Prohibition on Quantitative Restrictions (EU Exit) Regulations 2020
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Lord Callanan
That the Grand Committee do consider the Prohibition on Quantitative Restrictions (EU Exit) Regulations 2020.
Relevant document: 35th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Department for Business, Energy and Industrial Strategy (Lord Callanan) (Con)
My Lords, these draft regulations were laid before the House on 8 November 2020. As I am sure noble Lords will recognise, it is important that we have full sovereignty over our regulatory regime for goods at the end of the transition period. This SI will help ensure that we are not challenged if we choose to diverge from EU regulations by removing retained EU treaty rights.
At the end of the transition period, EU treaty rights on the movement of goods stemming from Articles 34 to 36 of the Treaty on the Functioning of the European Union will be retained in UK law unless they are removed by this SI. The rights flowing from these EU treaty articles prohibit the imposition of quantitative restrictions or equivalent measures, such as regulatory requirements, on imports and exports by member states, unless justified under Article 36. This is to encourage the free movement of goods within the single market.
The UK will have its own regulatory regimes after the end of the transition period and the EU will not be treating UK goods as it would goods from a member state. Therefore, these provisions are no longer appropriate to retain, and could impede our ability to diverge from EU goods regulation in future. This is because the provisions prohibit quantitative restrictions or equivalent measures on imports and exports, meaning that divergence from EU regulatory requirements could result in a challenge from a business or importer if it resulted in being a barrier to placing its goods on the market in Great Britain.
Of course, I understand that there is a lot of interest in precisely what these new regulatory arrangements will be. First, I cannot emphasise enough to noble Lords that this instrument does not introduce any of these new regulatory arrangements or any divergence. Any measures relating to specific regulatory arrangements are being dealt with in separate regulations; nor does this instrument deal with other matters, such as the Northern Ireland protocol or the UK internal market, which I know are also of great interest to noble Lords.
I will, however, say a few words on the new regulatory arrangements. Different goods are currently subject to different regulatory regimes. Cosmetics, food products, machinery, et cetera, are all dealt with in their own way, and that will continue to be the case. So I cannot give a detailed overview here, especially as these matters are not themselves the subject of the regulations before the Committee. What I can say is that by and large the regulatory requirements for goods as of 1 January 2020 will remain largely the same as they are now.
The main changes for the end of the transition period are to reflect the fact that we are no longer part of the single market; for example, the CE marking, which denotes compliance with EU rules, will be replaced by the UKCA marking, which shows that a good meets UK rules and was tested, where needed, by a UK-recognised body. This Committee debated that SI a week or so ago. Of course, any further regulatory changes will be a matter for future consultation and future legislation as appropriate.
The Government have published detailed guidance on these new regulatory arrangements and published guidance on the movement of goods between Northern Ireland and the UK. While many of the new arrangements will not apply in Northern Ireland from 1 January next year due to the Northern Ireland protocol, the Government have been categorical in our commitment to unfettered access to the rest of the UK market for Northern Ireland goods. But, again, I stress that these are matters that fall outside the scope of the regulations before your Lordships.
I return to what this SI does. It will remove the aforementioned EU treaty rights so that they no longer apply in England, Scotland or Wales. As some areas of goods fall under devolved competence, my officials have engaged regularly with officials from the Welsh and Scottish Governments. The Government have written to counterparts in Wales and Scotland to formally seek their consent to lay this SI, which they have confirmed. This SI does not cover Northern Ireland as the treaty rights in question will continue to apply in Northern Ireland as of 1 January 2021 by virtue of the protocol.
As I have already mentioned, these regulations will not result in any changes for businesses. However, they will give businesses greater certainty that when UK rules change they will not be rolled back after legal challenges based on treaty articles that no longer make sense once we have left the EU. A stable statute book is clearly in the best interests of businesses.
To be clear, this SI is not a pre-condition for divergence. As of 1 January, Parliament will have the ability to introduce new regulations—or not, as the case may be. Instead, is it about removing potential grounds for legal challenge based on retained treaty articles that have no place in our statute book once we have regained our full independence.
In conclusion, this SI will remove the rights flowing from Articles 34 to 36 of the Treaty on the Functioning of the European Union—reciprocal rights between member states that no longer have a place in a post-exit independent UK. This will protect our ability to regulate goods as we see fit and ensure that potential challenges do not require us to keep in line with EU regulations.
