather than outlining issues that have been previously discussed in Committee and on which the House is already aware of our position. The noble Lord asked whether it is the Government’s intention to identify a sub-category of vulnerable countries. The answer is yes: we will be replicating the GSP+ tier of economically vulnerable countries.
The noble Lord asked whether these trade preferences would undermine human and labour rights. The UK has a longstanding commitment to universal human rights, and this will be reflected in our trade preferences schemes. As part of transitioning the EU preferences scheme, we will be maintaining a similar approach to human rights commitments.
On the question of who will investigate accusations of subsidies, dumping, surges of imports et cetera, the Trade Remedies Authority will be able to investigate cases against any country, including preference-receiving countries. In doing so, it will consider allegations of dumping, subsidies and unforeseen surges in imports which cause injury to UK industry. Where the TRA determines that a trade remedy measure should be applied, it can make a recommendation to the Secretary of State, who can accept or reject that recommendation. Such measures usually take the form of an additional amount of import duty above the most favoured nation rate.
Lord Stevenson of Balmacara
I have a private joke with the former Minister, the noble Baroness, Lady Neville-Rolfe, that there is a small and declining number of people in this House with an interest in intellectual property, and that we used to gather to discuss arcane issues using incomprehensible language to our hearts’ content. The noble Lord, Lord Clement-Jones, is clearly a member of that group, and there are one or two others. The noble Baroness, Lady McIntosh, who is unfortunately not in her place, has joined the group recently. I say that because the discussion of the WTO tariff rate is coming down to that rather narrow group of people who have a deep knowledge of and fascination for the issues and are interested in exploring them, but are frustrated by the fact that the Taxation (Cross-border Trade) Bill, on which we should have had the chance to discuss the points so ably made by the noble Lord, Lord Lansley, was held back from us by procedural rules and went through without much debate. We are therefore having to invent a way of getting into that discussion.
The noble Lord, Lord Lansley, has done a great service to the House by going through some of the very intricate and complicated issues around setting tariffs and rates and how you play the game against the very complicated rules of the WTO. He does it, however, from a position of knowledge and experience that, I am afraid, will be frustrated again tonight, because there is not the will in the House to go through it in detail. Indeed, I tabled an amendment a week or two ago—when I thought there would be more time to discuss these things—on the prospect of the GSP tariff rates, setting and mechanisms. He is right that there are broader issues around those that we should discuss. However, this is not the time—and we do not have the time—to go into the detail, so I will not press my Amendment 14, which comes later, because the noble Lord, Lord Lansley, has raised the same points in a broader context. I hope that the Minister will respond briefly to the points raised, so that some of the issues that need to be on the record are on the record, but perhaps we should save some of the more detailed issues for another day.
Lord Bates
I thank my noble friend for moving the amendment. The noble Lord is right: my noble friend has raised, effectively, three issues that need to be examined. One is the level of tariffs. In that regard I will probably disappoint my noble friend by referring back to my noble friend Lady Fairhead’s response from the Ministers’ Bench to the invitation of the noble Lord, Lord Kerr, to set out a timetable for when those tariffs might become known. She made her points and they stand on the record; I probably do not need to repeat them. I also draw to the attention of the House The Implications for Business and Trade of a No Deal Exit on 29 March 2019, which was published on 26 February. On this occasion I draw my noble friend Lord Lansley’s attention to the section on tariffs, beginning at paragraph 31 and continuing into paragraph 32, which explores some aspects of the setting of tariffs.
Those are two aspects on the level of tariffs, but I now turn to some of the specifics to which my noble friend referred. He asked about the status of the common external tariff applied by the WTO. The noble Lord is correct that we have notified our bound tariff schedule to the WTO. Our bound schedule represents the upper limits of what tariffs the UK could apply on imports. If, for example, our bound schedule says 10% for product X, we could choose to apply 9%. The Government have yet to announce their applied tariffs for a no-deal scenario, but the noble Lord, Lord Lansley, is correct to say that on leaving the EU we will be free to set out tariffs within the parameters of the bound schedule that we lodged last year.
