Common Rules for Exports (EU Exit) Regulations 2020
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Lord Grimstone of Boscobel
That the Grand Committee do consider the Common Rules for Exports (EU Exit) Regulations 2020.
Relevant document: 29th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Minister of State, Department for Business, Energy and Industrial Strategy and Department for International Trade (Lord Grimstone of Boscobel) (Con)
My Lords, I hope that the Committee may be unanimous in support of these regulations and their objective. The regulations were laid before the House on 21 September and were approved by a Committee of the House of Commons on 14 October. They are made under powers in the European Union (Withdrawal) Act 2018, which I will refer to as “the Act” from now on. The Committee will be aware that, given the context, these powers are limited. All that they allow is the correction of technical deficiencies in existing EU legislation that, by the operation of the Act, is to be retained in United Kingdom domestic law following withdrawal from the European Union. The amendments made by these regulations correct those deficiencies by, for example, replacing references to the European Union, its institutions and legislation with the appropriate United Kingdom references.
The retained EU regulation, as amended by these regulations, lays down the basic principle that exports from Great Britain will not be subject to quantitative restrictions unless the restrictions are applied in conformity with the retained EU regulation. The new legal regime makes it clear what the purpose of any export restriction should be. In general, export restrictions may be used only where there is a risk of a critical situation arising on account of a shortage of essential products or to remedy such a situation, or where such a measure is needed to fulfil international undertakings entered into by the United Kingdom.
I start by drawing the Committee’s attention to the fact that these regulations amend the retained EU regulation only as it applies in respect of Great Britain. This is consistent with the Northern Ireland protocol, which preserves the ability of the European Commission to exercise these powers in Northern Ireland. However, as is also set out in Article 6 of the Northern Ireland protocol, nothing may fetter the movement of goods from Northern Ireland to Great Britain, other than to fulfil an international obligation. The EU regulation is not used to fulfil international obligations and so does not fetter the movement of goods within the United Kingdom.
Through the course of the year, we have seen the use of export restrictions on medical goods grow around the world in response to shortages arising during the fight against Covid-19. Indeed, the European Commission used the EU regulation in March in response to shortages of personal protective equipment—PPE. Under this EU regulation, the United Kingdom was required to temporarily authorise any exports of PPE, following a review of licence applications from exporters. In the vast majority of cases, the United Kingdom authorised these exports.
While export restrictions can be appropriate in dealing with critical situations in the short term, the restrictions we have seen build up around the world have disrupted the normal flow of trade and exacerbated the efforts of many countries to combat the global pandemic.
The Government have been clear that countries should limit their use of export restrictions as far as possible. In May, the United Kingdom joined calls for the use of export restrictions to be restricted and to be applied only where deemed completely necessary and in a targeted, proportionate, transparent and time-limited way. By applying strict conditions to the use of any export restriction, this legal regime sends a clear signal to our trade partners around the world that, despite the pandemic, the United Kingdom remains open for business.
I underline for the benefit of the Committee that the Government do not need to implement export restrictions pursuant to the United Kingdom’s international obligations by making regulations under the retained EU regulation as amended by this SI. Other, more specific legislation provides the appropriate powers with which to do this. For example, restrictions that apply to the export of arms are provided for under the well-established statutory regime under the Export Control Act 2002. In addition, Article 10 of the retained EU regulation does not preclude the use of export restrictions where this is required for the purposes of public policy.
I also point to the role that Parliament will play in overseeing any measures that are put into effect under the retained EU regulation as amended by these regulations. This is clearly set out in Article 7A. It explains that any such measures must be contained within a statutory instrument and describes the nature of parliamentary involvement, where Parliament can annul measures in some circumstances and can vote on the regulations in others.
This statutory instrument is subject to the affirmative resolution procedure because it transfers to the Secretary of State a power to legislate that currently sits with the European Commission. That is a power to put export restrictions into effect in Great Britain in certain circumstances. I commend the regulations to the Committee.
Lord Grimstone of Boscobel (Con)
My Lords, I thank Members for their contributions and will respond as fully as I can in the time available. I am conscious that I will not be able to do full justice to the many points that have been raised which, as always, show the great expertise of your Lordships. If I may, I will write to those noble Lords whose questions I am not able to do justice to during my closing statement.
As I have set out in my opening remarks, the SI makes technical amendments to the retained domestic version of the EU common rules for exports regulations. This will ensure that the retained EU regulation can apply effectively at the end of the implementation period. Many of the complexities to which noble Lords have referred are not as a consequence of this SI, which in a sense has quite a simple purpose; they relate to the complexity of the underlying regulations of the EU. I repeat that the purpose of this SI is to make technical changes to those regulations to bring them into line with our leaving the European Union.
This is a debate about the application of the retained EU regulation as amended in relation to Great Britain. I completely understand the many and varied points that noble Lords have made about Northern Ireland, but for those who want additional information about Northern Ireland, I direct colleagues to the Government’s Command Paper, The UK’s Approach to the Northern Ireland Protocol. This sets out that any procedures that are necessary to comply with any international obligations provided for under Article 6(1) will apply only to—and I stress this—minimal volumes of relevant trade. I take this opportunity to make absolutely clear that any such processes put in place in these very specific cases will have negligible implications for trade as a whole. An important point is that they will be administered by UK authorities, which will, of course, retain operational responsibility. I assure noble Lords that these authorities are able to, and will, exercise their discretion as appropriate.
