Trade Bill

Debate between Lord Hannay of Chiswick and Lord Purvis of Tweed

Report: 1st sitting: House of Lords
Wednesday 6th March 2019 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, like the noble Lord, Lord Stevenson, we welcome the Minister’s comments from the Dispatch Box. This is an occasion when parliamentary persistence has proved effective. We started this process when the Government had indicated that the Bill would be about only the existing continuity agreements and we made a very strong case, across all parts of the House, that it should also signal a direction of travel which, in many respects, would create precedent. It is on that basis that we on these Benches welcome the Command Paper that the Minister has published and her willingness to engage with and meet opposition parties and Members from across the House.

One reason this has been so important is that it has been a consistent practice of this Government, in relation to continuity trade agreements or starting discussions with countries about future trading relationships, to delude themselves that it will be easy, then deny that there is a problem when it is highlighted that they are difficult. Then they demur when frustrated officials leak information that allows us to glean the reality from the media. Then, unfortunately, on occasions, they deflect the problem, saying that is not their problem or responsibility; it is other countries that are not lifting the burden, or the European Union that is not being forthcoming with its position on a future relationship. We want to be in a position where we can put all that behind us and move on to a platform where we have much greater clarity as to what the trading relationships, and the role of Parliament and the devolved Administrations in their oversight and approval, will be. I welcome the Command Paper as the start of that.

To quote the noble Baroness, Lady Manzoor, from Question Time, this can be only the start of the process, and this is the platform on which we will seek to build. This is not the end. In that spirit, I hope the Government will be very favourable to Amendment 12 later today to ensure that that platform can be built on in the most constructive manner. On that basis, I look forward to hearing the Minister’s comments.

[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.

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[Lord Hannay of Chiswick]

My Lords, this amendment is in the names of the noble Lords, Lord Stevenson and Lord Purvis, and my own. I do not wish to appear disobliging towards the Command Paper the Government tabled last week and to which the Minister referred this afternoon before we started Report. It contains some useful material but unfortunately it falls short of providing a proper role for Parliament in three important respects, and thus fails to bring this Parliament anywhere close to the degree of mandating, oversight and approval that will prevail in some of the main trade partners with whom we will, in the future, be negotiating if and when we become responsible for a new, independent trade policy—most significantly, of course, the European Union and the United States.

The first defect is the Government’s refusal to put any of these provisions that they referred to in the Command Paper into the Bill. The degree of mandating and oversight will remain entirely in the Government’s gift on every occasion in which we set out to negotiate a major free trade agreement. Their willingness to give Parliament a say is clearly absent when one considers the consultation the Government have been holding on proposed agreements with the United States, Australia and New Zealand. No doubt having a public consultation, which they are engaged in at the moment, is entirely valuable and appropriate, but there has been no involvement at all by either House of Parliament in that consultation. That, surely, is a sad defect.

A second defect is that there is no provision at all in the Command Paper for mandating ahead of, and oversight during, the negotiations for parliamentary bodies—the word “mandate” never appears at all. The EU will be seeking a mandate from the European Parliament before negotiating with us and the European Parliament will no doubt have oversight throughout the negotiations. In the US, the Administration have just tabled their proposals for an agreement with us and these will undoubtedly be subject to detailed scrutiny and consideration by both Houses of Congress. Why should this Parliament not receive the same provisions and opportunities?

The third defect lies in the process of parliamentary approval for any agreement once the negotiations have been successfully concluded. The CRaG procedure, which is the Government’s preference, provides only for a negative procedure, which I suggest is inadequate for the very complex and sensitive issues that free trade agreements now entail. It is a much weaker instrument than the affirmative procedure proposed in this amendment. I hope that the Government will reflect carefully on how to remedy those three major defects. Without such remedies, the Bill clearly falls short of what is required in a period when trade negotiations have, quite rightly, become the object of careful parliamentary scrutiny and approval all across the world at every stage. Why should this Parliament be left on the sidelines?

[Lord Purvis of Tweed]

My Lords, I am very grateful to the noble Lords, Lord Hannay and Lord Stevenson, for working collectively to condense a number of amendments in Committee into one composite amendment. It captures the two broad areas that were left outstanding in the Government’s Command Paper, the presentation of which I and others welcomed. The first area explores how the Government see the prerogative power of the Executive taken forward in a new, more complex world. The second concerns the devolved Administrations. Both areas are deficient in the Command Paper, as has been said already.

To illustrate the first point, I was born in 1974, when there were four regional trade agreements in the world. In 1992, there were 24 and in 2019 there are 471. That shows the massive growth in breadth and complexity of trade agreements that have been notified with the WTO. Nine been notified to the WTO during the tortuous process of our consideration of this Bill, which shows how trade moves fast but also widely and with growing complexity. Therefore, reverting, in effect, back to a consideration of the prerogative power before our membership of the EU is not really sufficient. It is why the International Chamber of Commerce, in a meeting I chaired, was so disappointed with the British Government seeking,

“to address the issue of 21st-century trade with 19th-century constitutional practices”.