The EU’s common external tariff—as referred to by the noble Lord, Lord Lansley—is the EU’s version of its applied tariff schedule. These are the tariffs that will apply to UK exports to the EU in a no-deal scenario. My noble friend also referenced the Taxation (Cross-border Trade) Act, which states that the first time a tariff is set, and whenever an import duty rate increases, the made affirmative procedure will apply; otherwise the negative procedure will apply.
These amendments would make the made affirmative procedure apply in different circumstances. In the case of Amendment 10, that would be any time the rate of import duty diverged from the bound commitment made by the UK to the WTO; in the case of Amendment 14 the made affirmative procedure would apply in all circumstances. However, under both amendments it is currently stipulated that the setting of the tariff would remain a matter for the other place. The Act ensures that the scrutiny procedures applied to the exercise of each power are appropriate and proportionate, taking into account the extremely detailed nature of the tariff and the frequency with which it may be changed. The tariff is long and complex; it currently contains 17,000 types of goods and is more than 1,000 pages long. The EU tariff is subject to regular, almost daily, amendment, so the current balance of the chosen procedure reflects that understanding.
Once again, I express the Government’s appreciation to my noble friend Lord Lansley for moving this amendment, giving us the opportunity to expand on our positions and put those additional remarks on the record. I hope that is helpful and reassuring to him, and that he feels able to withdraw his amendment at this stage.
Lord Lansley
I am grateful to my noble friend, and to the noble Lord, Lord Stevenson of Balmacara. This debate has been very helpful, and the takeaway from this—one I am grateful to my noble friend for confirming—is that the bound schedule has already been notified to the WTO. People need to be very clear about the fact that if we leave without a deal and the Government come forward and say, “These are the tariffs that we intend to apply”, they are not varying the WTO bound rate but saying that, on a most favoured nation basis, they will apply these rates. That provides a basis for negotiations on preferential schemes that could emerge over time. I read the document about the implications of no deal for tariffs, and it is correct: the Government must balance the desirability of supporting liberalised trade, with benefits for consumers through price and choice, with protection for producers in this country. That will be a delicate balance to strike. If people are aware that we can behave in this way with an applied rate that varies from the bound rate, it removes the argument that by applying a lower rate in the short run we have prejudiced our ability to conduct trade negotiations with other countries in the future—we have not done that. If we get rid of that argument, it helps to shift the balance in many cases in favour of lower rates in the short run, rather than higher rates. I am most grateful to my noble friend for his response. On that basis, I beg leave to withdraw the amendment.
Lord Bates
My Lords, I am conscious of the time, but I also want to ensure that noble Lords have an opportunity to reflect on the serious issues raised by the noble Lord, Lord Lea. We may deal with them briefly this evening but we did not deal briefly with them when they came up in Committee. There was quite some debate on them on 4 February, and for those noble Lords who are interested, they can read it in glorious technicolour between columns 1360 and 1370 in the Official Report of those proceedings. Perhaps if the noble Lord, Lord Lea, will permit me to summarise what the key arguments were at that point, I will try to answer two of the points that he raised.
EFTA membership would not be acceptable because it would mean accepting the free movement of people between its four existing members. To gain access to the 29 existing free trade agreements negotiated by EFTA, the UK would have to negotiate its way into each and every one of them with the relevant third countries. There is no guarantee that that would be successful: EFTA’s trade agreements were not negotiated with the size and type of Britain’s economy in mind. Were the UK to join EFTA, it would constitute 71% of the enlarged area.
If we rejoined the European Economic Area to stay in the single market, we would not have control over our borders. It would mean having to accept all four freedoms of the single market, including free movement of people across the 30 EEA states. On laws, it would mean having to implement new EU legislation covering the majority of the sectors of our economy. In contrast, we are making an up-front sovereign choice to commit to ongoing harmonisation with EU rules on goods, covering only those necessary to provide frictionless trade in the context of our agreement.
