European Union (Future Relationship) Act 2020 (References to the Trade and Cooperation Agreement) Regulations 2021

Wednesday 21st July 2021

(3 days, 7 hours ago)

Grand Committee

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Cabinet Office

Considered in Grand Committee

Moved by

Lord True Portrait Lord True
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That the Grand Committee do consider the European Union (Future Relationship) Act 2020 (References to the Trade and Cooperation Agreement) Regulations 2021.

Relevant document: 7th Report from the Secondary Legislation Scrutiny Committee

Lord True Portrait The Minister of State, Cabinet Office (Lord True) (Con) [V]
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My Lords, I beg to move that the Grand Committee do consider the draft European Union (Future Relationship) Act 2020 (References to the Trade and Cooperation Agreement) Regulations 2021, which were laid before the House on 16 June. Of course, I am grateful for the opportunity to discuss the regulations presented before the House, but I apologise again as a Minister that I cannot be present in person as I am currently isolating.

The purpose of this instrument is technical; it does not introduce any new policy. Rather, the main purpose is to update references made in the European Union (Future Relationship) Act so that they match the legally revised trade and co-operation agreement, helping to ensure a clear and coherent statute book.

The trade and co-operation agreement, along with the security of information agreement, and the nuclear co-operation agreement, was provisionally applied, as noble Lords will remember, from 2300 on 31 December 2020, in time for the end of the transition period and pending ratification.

In the UK, it was necessary to pass the future relationship Act, which implemented the agreements in domestic law before provisional application was possible. As I am sure noble Lords will recall, it received Royal Assent on 31 December last year. It was our expectation that the European Union would ratify in turn, in line with its own procedures, the treaty ratification in the European Parliament and the Council. The original deadline for provisional application was 28 February. The Government subsequently agreed to the EU’s request to extend the original period of provisional application to 30 April 2021 to give it more time to complete its processes. We are pleased that the European Union completed these processes before the end of April, and the agreements therefore entered into force on 1 May.

Due to the short period of time available between concluding negotiations and the end of the transition period, it was not possible to complete the necessary legal revision process before the agreements were provisionally applied on 31 December. Instead, the agreements have undergone a final process of legal revision since provisional application. The legal revision process provided for by Article FINPROV.9, now Article 780, of the trade and co-operation agreement resulted in typographical and other errors in the agreement being corrected, and the articles being renumbered from Article 1 to Article 783. I underline for your Lordships, however, that the substance and policy content of the agreement has not changed.

As a consequence of this revision to the trade and co-operation agreement, some of the corresponding numbering and references in the European Union (Future Relationship) Act must be updated, which is why this statutory instrument has been drafted and laid. If the instrument is not made, some references in the European Union (Future Relationship) Act, including numbering and annexes, will not match what is contained in the legally revised agreement. It could be the cause of undue confusion for businesses and citizens, potentially making it difficult for them to ascertain what their legal status is and what their legal obligations are. It is therefore crucial that we provide clarity so that businesses and citizens can pursue the opportunities of our agreement with confidence.

This statutory instrument was laid by my noble friend Lord Frost, following the affirmative procedure in exercise of the powers provided for in the future relationship Act. These powers allow Ministers to make amendments that they consider appropriate in pursuit of coherence and clarity following the legal revision process envisaged by the trade and co-operation agreement. The main changes to the European Union (Future Relationship) Act as a result of this instrument are the renumbering of the articles and the correction of cross-references to the TCA in the Act. For example in Section 8(1)(a) of the Act, Article LAW.PRUM.15 will now become Article 537 to reflect the legally revised version of the trade and co-operation agreement. Similarly, in Section 14(1)(a) of the Act, Article TBT.9 now becomes Article 96. I can assure noble Lords that I do not intend to go through all the examples, but they are set out in the instrument.

I can confirm that there was engagement with the devolved Administrations prior to the laying of this instrument, and they are content. I take this opportunity to note my gratitude to the devolved Administrations for their constructive collaboration on this matter.