This amendment seeks to address this fundamentally.

There is no direct replication of the relationship between the Commission, the Council and the European Parliament. The European Parliament has formally notified and engaged from the start of a trade negotiation 12 times. We are seeking to maintain this as the same form of platform of relationship, and if there is no direct read-across from what we have at the moment we will seek to use that as an opportunity to enhance the role of Parliament, rather than enhance the role of the Executive. That is why the first element seeks a role for Parliament in supporting the mandate or the negotiating objectives. The Government may say they have an issue with the word “mandate”: we are just taking the word of the Prime Minister when she sought and secured, “the mandate I need” when it came to negotiations with the European Union recently. When that passed the House of Commons she said she was,

“armed with a fresh mandate”.

This is the Prime Minister’s language and if the Government are opposed to it, they need to explain why the Prime Minister’s language is wrong.

On the second area, we have changed the use of the prerogative power over recent years. Canada still deploys troops without parliamentary approval—we do not. We have moved to fixed-term Parliaments. We have changed, adopted and modernised the prerogative power and that is why it is appropriate that Parliament has a role in setting the negotiating objectives and mandate and also has a vote on the final ratification.

My final point concerns consultation with the devolved Administrations. This formal statutory underpinning of consultation was sorely lacking in the Command Paper. It is welcome that there will be a process through the concordat, that there will be a forum and that there will be ongoing discussions with Ministers, but just to give the current example of the Faroe Islands trade agreement, the draft text was not shared and the level of consultation with devolved Ministers was not appropriate. We seek to address those two areas in this amendment, with consultation with the devolved Administrations, an updating and a more appropriate role for Parliament. I hope that the Government will see this in the spirit in which it was tabled—that we wish to build on the Command Paper and improve it—and that they will accept it.

Trade Bill

Debate between Lord Hannay of Chiswick and Lord Purvis of Tweed

Committee: 4th sitting (Hansard): House of Lords
Monday 4th February 2019 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, I support the amendment in the names of the noble Lords, Lord Stevenson and Lord Purvis, and the noble Lord, Lord Bowness, who asked me to mention that he is unable to be here but that he continues to support the amendments. The noble Lord, Lord Stevenson, introduced the amendments admirably and explained very clearly why those parts of the Taxation (Cross-border Trade) Act which we seek to change are either unnecessary or damaging. He is absolutely right to say that the least important is probably the European Research Group amendment passed at a very late stage in the Commons, which we had no chance to intervene on effectively when it came through this House because it was a money Bill.

However, one part of it makes collection of customs duties possible only if the European Union collects customs duties and gives them to us. The original idea was that we would collect duties on behalf of the European Union; this was an essential part of the—now lost in the mists of time and buried deep under the soil—Chequers plan. The European Research Group amendment, frankly, neutered the Chequers plan, but as the European Union was never going to accept it anyway and made it clear at Salzburg and later that it would not accept it, there seems no point leaving it on the statute book.

The last point made by the noble Lord, Lord Stevenson, relating to Amendment 80 about VAT is actually extremely important. Anyone who seriously believes that preventing the British Government maintaining a VAT union, if you would like to call it that—a system that enables trade across borders between us and the European Union without the need for extremely elaborate VAT calculations, inspections, payments and so on—and doing away with that which exists now and going back to where we were before that existed will not put a huge amount of friction on our trade simply does not understand the realities. The VAT aspect is just as important as the tariff aspect and is separate from it. Unfortunately, the European Research Group—in its usual extraordinarily constructive way—has managed to insert something here that would be really damaging to our interests if it is sustained when we go into negotiations with the European Union about future trade arrangements. The only sensible thing to do—I hope the Government will give careful thought to this—is to get rid of this now and take it out of the Taxation (Cross-border Trade) Act.

We cannot be certain now what the Government and the European Union will do when negotiating our future trade arrangements. The Government are quite right to say they cannot guarantee how that will go. But they can remove this great ball and chain around their ankle, put there by the European Research Group, which would be really damaging to us if it ever came to be a central part of our future trade relationship. To say that relationship will be frictionless if the VAT aspect is not dealt with is just a bad joke, frankly, if you have to have VAT inspections, payments and all that sort of thing on goods that are passing. After all, the VAT levels are different in every member state, and the current system enables us to live with that without slowing down or impeding trade; that would go. So I really hope the Government—if not tonight, at least before Report—could say that they will take out that amendment, which should never have been allowed in. This is the single most important amendment in this group of four.