The noble Lord, Lord Lea, said that if we crash out, we need to keep the right to rejoin EFTA. If we leave the European Union without a deal, we fall out of the EEA and EFTA. We would be able to apply to rejoin, but this is contrary to government policy for the reasons that I have explained. He asked what the impact on the EEA Agreement would be if we extended Article 50. If we were to extend Article 50, the UK would, of course, stay within the EEA under the EU pillar until we left the EU. With regard to citizens’ rights agreements made with the EEA and EFTA states, these would enter into force only when we leave the EU or at the end of an implementation period.
I hope that, with that brief summary, the noble Lord—whose contributions I always enjoy and listen to attentively—will not feel that I have not responded to him, but in the context of the wider consideration of this issue in the debate, the Government’s position remains as it was in Committee. I therefore ask him to consider withdrawing his amendment at this stage.
Lord Lea of Crondall
My Lords, I thank the Minister for that reply. In fact, he did not answer all the questions on 4 February. I could draw attention to some of them, but I will not. This could have been an opportunity today. Free movement of persons is, of course, an issue of which we have experience within the European Union. We would be cutting off our nose to spite our face on areas of the economy, such as the whole entertainment, theatre and ballet industry, as the noble Baroness, Lady Bull, referred to on one occasion. There are many, many others, so these sweeping statements about control of our borders are really over the top and not a sensible way to address this issue.
I am not going to say more at this stage. Suffice it to say that the initiative is now with the House of Commons. I have some confidence that in the next few days and weeks this will become, as my noble friend Lord Monks said, a strong policy in the Commons. I rest on the fact that it is still the policy of the House of Lords, as has been said by my noble friends. On that basis on this occasion, I will not seek to test the opinion of the House.
Baroness Fairhead
My Lords, I thank the noble Lords, Lord Stevenson of Balmacara, Lord Purvis of Tweed and Lord Hannay of Chiswick, for tabling Amendments 12 and 35. They seek to ensure that Parliament has a significant role in free trade agreements and impose obligations on the Government and a scrutiny committee in relation to mandate-setting, transparency and approval of free trade agreements.
I fully understand the desire of noble Lords right across the House to ensure that there is strong and effective scrutiny of future trade agreements. It is an objective that the Government share. We have listened carefully to the views put forward in both Houses on this topic and last week published comprehensive proposals for enhanced scrutiny of future trade agreements in a Command Paper. This included confirmation that we would publish our outline approach to negotiations, including our objectives, accompanied by detailed economic analysis.
We further committed to publishing progress reports after each negotiating round and an annual trade report across all live negotiations. This draws on best practice internationally and will ensure a high degree of public transparency around our negotiations. In terms of Parliament’s role, we committed that we would work closely with a committee, or one in each House, to ensure that it could effectively scrutinise negotiations from start to finish, as well as setting out opportunities for scrutiny of FTAs throughout negotiations.
It is to this role that Amendments 12 and 35 apply. I will address these amendments and our proposal in this area in more detail. Amendment 12 would disapply CRaG to trade agreements and instead require that the agreement secured the approval of both Houses prior to being ratified, as well as requiring the approval of both Houses for negotiating mandates. Without wishing to revisit ground that was covered during Committee, it is worth reiterating that such a proposal goes to fundamental constitutional principles that underline the negotiation of international treaties. The negotiation and making of treaties, including international trade agreements, is a function of the Executive. This rule is not only the result of centuries of constitutional practice but also serves an important function. It enables the UK to speak clearly, with a single voice, as a unitary actor under international law. It ensures that partners know our views and are able to have faith that our position, as presented formally in negotiations, is the position of the United Kingdom.
Regarding the setting of mandates, we have considered international practice, and it is telling that there was none among those we considered in which the legislature had this role. That includes the EU, Canada, Australia and New Zealand. The noble Lord, Lord Bilimoria, referred to the United States. It is true that the United States legislature is different from ours. Congress does not vote on a mandate for each agreement but delegates authority for brokering trade agreements through a trade promotion authority. This includes setting out overall objectives for trade negotiations and legislation but not specifically for individual deals. The trade promotion authority then enables an expedited process for the consideration of trade deals whereby Congress has 30 days to consider the mandate for an individual country negotiation and can call hearings on them with the United States representative. They are therefore consulted in relation to the specific mandate for each country and during negotiations, as we plan to consult Parliament.