I hope therefore that noble Lords can agree with me that these draft regulations perform a simple but valuable role in helping to ensure certainty and clarity in the UK’s statute book as we take full advantage of the opportunities available to us in the new era. I beg to move.

Baroness Wheatcroft Portrait Baroness Wheatcroft (CB)
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My Lords, I thank the Minister for introducing these regulations in such a straightforward way, and I thank him even more for not going into any more examples of the effect that they will have. Given the fact that they moved from 780 articles to 783, there was clearly scope for him to have at least filled up his full allocation of time with examples that we really do not need. As he said, this is a technical regulation, and I am sure that noble Lords will support it. However, I fear that it will not provide the clarity and do away with the confusion that exists in matters of the TCA that the Minister referred to. I will highlight a couple of issues.

First, on the product conformity rules, at the moment, the UK largely recognises the CE designation on UK and EU products but will not continue doing that after January 2022. Can the Minister assure me that businesses are being made fully aware of the fact that, come January 2022, products bearing the CE designation will not be acceptable in the UK and will have to have the UK designation for safety requirements upon them?

Secondly, I will go into the issue of the Northern Ireland protocol and the how it affects UK trade and the TCA. When that TCA was introduced, the British Government, in a statement updated this month, said that the TCA, agreed in December,

“changes the basis of our relationship with our European neighbours from EU law to free trade and friendly cooperation.”

Today we are told by the Minister, the noble Lord, Lord Frost, that we are seeing a relationship which is punctuated with legal challenges, characterised by disagreement and mistrust. That sounds rather different from what was envisaged when we went into this business.

Now that we have embarked on a new attempt to try to restructure what was always destined for failure—the Northern Ireland protocol—and negotiations are going to be extremely difficult, does the Minister believe the time may have arrived for us to change negotiators and have a fresh start for a fresh relationship that might be based on trust rather than the mistrust which the noble Lord, Lord Frost, says exists at the moment? Might he also bear in mind, when those renegotiations take place, something the German Government said on 5 July of this year when referring to the trade and co-operation agreement? They said that

“Although the European Union would have wished it, unfortunately the agreement does not contain any provisions on cooperation in the sphere of foreign and security policy.”

That seems a significant lack, and I know that others in the House agree. Might the Minister consider whether this is the opportunity to try, in a spirit of co-operation and trust, to reinstitute co-operation in the sphere of foreign and security policy?

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering (Con)
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I am grateful for the opportunity to speak to the regulation before us and to follow my noble friend Lady Wheatcroft. I thank my noble friend Lord True for introducing the regulation and I sympathise with him having to isolate in what is meant to be freedom week, which has not gone quite according to how everyone had hoped.

I take the starting point that my noble friend set out, that this is purely technical in nature and that it came about from the fact that the process of correcting and checking all the cross-references for consistency usually takes place before signature. However, I wonder whether, for example, if there has been an extension of the grace period already for goods travelling not just from Great Britain to Northern Ireland but also in some cases goods travelling from the UK to the whole of the EU and the reverse, there will be any consequential changes if that grace period is either extended again or if further changes are made? As I understand it, that goes to the heart of what was agreed in the trade and co-operation agreement. The sooner we make the changes, the better, but I would just like to know that there are no further consequential changes in part.

I am hearing a lot from the food industry that it is particularly concerned that we do not seem to be on track yet to making the changes by the deadline—I honestly cannot remember whether it is 1 October or 31 October. So I would like confirmation from my noble friend that either the grace period is going to be extended again or we are going to have a revision to the trade and co-operation agreement to try to soften the blow.

The figures that I have from the food industry were issued in the third week of June. They make the point that the reduction in trade is due not just to the fact that we have left the EU but to the ongoing impacts of the Covid-19 pandemic. The fact that a number of Ministers and others are having to isolate makes the point, not just that there is a shortage of lorry drivers already but that lorry drivers and deliveries are being severely challenged at this time because of the further requirements to isolate because of the ping pandemic as opposed to the Covid pandemic.