To make it clear to noble Lords, I repeat that, as I set out in my opening remarks, Article 6(1) of the Northern Ireland protocol makes it clear that nothing—I repeat, nothing—shall fetter the movement of goods from Northern Ireland to Great Britain, except in order to fulfil an international obligation. The EU regulation is not used to fulfil international obligations, and therefore will not fetter the movement of goods from Northern Ireland to Great Britain. The noble Lord, Lord Wallace, asked where on earth these international obligations come from. They come about if the UK agrees to enter into any such international obligation and agrees to be bound by them.
Since the regime in Northern Ireland will be unchanged after the end of the implementation period, the United Kingdom Government will still be able to implement export restrictions in Northern Ireland in circumstances permitted by Article 10 of the EU regulation; that is where they are required on grounds of public policy, or for the protection of health and life for humans. These restrictions under Article 10 are very specific in this effect, and noble Lords can see those in the original regulation.
I ought to again make it clear that this SI is compatible with the United Kingdom Internal Market Bill. The objective of the United Kingdom Internal Market Bill is to protect the highly integrated market across the United Kingdom, guaranteeing that, as EU law falls away at the end of the year, companies will be able to continue to trade unhindered in every part of the United Kingdom. This SI will ensure that the retained EU regulations on the common rules for exports will operate effectively in Great Britain from the end of the implementation period. As I have described, in no way will trade be fettered between Northern Ireland and Great Britain, except in circumstances not covered by these regulations, and therefore perhaps not appropriate for us to debate in great detail today.
A number of noble Lords, including the noble Lords, Lord Blencathra and Lord Purvis of Tweed, asked how the role of Parliament operates and, in particular, about the differences between Articles 5 and 6. As I said earlier, the role of Parliament is as set out in Article 7A in the regulations. The difference between why that article is subject to the negative resolution procedures and Article 6 is subject to the affirmative procedure relates directly to the urgency of the situation in front of us.
Let me explain further. If the Secretary of State implements a measure under Article 5 of the retained EU-authorised regulation as amended, that export authorisation can only be implemented for up to six weeks to prevent a critical situation arising on account of a shortage of essential products or to remedy such a situation. That seems appropriate if the urgency is such that this has to be brought forward quickly and last for only six weeks. A negative resolution SI, which can be annulled in either House of Parliament, is therefore appropriate. If the Secretary of State implements measures under Article 6 of the retained EU regulation as amended, they can take a wider range of forms and are not time-limited. In those circumstances, because of the greater scan, scope and longevity of such regulations, they would be set out in a “made affirmative” SI, which must be voted on within 40 days of being made.
The noble Lord, Lord Purvis, asked about the information that would be available at that time and drew a contrast with the Commission report under the EU regulation. In both cases, further information would be provided to the Houses of Parliament as part of an Explanatory Memorandum. I can assure noble Lords, particularly the noble Lord, Lord Wallace of Saltaire, that in coming to their conclusions about the necessity for the use of regulations, the Government would take account of the whole UK and, if necessary, any views expressed by the devolved Administrations.
I should stress that we are not rushing or looking to find ways in which to use these powers. The Government have been clear throughout the Covid-19 pandemic that the use of export restrictions around the world should as far as possible be limited. No one would be happier than us if we found that we never had the need to use these powers. The Prime Minister underlined that view recently in a speech to the United Nations, in which he urged countries to lift export controls on Covid-critical products wherever possible. The Government have no plans at present to bring forward further export restrictions under this retained UK regulation.
The Government do not apply any restrictions on medicines under these regulations and do not intend to do so. I can reassure the noble Lord, Lord Wallace of Saltaire, on those points. The UK applies certain limited restrictions on the export of medicines designed for UK patients on the UK market where there is a risk of a shortage in the UK, but those restrictions are made pursuant to the Human Medicines Regulations 2012, which require wholesalers to ensure, as far as possible, that the needs of patients in the UK are met.
In conclusion, my noble friend Lord Blencathra asked about Project Defend, as it is commonly known. The coronavirus pandemic has demonstrated the importance of resilient supply chains to ensure the continued flow of critical goods and to keep global trade moving. We are working closely across the Government to analyse UK supply chains for a range of critical goods, excluding food, and to help define strategies to ensure that the UK has resilient and diverse critical supply chains.
My noble friend Lord Trenchard asked about how this SI would technically operate in conjunction with the retained EU regulation. It amends the retained EU regulation, which then passes into UK law in this amended form if noble Lords agree to these regulations today.
I have my eye on the clock and am conscious that I have not done full justice to the detailed points raised by noble Lords. As I said at the beginning of my wind-up, I will write to them and place a copy of my reply in the Library. On that basis, I commend these regulations to the Committee.
Motion agreed.
The Deputy Chairman of Committees (Baroness Barker) (LD)
The Grand Committee stands adjourned until 6.15 pm. I remind noble Lords to sanitise their desks and chairs when leaving the Room.