The noble Lord, Lord Hannay, said that there had been no consultation with Parliament, but there was a debate on 21 February to consult the Commons on four new free trade agreements we are considering. As he will understand, we are unable to negotiate right now while we are members of the EU. We will ensure that Parliament has the opportunity to scrutinise the outline approach to negotiations, and those would usually go to general debate in each House.
Lord Hannay of Chiswick
I am most grateful to the Minister for that clarification. I think I heard her say that there will now be an opportunity to consider the objectives the Government are pursuing in their negotiations—when they are able to conduct them—with Australia, New Zealand and the United States. That is very helpful, but she seems to be making rather heavy weather about the word “mandate”. She gave us a very lengthy exposition of the royal prerogative, which is something that is behind us but is now exercised, of course, by the Government. Could she not possibly think a little more carefully about ways in which this objective could be achieved? She has said already, I think, that the Government intend to set out their objectives in the negotiation. Why can they not say that they would seek the view of both Houses of Parliament on their objectives, which would be a mandate for the negotiations? That is all that is being suggested.
Baroness Fairhead
My Lords, the chosen words of the Government are “outline approach”. On the noble Lord’s point, the ability to have objectives in that outline approach and the ability for both Houses to debate and scrutinise those objectives is the key part of what we are discussing here. I agree with my noble friends Lord Hailsham and Lord Lansley, who talked about the critical issue here, which is consideration and discussion. That is absolutely what this Command Paper proposes—in the initial stage of the outline approach, to particularly scrutinise those objectives.
Lord Bilimoria
The noble Lord, Lord Kerr, said very clearly that the power of having Parliament behind the Government enhances our negotiating position with the mandate that that gives. The exact example is: why have we been outgunned by the EU in the negotiations over the past two and two-thirds years? It is because it has had a clear mandate from 27 countries, whereas we have a divided country and a divided Parliament. That does not give a clear mandate whatsoever, which is all the more reason we need the amendment.
Baroness Fairhead
My Lords, I do not want to go into the world of semantics, but the preferred term is “outline approach”. The objectives will be the objectives set, which will be scrutinised in the way in which we are proposing in both Houses. I agree totally with the noble Lord, Lord Kerr, that you want the ability to go back and say, “I do not think that will get through my executive board” or whoever because we want a clear set of objectives. This is what we intend to have, and an ability to say, “I do not think that will rub”. I also note that the International Trade Committee in the other place did not call for the power to approve the mandate.
We recognise the legitimate desire of this House to ensure that Parliament is able to shape our approach to negotiations. That is why we are committed to publishing the approach to negotiations. It will include those objectives. We will ensure that Parliament can scrutinise these. My noble friend Lord Tugendhat asked whether it is sufficient. We are trying to ensure enhanced scrutiny, so that is exactly what the Command Paper proposes. As I said, we expect that this would usually be through a general debate in each House.
Lord Warner (CB)
Does the Minister not accept that a Command Paper does not give the assurance to Parliament that provision in legislation does?
Baroness Fairhead
My Lords, I will come to that point later, which relates to the question that the noble Lord, Lord Hannay of Chiswick, raised on whether these matters should be on the face of the Bill.
The essential point is this: this is the first time in 40 years that we have been negotiating a free trade agreement. We are keen to make sure that we do not lock ourselves into a process by having detailed elements on the face of the Bill which would then be difficult to change. What we want to do is to ensure that, through this Command Paper, the process of an enhanced scrutiny is clear, that there is an ability for Parliament to scrutinise at every stage and, furthermore, that there is a committee which will meet in confidence, which I think was something that was raised in this House as critically important. The noble Lord, Lord Hannay of Chiswick, raised this with reference to the ISC, pointing to the fact that sometimes confidential discussions need to be held in a room with a committee of experts. That is what we are proposing. We would also expect these outline approaches and objectives to be the subject of close dialogue with the relevant committee.