Does my noble friend share the concern that all the UK’s top 10 products exported to the EU have fallen significantly in value in the period 2019-21? Whisky has dropped by 32.3%, chocolate—although I do not think many of us will be eating chocolate in the present heat—has dropped by 36.9%, lamb and mutton have dropped by the lesser amount of 14.3% and dairy products have been severely impacted. I would be interested to see whether the figures are expected to revive, if my noble friend has access to the figures, in the third quarter in the run-up to September.

I share the concerns expressed most eloquently by my noble friend Lady Wheatcroft regarding the ongoing procedures under the Northern Ireland protocol. Coupled with our reduction in trade with the EU, the pandemic and the shortage of lorry drivers, a mood is arising that we are going to have a very difficult run-up to Christmas. I say that as I have the honour to be the honorary president of the United Kingdom Warehousing Association, whose members are being impacted by the fact that they do not have enough drivers to empty the supplies that they have in their warehousing. Obviously, perishable foods are a particular concern, given the heat at this time of year.

I take the point made by my noble friend in introducing this instrument so thoroughly and taking great pains to say that this is purely technical. I just want to be convinced that there have not been any consequential changes to the initial grace period—as I imagine there would have been, since it was enshrined pretty definitely that the grace period was meant to end on, I think, 1 March or 1 April—or to be told if there will be any consequential changes to the trade and co-operation agreement through an extension of the grace period from October. With those remarks, I welcome this opportunity to address the changes set out in the instrument.

Lord Wigley Portrait Lord Wigley (PC) [V]
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My Lords, I am delighted to follow the noble Baroness, Lady McIntosh. I too have had some representations from the food industry, which has expressed the concerns that she has outlined. From what the Minister has said, and from the background notes available to us, this order represents minor and technical changes to instruments that have already been discussed and endorsed. If that is so, there is hardly scope for an extended debate.

I have three questions. First, did the errors and inconsistencies that we are correcting today come to light purely as a consequence of the Government’s operation of them, or did they come to the Government’s attention through some outside body, company or trading organisation that might have found themselves in difficulties arising from the original wording? The Minister referred to the danger that if we do not pass the order then there could be uncertainty. Might there already have been some uncertainty facing business as a consequence of the wording as it stands?

Secondly, if that is so, did the original wording cause any material negative impact on any commercial organisation? Indeed, has such an eventuality lead to any court action or any dispute with the EU authorities or any commercial body within the EU, or could it conceivably do so in future?

Thirdly, to the extent that these regulations have particular significance for Northern Ireland—I noted the points made by the noble Baroness, Lady Wheatcroft, a moment ago—have the Government discussed the workings of these regulations in detail with the devolved Government in Northern Ireland? Have they asked them whether any aspect of the original order, beyond what we are discussing, caused problems for Northern Ireland? If so, might we expect to have further amending orders, perhaps on more substantive issues, when we return in the autumn, and is that not inevitable in the wake of today's Statement by Brandon Lewis? Will we not have to visit all this again if there is progress on a comprehensive veterinary agreement with the EU?

Finally, I was delighted to understand from the Minister’s comments that the Government have, in this instance, consulted with the devolved regimes and that they have been positive in their responses. I would say in passing that, if they are consulted in advance, then their responses will almost always be positive and warm. They only get stroppy when they feel they have been left out of the loop. Can the Minister clarify whether, as a matter of routine, the Government always give all devolved Governments an opportunity to comment on proposed orders of this sort in case there is some unforeseen aspect which impacts on their devolved responsibilities? Having said that, I am happy to support the order.

Lord Berkeley of Knighton Portrait Lord Berkeley of Knighton (CB) [V]
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My Lords, I am very pleased to follow my friend Dafydd, the noble Lord, Lord Wigley. We move from one part of Wales to another for what I am about to say, which will be mercifully brief. I, too, thank the Minister for not bombarding us with every single change. I am happy with the process he has outlined.