[Lord Purvis of Tweed]

My Lords, I am very happy to have my name attached to these amendments. It shows the Government there is a degree of cross-party consensus that it is important that these aspects—which, as the noble Lord, Lord Stevenson said, did not get the level of scrutiny they deserved in the Commons—get scrutiny in Parliament. This is after the event, because in effect we are scrutinising legislation, but there is no harm in a bit of post-legislative scrutiny of the taxation Act. In an exchange the Minister and I had during the very brief proceedings in this House on the Taxation (Cross-border Trade) Bill, the Minister said there would be ample opportunities for scrutiny, such as during the upcoming Trade Bill, so we are taking him at his word and offering the Government a chance to give a full-throated defence of the ERG amendments passed in the Commons.

As the noble Lord, Lord Hannay, said, there are perhaps some unintended consequences of these amendments that we now need to properly scrutinise. It is an extraordinary position we find ourselves in where Members of the Government’s party moved amendments to the Government’s Bill that would in effect render the Government’s then policy on the facilitated customs arrangement largely inoperable. Now those same Members are meeting the same Government today to breathe new life into the very systems of a facilitated customs arrangement that they themselves rendered largely inoperable by their amendments. I was struggling for an analogy on the way to the Chamber this afternoon. I could not find one as ridiculous as the position we now find ourselves in. If it is the purpose of the so-called alternative arrangements working group that is now meeting to try to find solutions to the problems that they themselves created, I do not think that any alternative arrangements will come out of this working group.

The ERG amendments now sit most uncomfortably with the process under way, so it is right that we give them proper scrutiny. The Government say one of the amendments they accepted—that there would need to be a stand-alone statute for any customs arrangement agreed with the European Union—is not necessary for any other trade agreements. If I understand it correctly, the positon of the Government is that the free trade agreement with the European Union would undergo a CRaG process, which is an affirmative process to be approved because there is a treaty, but a secondary customs arrangement that would come with that would have to have a stand-alone statute. Why? What is the Government’s rationale for that? In the Commons, the Government simply said they thought it would be appropriate that there would be a stand-alone statute. I do not understand why, so I hope the Government might be able to tell us why that would be the case.

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[Lord Purvis of Tweed]

My Lords, I am happy to contribute to the successful realisation of the noble Lord’s ambition to have an amendment on commencement.

I want to make two final comments because I know the Committee has been working hard in offering scrutiny to the Bill, but before I do so I wish to thank the Ministers, and indeed the whole team, who have tried to answer on what was on some occasions an impossible situation. Earlier the noble Lord, Lord Bates, aptly commented on how fast things have been moving, and I think the Ministers have had a degree of sympathy from the Committee. However, this is serious. As the noble Baroness, Lady Neville-Rolfe, said, businesses need urgency as they operate. They need urgency in their day-to-day practices but also when it comes to knowing what the Government’s position is.

In advance of the next stage, if there is one, it is helpful that all the usual channels are here. I do not think the Committee needs any reminding of the decision of this House, very clearly stated, that greater information is needed on both the Government’s policy and intentions on how it sees trade agreements being put in place, as well as the relationship with the devolved Administrations. If that is not forthcoming, the House has sent a clear signal that there will not be a Report stage. However, on the basis that there will be, the information that is needed on the current position on the intended trade agreements needs to be forthcoming. There also needs to be clarity on—if we are going to be crashing out on WTO rules—the position of operating on non-certified WTO rules.

The relationship with the devolved Administrations, while a little clearer, needs more fleshing out. This is not just about constitutional courtesies with the Scottish and Welsh Parliaments and Northern Ireland authorities. Trade agreements could disproportionately affect parts of the United Kingdom, which will affect livelihoods and public services in those areas. They need to be not just consulted, but involved. Contrary to the Government simply wanting continuity agreements for trading relationships, we also want to see the rolling over of the same amount of parliamentary scrutiny that the European Parliament would afford trade agreements, which this Parliament will be denied unless this Bill is amended.

Finally, we need to be looking forward to the future. The noble Lord, Lord Lansley, and others, have made very constructive contributions. If we are to have a customs arrangement—which, if it covers the majority of our trade with our biggest market, will be a customs union—then the clarity about how that will be conducted will be important. While we are at the end of the Committee stage, I hope that the Minister has received strong signals that there are still questions that need to be answered. Those answers need to be forthcoming before this House will consider the Report stage.

[Lord Hannay of Chiswick]

My Lords, I am not sure that the noble Lord, Lord Stevenson, did me a great favour by alleging that I had partial paternity of this amendment, but I will leave that to one side. It is a very simple amendment, setting in statute the view that has been expressed twice by this House, by massive majorities, and once in the House of Commons last week: that leaving the European Union on 29 March by default without an agreement should be excluded. That is what this amendment proposes to do. It does not prevent this Act, as it would be, coming into effect in the event of the meaningful process being successfully completed in the other place. Nor does it do so if the other place should, in the extraordinarily unlikely circumstances, actually decide that we should leave without a deal. However, it rules out leaving by default as a condition for the entry into force of the provisions in this Act. No more needs to be said, and I have a feeling that we may wish to debate that rather more decisively on Report.