Lord Mackay of Clashfern
While my noble friend is proposing to make a comment, it is highly important that the question of whether something should be discussed at Third Reading is a matter for this House. We have become rather accustomed to attempts on the part of Ministers to decline the opportunity of a Third Reading, but it is for this House to decide. I have no doubt that this particular, very important problem, which involves a delicate balance between the Executive on the one hand and Parliament’s two Houses on the other, should be handled with the utmost care. As the noble Lord, Lord Stevenson of Balmacara, noted, this is an issue about which there is already a bit of difficulty with the detail. We must try to get this right. I have no doubt that, if it is agreed at this stage, the House will allow it to be raised at Third Reading.
Baroness Fairhead
My Lords, we have had very fruitful discussions and come quite a long way on this point. All I can say is that I would be happy to discuss it further but I cannot guarantee to come back at Third Reading with any changes. On that basis, the noble Lord will have to decide how he chooses to treat his amendment.
Lord Stevenson of Balmacara
The Minister is certainly very brave to take on a former Lord Chancellor in his pomp. I agree with the noble and learned Lord. The House has a very strong view about this and would like to see it back, but I am stuck with the procedural arrangements, as far as I understand them. I cannot amend the amendment before the House at the moment. I assume that the only way to do this would be to vote it through—if the House will agree to its view being tested—and hope that we can bring it back either through ping-pong or in some other way. I give way to the noble and learned Lord to see if he has inspiration of his own.
Baroness Falkner of Margravine
The noble Baroness has just told your Lordships that the House was trying to protect manufacturing through being in “the” customs union. So we have on one side “the” customs union, which is the EU customs union, and on the other side we have a bespoke customs union. That in itself illustrates the problem with those who want to reverse where we are today.
I urge the House to look at the common commercial policy carefully, not only in the light of Articles 206 and 207 of the TFU, and to look at the jurisprudence. The jurisprudence on the part of the CJEU expounds the EU’s common commercial policy into foreign direct investment rules way beyond common commercial policy and into the EU’s external action policy. Some of us may have no problem with that, but the jurisprudence will continue while we are outside the room and not at the table. The jurisprudence will reflect the EU’s priorities, not ours. It would leave us in a vulnerable position going forward whether we were in “a” customs union or the bespoke customs union, which would potentially give us bargaining rights and some say in jurisprudence. Certainly that customs union would give us no rights at all.
I am not used to evoking Mr Blair in support of any cause—I suppose it will have the same impact here as it does elsewhere in the country—but even he has gone public to say that the worst of all worlds would be for us to stay in the customs union. If noble Lords want to support trade in goods they need to move either towards the withdrawal agreement and the FTA that is likely to come with it, or to move to simply remain in the EU. This amendment is an ambush to try to achieve that latter aim. I am pro that latter aim—I am pro remaining in the EU—but I can see, with 20-something days to go, that either we have to agree with the withdrawal agreement, as I voted the last time, or we have to go the other way, as I said in my previous speech, and ask the Prime Minister reconsider our position. A customs union is not going to do that and, on that basis, I will be voting with the Government.
Lord Bates
My Lords, at this hour, and given the debate, there will probably not be many Members of your Lordships’ House who are carefully weighing the arguments on either side, wanting to know what the Minister is going to say from the Dispatch Box that could just persuade them another way. We have been around this course many times and the arguments have not changed. The House knows the Government’s position on this: they have set it out many times. The people of the United Kingdom voted to leave the European Union and to take back control of their laws, borders and money, and have an independent trade policy. If we had a customs union, we would not get that. That is the central point against the amendment. On the other hand, we have a withdrawal agreement that allows us to have many of the benefits of our membership of the European Union without being members of it, and honours the referendum result.