We have heard a bit from previous speakers about drops in trade. We have heard about co-operation and trust, coherence and clarity; these are things we simply have to build with the EU so that our various sectors can prosper. Although this is slightly off the point, I hope the Minister will give me a moment of indulgence to mention that in terms of trade, as he knows, musicians have been hit appallingly hard and there is a little lack of clarity about how we are going to overcome this.

The noble Lord, Lord Frost, with whom I have had private and public meetings, and the noble Baroness, Lady Barran, at the DCMS, have explained that we will try to find bilateral agreements with countries. I am extremely grateful that they are doing that, but we were hoping that this could be sorted out at least at a TCA level, because the problem for people building a tour in Europe is that, if all or an awful lot of the countries are different, it is an absolute nightmare. I bring this back to trade now. People are seeing their livelihoods pulled from underneath them. I make that point, but I am happy for the Minister to proceed as he outlines.

Lord Wallace of Saltaire Portrait Lord Wallace of Saltaire (LD) [V]
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My Lords, this takes me back to when I first started to work on the European Community. The EU is a legal construct; clauses, subclauses, chapters and treaties all matter a great deal—usually in French and English, with others to be carefully compared.

I remind the Minister that, when I started to work on this, Margret Thatcher, the then Conservative Prime Minister, was pushing hard to create a single market by removing non-tariff barriers, which she rightly saw as bigger barriers to trade than tariffs. All Conservative Ministers learned and well understood this. I find it very sad that so many Conservatives and current Ministers appear to have forgotten that a mere 25 to 30 years later.

One of the many things that this Government have declared and then had to go back on is that Brexit is done. We are learning that Brexit is far from done; there is a great deal more to be sorted out. That is of course partly because of the chaotic way in which the TCA was negotiated at the last minute against the deadline—in the clear hope from the Prime Minister, Boris Johnson, that this would leave very little time for Parliament to scrutinise or find holes in it.

Now we have a technical SI on the negative basis to correct some aspects of it. Can the Minister confirm whether he expects there to be further SIs that will deal with minor—or indeed major—amendments to the TCA and, if so, may I warmly suggest that they should in all cases be affirmative SIs? We are trying to redesign our relationship with the European Union and we all have an interest in that relationship not becoming a hostile and ill-tempered one. If we are to achieve that, however, it requires a good deal more to be sorted out, including foreign and security policy co-operation, as the noble Baroness, Lady Wheatcroft, said.

In this respect, the very 19th-century view of the noble Lord, Lord Frost, of sovereignty as much more fundamental than international law is clearly a barrier to reasonable negotiation and reasonable arrangements. We all understand that the greatest difficulty with the Northern Ireland protocol is that, for ideological reasons, the British Government have refused to negotiate a phytosanitary agreement—or veterinary agreement, as the noble Lord, Lord Wigley, called it—on the grounds that this would impinge on British sovereignty, not that the British Government have said, so far, that we wish in any way to move away from existing European regulations. That seems to me to be a triumph of ideology over national interest—and, incidentally, it begins to threaten the union and peace in Northern Ireland.

I have some sympathy for the Minister in his position. Honest Conservatives now working for a chaotic Government—I hope not quite as chaotic as Dominic Cummings claims—must find themselves in some difficulty defending the position of a Government who often deny responsibility for what they negotiated less than three years ago. The Government must take responsibility for their future relations, however much they may wish to tilt towards the Pacific. I have to say that I was very amused to discover the other day that the Government are planning to send fishery protection boats to the Pacific in order to enforce fishery protection there, while we are so short of fishery protection vessels in the UK that we could do with another dozen or two here.

There are a number of illogical elements in this Government, which I am sure the Minister quietly regrets as he loyally continues to serve. Can he assure us that further amendments to the TCA, which we unavoidably expect, will be presented, whenever possible, as affirmative SIs and debated on the Floor of the Chamber? We all have strong interests in this relationship becoming a stable and friendly one, and we are some distance from that yet.

