Trade Bill

Debate between Lord Grantchester and Lord Purvis of Tweed

Committee: 3rd sitting (Hansard): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I declare my interests as stated in the register. Tariff-rate quotas have been set for mostly agricultural products, to allow some countries preferential access to the EU single market below the tariff rate set for those products. The UK does not have its own national tariffs but merely shares in the amounts set for all member states across the EU. This is most important to the agricultural sector and industry, as it sets out the quantity that comes into the EU at preferred competitive rates, bearing in mind that products still have to be compliant with the relevant EU standards.

On exit, these TRQs at EU level will need to be split between the remaining states and the UK. The proposal agreed between the EU and UK is that the product quota should be split according to the relevant usage or consumption of the product in the UK and EU. The difficulty arises on the specific quantities, as there is a lack of data to inform the division. Although there is detailed information on the point of arrival of products into the EU, there is not the same detail regarding where the product may be consumed. The EU and UK, in bilateral discussions, have agreed to adjust the schedules without triggering renegotiations under Article XXVIII of GATT. This was submitted in October 2017. However, it was almost immediately challenged by the large exporting countries, such as the US, Brazil, Australia and New Zealand.

I cannot overstress how critical this issue is to British agriculture and the nation’s consumers. It is revealing that so many glib answers are often proposed in the current impasse over Brexit. From a lack of information and knowledge, poor judgments are made, leading to a lack of appreciation of the consequences. I am sure I do not need to explain to the Minister the delicate balances in the market, where price volatility results from small changes in supply, quite irrespective of the huge discrepancies in tariffs under preferential treatment and other third countries that have allowed managed change to take place.

To give one example, Britain’s sheep exports, with large implications for the Welsh economy, comprise more than one-third of production, with almost all of it destined for Europe. This trade is virtually one-way, with minimal imports from the EU. Without agreement, and a smooth transition, tariffs to the EU would render this trade immediately uneconomic. The seriousness of the issue was underlined by a joint letter from the British Retail Consortium, signed by the chief executives of all the major supermarkets—Sainsbury’s, Asda, M&S and Waitrose, among others—only two days ago. The BRC stated that it wanted to maintain the same tariff-rate quotas. The wording of the amendment signifies that it is a probing amendment to ask the Government to provide some certainty in their answers to the challenges, and their approach to the future.

Amendment 54, in the name of the noble Lord, Lord Purvis, calls for a report to Parliament, and I look forward to the noble Lord’s remarks. The concern is that access to the home market—and, hence, the vibrancy and well-being of agriculture and the rural economy—will be sacrificed as a pawn in negotiations in rolling over trade deals to be ratified by third countries in the future, especially in relation to the interests of other industries. The Committee has already debated the fear that standards would also be under jeopardy. It is imperative that the UK Government continue to maintain the present TRQs. I beg to move.

[Lord Purvis of Tweed]

My Lords, Amendment 54 is in my name. As the noble Lord, Lord Grantchester, pointed out, the division of the tariff-rate quotas is of great importance to parts of the UK economy, especially the rural economy, but it is also important to our trading partners. Some likely trading partners when it comes to agriculture have already stated their concern about the agreement the UK and EU have reached.

I admit that this amendment was prepared with the expectation that there would be more than a month between the Act coming into force and exit day. That was a naive hope. I thought that the Government might have been able to have this legislation on the statute book long before, but with the delays that have occurred I admit that one month would be tight between the Act receiving Royal Assent and potential exit day. Nevertheless, the core element of the amendment, which seeks to get clarity on the UK’s position, is important. Clarity is sought in two areas: first, what our current position is regarding discussions with third countries about the division of the tariff-rate quotas; and, secondly, how the Government would consider the impact of these decisions on our economy.

As the noble Lord, Lord Grantchester, indicated, agreement was reached between the UK and the EU in 2017. He was right that that provoked immediate objections. The countries considered that the changes proposed by the EU and the UK for the division of the tariff-rate quotas amounted to more than simple rectification of the schedules. The European Parliament said in a report to its own committee that the changes had,

“involved less flexibility and market access for their exporters”.

Its stated objections to the EU-UK quota subdivision, saying that,

“other concessions should compensate for the loss of market access”.

These are the questions that the European Parliament is asking the Commission about what concessions there are likely to be. The questions the European Parliament is asking the Commission are ones that this Parliament should be asking our Government.

The expectation might be that we will want to trade on certified WTO schedules. As the Minister said previously, it is not necessary for us to trade under these, but they are desirable because they mean that the negotiations, on which concessions could be provided, are not ongoing, and that concessions have either been provided and then accepted and settled, or that there are ongoing negotiations in which we have to monitor what concessions are being offered to secure the prize of certification. My amendment asks for a report from the Government to be clear about what that position is.

As with the debate we had on the previous group, I was able to secure information about what had happened at the WTO market access committee in October, and the position of the other countries and of the EU. I was able to see the text of a Council regulation, EC32/2000—the proposal to modify the implementation of the tariff-rate quotas bound in the GATT. The discussions that took place between the Council and the European Parliament have been reported on. On 14 November the Parliament decided to enter into inter-institutional negotiations based on the Council’s report on its proposal. In none of that has it even been suggested that there could be a role for our Parliament in discussing with the Government the potential impacts of the concessions offered to secure approval for our TRQ division. The provisional agreement reached with the Council at the Parliament on 10 December to discuss what the European Union’s position would be is in stark contrast to this place, where there have been no equivalent proceedings with the British Government.

If we are not going to be involved as the European Parliament is on the European side, at the very least we need a report on what the likely impact will be after the Bill becomes an Act, if it does so. On that basis, I hope the Government will accept that we need much more information not only about the current standpoint but, similar to what the European Commission has provided to the European Parliament, on what the likely impact will be.