I shall come to two points. The noble Lord, Lord Stevenson, when moving the amendment—which is worthy of further examination as to what it is seeking the Government to do—said that he wanted to give the other House an opportunity to think again on this issue. The noble Lord, Lord Kerr, in a brilliant, brief contribution—perhaps because we had heard his eloquence on this point in Committee—reminded the House that it voted in favour of his amendment. What they did not mention was that when it went to the other House, giving it an opportunity to think again, it rejected not only your Lordships’ amendment but the concept of a customs union put forward by Stephen Hammond when the Bill was at this stage in the other place. If the purpose is to give that House another opportunity to think again, perhaps it could shout down the Corridor, “We have already said it; did you not hear us the first time?”
Some noble Lords have pointed out that the uncertainty is damaging for business. I accept that. Uncertainty is always damaging for business. What business needs is certainty. However, right at the 11th hour, when we are within sight of and have an agreement, with an exit day that meets the criteria, the amendment proposes to require Her Majesty’s Government to reopen the whole negotiation process that has taken place over the past two years. Somehow that is supposed to help business. Not many businesses would sign up to that level of reopening negotiations and uncertainty. The presentation of the amendment presupposes that the outcome and benefits of a customs union are known. No—they would have to be negotiated. That would be the case unless, as the noble Baroness, Lady Falkner, rightly said, it actually related not to “a” but “the” customs union. In that case, the noble Lords’ option would be there immediately. That is the position of those who want to stay in the European Union, and we understand it.
The amendment therefore plunges us further back into uncertainty and more years of negotiation. The House has already given its view, not once but twice, on this issue. The other place does not need the chance to think again and I therefore urge noble Lords to vote against the amendment if it is pushed to a Division. Most importantly, I urge all Members in the other place not to listen to the amendment but to look at the withdrawal agreement before them next week and make sure that they vote for it, so that we leave the European Union on 29 March, as the British people wanted, but with a deal.
Lord Stevenson of Balmacara
Follow that wonderful peroration! The Minister has been practising, I am sure. I congratulate him on his brilliance in getting out of the Tugendhat trap. He obviously thought that he would be judged on whether he met the very high standards required of an answer in this place before going down to an ignominious defeat—as I hope will be the case. He did it by setting his own bar and then deciding whether he had passed it by inventing, as often happens in these debates, the things that I did not say and then arguing against them effectively. He ended up by appealing to the green Benches down the Corridor, where I think he will probably find a slightly better response than he will get today.
I am sorry that the Minister has to defend the indefensible. As he said, all the arguments have been exhausted. In response to two of the charges, yes, the other place has considered this matter before, but somebody once said, “When the facts change, I change my opinion. What do you do, sir?” On the question of uncertainty, surely it is better to have a certain target, even if it takes time, than the continuing uncertainty of whether there will be a target, and that is what this amendment tries to do.
Customs unions are not very widely found in the world. They are a very special thing, particularly when they involve equality of partners trading with each other. The majority of customs unions in the world involve single dominant economies forcing terms on others. This customs union is a particularly good example of the way in which mature democracies coming together can create good for all and we should be very chary of moving out of it.
The Minister challenged the wording of the amendment but it is incredibly inclusive and was drafted to make sure that it stood the test of time. It simply states:
“It shall be the objective of Her Majesty’s Government to take all necessary steps to implement an international trade agreement which enables the United Kingdom to participate after exit day in a customs union”.
It does not imply staying in the EU. I think that we have had the debate. I wish to test the opinion of the House.
Baroness Fairhead
I thank the noble Lord, Lord Stevenson of Balmacara, for tabling this amendment. I will make some statements about why we are much more supportive of ISDSs and these dispute resolutions. I draw noble Lords’ attention to the fact that, as this House is aware, the Trade Bill is not intended to cover future free trade agreements or the investment policies associated with them. As a result, Clause 2 allows the Government to change domestic law where necessary to ensure that these continuity agreements can operate in a UK context. To be clear, no powers in the Trade Bill will be used to implement investment protection provisions, because such provisions in trade agreements do not require legislation.
I want to comment about investment protection provisions more generally because I believe they have a place. According to UNCTAD, foreign direct investment in 2017 was around $30.8 trillion. There are around 3,000 international investment agreements, most of which include these sorts of provisions. They have been going for over 40 years and, to date, only 855 claims have ever been completed. This means that, for the vast majority of investment agreements, no claims have been made. Furthermore, states have won more claims than investors—37% to 28%—with the rest either settled or discontinued. This does not suggest a bias in favour of investors and, I hope, offers a bit of comfort.