I reassure noble Lords that we have engaged with the devolved Administrations in Scotland and Wales on the changes that this SI makes, have ensured that they have been kept informed of its progress and have obtained their consent.
The safety of individuals, families and communities is a top priority for the Government. As I am sure noble Lords will recognise, it is essential that the UK is able to protect its sovereignty and that we can make our own rules to protect consumers and to prevent unsafe and non-compliant products entering the UK market. I commend these regulations to the Committee. I beg to move.
Lord Callanan (Con)
I thank the noble Baroness, Lady Ritchie, and the noble Lord, Lord Bassam, for their consideration of this statutory instrument and their valuable contributions and questions—I shall endeavour to deal with as many of them as possible.
I have set out today the importance of this SI and the importance of having full sovereignty over our regulatory regime for goods at the end of the transition period. I emphasise that this SI is not a precondition for divergence; nor does it introduce any divergence from our current rules. By supporting the SI, we will ensure that we are not faced with legal challenges that seek to keep us in line with EU regulations.
To recap: treaty rights provisions prohibit quantitative restrictions or equivalent measures on imports and exports. Therefore, future divergence from EU regulatory requirements could result in a challenge from a business or importer if it led to a barrier being created to placing their goods on the market in Great Britain. This SI will ensure that we have the freedom to regulate goods in Great Britain as we see fit, along with considering the impact on businesses and consumers, while ensuring that the UK product safety system remains among the strongest in the world.
As advised, these regulations will not result in any changes for businesses. However, they will give businesses greater certainty that, if UK rules change, they will not be rolled back after legal challenges based on treaty articles that no longer make sense once we have left the EU.
The noble Baroness, Lady Ritchie, raised the important subject of working with the devolved Administrations. I repeat what I said in my introduction: my officials have had a number of informal meetings with officials from the Governments of Scotland, Wales and Northern Ireland, all individually, on this SI. Officials have also hosted regular meetings with officials from the devolved Administrations to discuss progress in negotiations and the regulatory requirements for goods at the end of the transition period. I say again that consent to this regulation was given by all the devolved Administrations.
The noble Baroness also asked about goods moving from Northern Ireland to Great Britain. We are laying this legislation to ensure that we do not face challenges from manufacturers or importers if in Great Britain we decide to change our regulation of goods in a way that creates barriers to trade with the EU. This does not mean that there will be barriers for goods flowing from Northern Ireland into Great Britain. We have laid legislation to prevent such barriers, including the United Kingdom Internal Market Bill and the unfettered access legislation. This SI will not undo any of those protections. I shall write to both noble Lords on the definition of Northern Ireland qualifying goods.
The noble Lord, Lord Bassam, asked about the protection of rights. The vast majority of these changes will take place regardless of the agreement that we have reached with the European Union on our future trading relationship so that businesses can be confident that their plans and preparations to date have not been wasted.
We also recognise the impact that the pandemic will have had on industry’s ability to prepare. For that reason, we are taking a pragmatic and flexible approach to using some of our retained powers as a sovereign nation to allow businesses time to adjust.
The noble Lord also asked about legislative time. More than 150 SIs required by the end of the transition period have already been laid. Good progress is being made and we remain confident that all required SIs will be in force by the end of the transition period.
The noble Lord and the noble Baroness, Lady Ritchie, also asked about the important subject of business readiness. We are listening to businesses and recognise that they have faced many challenges, particularly from Covid-19. For goods with the new UKCA marking, we are permitting the use of the CE marking for goods in scope of the SI until 1 January 2022 as long as Great Britain and EU technical requirements remain the same. There are easements allowing the UKCA marking to be affixed to a label on a product or on a document accompanying the product until 31 December 2022, and we are allowing new importers of products from the EEA to set out their details on a document accompanying their products until 31 December 2022. Those are all ways in which we are helping to ease the burden on business.
Since the summer, the Government have also been providing support through an ambitious series of business readiness events. My department has published a range of guidance. However, I stress once again that this SI does not introduce any changes for businesses.
The UK will have its own regulatory regime after the end of the transition period and the EU will not treat UK goods as it would goods from a member state. Therefore, the provisions to which this SI relates are no longer appropriate to retain and could impede our ability to diverge from EU goods regulation in future. I commend the regulations to the Committee.