Baroness Hayter of Kentish Town Portrait Baroness Hayter of Kentish Town (Lab) [V]
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I too thank the Minister for such a succinct introduction—although in this case it possibly was not difficult as the SI is only about changing the numbering of paragraphs. When we remember that old refrain, “We’re here because we’re here because we’re here”, we can respond “We’re here to renumber”. But at least, unlike the troops, we can ask, “Why are we here to renumber?” The answer, of course, has been suggested by other speakers: the treaty had not been “scrubbed” when the Bill went through.

So anxious was the Prime Minister to hit his self-imposed date that nothing else mattered—not legal certainty nor careful drafting, nor clarity for businesses, their advisers and even enforcers working on behalf of the Government. Indeed, the Government have admitted that the document was signed too late to allow the lawyers to take a proper look at it. That is the cause of us all being here today.

The Minister may recall that we warned again and again of the discomfort of business, which was told to prepare for the end of transition when it did not know what the rules would be. The final hurried signing and implementing of the TCA—no matter how good its content—meant that mistakes and gaps were the order of the day. The errors being rectified at this moment are slight and inconsequential, and the Minister will be pleased to know that they give us no problem, but we fervently hope that future trade deals will not be signed off in this cavalier way. Parliament and stakeholders, as well as lawyers, must have time to scrutinise before treaties are signed and ratified.

This Monday, I heard the noble Lord, Lord Grimstone, reassure our International Agreements Committee that future FTAs would be given plenty of time for that committee, and the new Trade and Agriculture Commission, to interrogate the texts. Perhaps the Minister would like to repeat that commitment for the sake of this Committee, so that we can be confident that all the legal checks will in future take place before any ratification of a treaty. Could he also indicate whether he foresees the proposed parliamentary partnership assembly being able to review how negotiations with third countries interact with the TCA? He might, incidentally, also nudge his colleague, the noble Lord, Lord Frost, about getting a move on in establishing the civil society forum and the domestic advisory group, so that they are able to consider exactly such issues.

It is interesting that the question was raised whether this, albeit very small, technical and necessary change was noticed by the Government’s own lawyers or by outsiders, be they business or other users of the particular paragraphs. It is always that outside pair of eyes that makes the better deal. However, for the moment, we are very content with this SI and assume it will go through smoothly when it gets to the Chamber, presumably tomorrow or when we come back.

Lord True Portrait Lord True (Con) [V]
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My Lords, the computer is trying to remove the answer to one of your Lordships’ questions—if it does, I shall have to reply in writing.

I am very grateful to all noble Lords for their contributions. As I set out, the purpose of the instrument is to help ensure that the statute book works coherently and effectually following the legal revision of the trade and co-operation agreement. I will not get drawn into a detailed debate about historical periods; indeed, it being a hot afternoon—and being I think in a minority on this Committee in the views I took on the events of 2016 to 2019—I excised from my brief all political points.

I will not go into them, except that I must respond to my noble friend Lady Wheatcroft’s comments on my noble friend Lord Frost. I repudiate those comments and disagree with her that the country would be better served by another person engaging in negotiations at this time. My noble friend Lord Frost, as a civil servant and as a Minister, has been and continues to be an outstanding servant of his country. I also submit that anyone who was present in the House today or who followed its proceedings could not but agree with the measured, restrained and realistic tone in which he presented the Government’s proposals to the House. They were everything one would expect of a diplomat and Minister.

The protocol is not strictly germane to these arguments, but my noble friend has laid out proposals before the House which we wish to negotiate and consider in good faith with the European Union. It is idle to deny that the protocol has caused problems in Northern Ireland; it has done so—and it behoves all of us in a spirit of comradeship, amity and diplomatic endeavour together with responsible institutions, such as our partners in the EU, the Government of the Republic of Ireland and ourselves, to seek to solve the problems that we all agree have arisen to help the good people of Northern Ireland. We wish for the best possible relations with the European Union. We have long enjoyed those, and I pray for the day, if they are not as satisfactory as we would wish—although I do not say that they are not satisfactory—when good relations between us should ever thrive.