I understand the concerns that have been raised in the past, but our assertion is that many have been overstated. Often, ISDS mechanisms are attacked because they seem able to force a Government to regulate in a particular way in the public interest. However, they do not infringe on that right to regulate. The right of Governments to regulate is protected in international law. I reassure the noble Lord that the threat of potential claims has never affected the UK Government’s legislative programmes. We have more than 90 agreements with these clauses, as the noble Lord said. We have never had a successful claim made against us.
The amendment would require investment disputes to be heard by UK courts or tribunals in all instances, which has the potential to undermine what we think has been quite an effective process—an internationally accepted framework which has successfully supported our investors worldwide. The noble Lord, Lord Stevenson, mentioned new concepts, including the multilateral trading court. I agree with him that that is just one of a number of concepts. Work is at an early stage internationally. Future negotiations should take place in a forum where states will be fully involved to ensure that the system delivers. I fully agree with the noble Lord on that. We support the objectives of ensuring fair outcomes of claims, high ethical standards for arbitrators and increased transparency, which is another of the points that have been held against the previous systems. We have pushed hard for greater transparency.
As the noble Lord is aware, we in the UK expect other countries to treat our businesses operating abroad as we treat their investors in the UK. Our concern is that if the amendment were passed, it would be likely that any future partners would also insist on reciprocal provisions. That would mean that any disputes brought by UK investors against a host state would be required to be heard in its national court. This has the potential to be to the disadvantage of our investors.
The amendment could also create a precedent by encouraging some existing bilateral investment treaty partners to seek amendments with the UK to ensure consistency. UK investors—I am sure we all agree—can make incredible contributions to the countries in which they invest, including in hospitals, schools and other infrastructure. Potentially, this amendment could lead to decisions by UK investors to not invest. These countries would therefore not benefit; indeed, our assertion is that countries could be damaged in investment terms. I also ask noble Lords to note that, while international arbitration has been a valuable tool for our investors—who, in some cases, have been subject to egregious treatment by local Governments—we have never been successfully sued.
Most of our future negotiating partners who favour the inclusion of investment protection and ISDS would expect this to include some form of dispute resolution through a means that the international community is trying to work out. Securing agreement on an alternative domestic process could lead to the UK having to accept an unwelcome trade-off.
Additionally, as I highlighted at the start of my comments, the Trade Bill is not intended to deal with future free trade agreements. Therefore, we do not propose coming back with any changes on this at Third Reading. I am very happy to have discussions with the noble Lord outside the Chamber, but in respect of the true aims of this Bill and the systems already in place to resolve those disputes, I ask him to withdraw the amendment.
Lord Stevenson of Balmacara
I am very grateful to the Minister for her full response. I look forward to reading it in Hansard. I will take her up on her offer of further discussions, but at this stage, I think the best thing is to withdraw the amendment.
Lord Deben (Con)
My Lords, I wish to make a confession: when I was a Minister responsible for this area, I disobeyed the Government’s policy. Then, it was that we should be opposed to all these appellations and very determined in insisting that they were a restraint on trade and a disgrace. I thought that was nonsense. We have done great damage to our food industry by not defending so many of the things we have. Cheddar cheese, for example, can be manufactured almost anywhere in the world, but it is a Great British invention. The noble Lord, Lord Tyler, referred to what Cornwall has produced; in Suffolk, we now have a kind of local food industry which is really important. The fact that the food is made locally matters hugely, even if it is sold a long distance away.
This is much closer to what people want; it is much closer to what food ought to be like. It is much further from the kind of industrialised agriculture and food industry which, we must understand, is the “museum”—if I may use the expression of the ambassador from the United States. It is a museum of the kind of food we have produced, which has not had this very important distinction. Part of that distinction is the geographical identification. I know that my noble friend will be hugely supportive of this, but I thought I ought not to leave the opportunity to admit my past transgressions.