A broader question was raised about exports and imports. That is an important question, and the Government are monitoring closely, as I can assure my noble friend Lady McIntosh, the movements and changes in trade, in exports and imports. It is obviously particularly complex at the moment because of the complicating factors of the Covid emergency, which have distorted so many things in international life over the last few months. However, I assure my noble friend that we have monitored those things extremely closely and will continue to do so.

I was asked by the noble Baroness, Lady Wheatcroft, about CE markings. My computer has not been able to provide me with the answer, but I absolutely undertake to the noble Baroness to get that answer to her and copy that to other members of your Lordships’ committee.

I was asked about touring musicians—another broader issue. I dealt with this matter when responding on the European Union in your Lordships’ House. It is a matter of concern and one which the Government have taken and did take very seriously. As the noble Lord will know, we made proposals to the European Union that were not acceptable at the time. At the first UK-EU partnership council on 9 June, the UK raised the issues faced by touring performers and noted work under way with member states, as he says, on trying to ease or clarify the barriers presented by visa and work permit requirements. I promise him that we will continue to discuss these issues with all member states to find solutions to this work for our great creative industries. It is a matter of concern, and I assure him that that is the case.

On the question of affirmatives, it is always a bad thing for a Minister to give an absolute categorical guarantee if he is not entirely sure of his ground. What I am sure of is that the Government believe that decisions are made stronger through scrutiny and debate, and in that respect I respond positively to what the noble Baroness, Lady Hayter, said. We are committed to facilitating scrutiny wherever possible.

In this case, the FR Act requires the Government to use the affirmative procedure. Because the power which the Government are using, as today, to make the SI is inherent in that Act and because the SI is being made after IP completion date and amends primary legislation, it is necessary for such a procedure to be affirmative. In reply to the noble Lord, Lord Wallace of Saltaire, my assumption, if not my undertaking, is that because of that legal position, if any further regulations of this kind were to be brought forward—our current expectation is that we are not aware of further, similar statutory instruments in the pipeline—my expectation, as well as that of Parliament, is that they would come forward as affirmatives under the Act.

I was asked whether there had been any complaints or court action as a result of the numbering difficulties—the noble Lord, Lord Wigley, raised that. I am not aware of any. Obviously, the Act made provision to enable this kind of renumbering to happen. If I am wrong on that score, I will correct the issue and let him and other noble Lords know, but I am not aware of such proposals in the pipeline.

I accept the general construct of the remarks from the noble Baroness, Lady Hayter. Parliamentary scrutiny is and will be important going forward in our relations with the EU. I think it is right to place on the record—this is not only my personal view—that the Government are very appreciative of input from the scrutiny committees in both Houses as we consider what shape scrutiny should take going forward. I am informed that our officials are having fruitful discussions about this with committee officials in both Houses, and I am sure that that is the case. Obviously, arrangements for long-term scrutiny must be proportionate and focused on areas where the United Kingdom has direct legal obligations under the new relationship. However, the Government will facilitate transparencies of the withdrawal agreement and TCA governance structures to the extent that we are able.

With regard to consultation with the devolved Administrations, I referred to that in my opening remarks. The DAs were engaged on this. The Government wish to have a constructive relationship, which is why the Prime Minister called the Covid summit after the elections in the devolved Administrations—my right honourable friend the Chancellor of the Duchy of Lancaster is a conspicuous example of this; noble Lords will have heard him before your Lordships’ committee yesterday. In this particular case, the Northern Ireland Executive were indeed involved and confirmed that they were content with the SI. Because of its technical content their formal consent was not required, but they were certainly fully involved.

I apologise for not being able to give a detailed answer on the CE marks to my noble friend Lady Wheatcroft. I hope I have not missed anything out. I passed over a few references to Mr Cummings—it is always tempting to mention him to me. As I say, it is a rather hot afternoon and I decline to be drawn on that subject. I hope this has been at least some kind of response to your Lordships. I am grateful for all the points raised, and we will reply to those that I mentioned which we have not replied to. I thank all noble Lords for their contributions and appreciate all those who have come to improve our discussion today. I commend the regulations to the Committee.

Motion agreed.

Sitting suspended.