Baroness Fairhead
My Lords, I thank the noble Lord, Lord Tyler, for tabling this amendment. I fear, however, that I may not be able to give it the wholehearted support that he wants, because it seeks to bind the UK into a negotiating position of agreeing reciprocal protection of all EU and UK geographical indications—GIs—as part of the future economic partnership agreement. I can, however, reassure this House, the noble Lord, Lord Tyler, and my confessional noble friend Lord Deben, that the Government fully recognise the importance of continuity in the protection of UK GIs. We have heard, loud and clear from all parts of the UK, the concerns of our producers. It remains a priority for us to secure this protection; we agree that it is very important to maintain it.
While we share the objective of continuing the protection of UK GIs, we do not support the amendment because its effect would be to restrict our negotiating position on the detail of the future agreement. It is important for the Government to retain options that give us the flexibility to conclude negotiations successfully, with both the EU and potential future partners, in line with UK interests. These negotiations will be to the great benefit of UK industry, not least the UK’s superb food and drink industry, by opening markets to our products.
As I hope I explained in the House on the last occasion, the protection of UK GIs in the EU has been confirmed as continuing in both negotiated-deal and no-deal scenarios. This has been confirmed by the European Commission and is consistent with our understanding. These GIs should continue to have the same level of protection.
For the future protection in the UK of both UK and other countries’ GIs through the withdrawal Act, we have agreed to establish our own GI scheme, which will be very similar to the EU scheme—a good scheme, to echo the point of my noble friend Lord Deben. This was confirmed in the White Paper. The scheme will provide a simple set of rules giving all 87 of our GIs continued protection in the UK when we leave the EU. The independent scheme will be established in both a no-deal and a negotiated-deal scenario. It will be open to new applications from both UK and non-UK applicants from day one, and it will fulfil our obligations under the WTO agreement on trade-related aspects of intellectual property.
In the rest of the world—again, as I confirmed last time—we are working with our global trading partners to transition the EU trade agreements, including ongoing obligations towards, and recognition of, our GIs.
While existing UK GIs will automatically remain protected whether we reach an agreement or not, existing EU GIs in the UK do not automatically benefit. As the House is aware, the withdrawal agreement with the EU means that all existing EU GIs will get the same level of protection as now until a future economic partnership agreement between the UK and the EU comes into force. The potential long-term protection of existing EU GIs would, therefore, not be determined then but as a result of the future economic partnership. This amendment, which proposes a reciprocal agreement, would, therefore, prejudice the negotiation. Furthermore, by requiring a reciprocal system of mutual recognition, it would tie the UK into accepting EU GIs created in the future. That would mean that the UK would be forced to protect successful EU GI applications without the ability to assess them ourselves.
As I emphasised earlier, not agreeing to a reciprocal arrangement would have no consequences for the protection in the EU of existing UK GIs, which should enjoy continued protection after exit regardless. In summary, therefore, we believe fundamentally in the importance of GIs, particularly for the agricultural community, but if this amendment passes it will remove the flexibility necessary for the UK to successfully negotiate new trade relationships outside the EU.
Additionally, I have assured noble Lords that the desire of UK GI producers for continuity of recognition and protection is fully acknowledged and is a key priority for us. In that context, the comments of the European Union grant us additional assurance that they will continue to be protected. On that basis and in the light of the negotiation of the future economic partnership, but with the absolute conviction that we are committed to UK GIs, I ask the noble Lord to withdraw this amendment.
Lord Tyler
My Lords, I have listened with great interest to what the Minister has said. There is a simple trade-off here. She said that if we were to pursue the declaratory proposed new clause, it would reduce flexibility. The more flexibility there is in a case such as this, the less one can be sure and confident that the situation is going to continue to protect in the way that my noble friend Lord Stevenson—I think that I can call him that on this occasion—and I would like. Various producers in the UK want that continuity as a certain guarantee for the future. However, we will read with care in the Official Report what the Minister has said and see whether further action may be needed. In the meantime, I beg leave to withdraw the amendment.