Trade Bill

Lord Lansley Excerpts

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

[Lord Lansley (Con)]

My Lords, if I may add something to this group of amendments, first, I say well done to the noble Lord, Lord McNicol. He passed the first test: one of the Opposition’s central jobs is to know which subjects should be raised in Committee and make sure that they are raised. He has done us a service by doing exactly that.

Turning to these two amendments, neither is practical as drafted, but we can probably leave that to one side and focus on what we want to achieve on rules of origin. The first reason it is not mentioned in detail in this Bill is that Section 17 of the Taxation (Cross-border Trade) Act effectively puts the rules of origin requirements into law. They are the same, as far as I can see, as would apply generically to rules of origin under the revised Kyoto convention. The country of origin must be identified as that country or territory in which the last substantial process took place. But that does not really answer the point.

This is where we come to the existing international trade agreements that we might roll over. They will have been constructed on the basis that any processing that took place in the United Kingdom was processing within the European Union. We cannot assume that, when these international agreements are rolled over—whenever that will be, but a couple of years from now, I hope—products originating in the United Kingdom will be defined as including processing inside the European Union. We will have become a third-party country. That is unless, in the form that they rolled over, the countries with which these agreements have been made, and with which we enter into our future agreement, accept that origination should be cumulated between us and the European Union.

If I am asking a question of my noble friend the Minister it is: can we look to cumulation between the United Kingdom and the European Union as being a feature of the rollover agreements, such that, from the business point of view, what they have understood to be the situation prior to exit day becomes the situation after exit day? That is essentially what we are looking for.

Declaring an interest, 28 years ago I was deputy director-general of the British Chambers of Commerce. That movement was and is responsible for the issuing of certificates of origin, so it understands this rather well. Of course, that applies outside the European Union at the moment. If we are in a customs union, all those problems go away, but we had that debate on day two of Committee.

If we must deal with this issue, I say to my noble friend that I hope the Government’s discussions with the British Chambers of Commerce have been productive. I know that two years ago, the movement said that, given the nature of international supply chains, ensuring that a “Made in Britain” badge can continue to be displayed proudly on products originating in this country will require us to re-enter some complex definitions of the relationship between international supply chains and origination in the United Kingdom. It also said that it was happy to work with government to look at how that might be achieved in future. I hope that this will come forward in our discussions on Report to demonstrate that the Government have an idea of what future trade agreements might say about origination to ensure that the “Made in Britain” scheme is not frustrated in circumstances where we think of a product as British.

[Baroness McIntosh of Pickering (Con)]

My Lords, I add my congratulations to the noble Lord, Lord McNicol, on taking his place and on his performance today. Given his history, I am sure that negotiating procedures in your Lordships’ House will be less turbulent than in other places where he has worked. I thank both him and the noble Lord, Lord Purvis, for giving us the opportunity to, in my case, put questions to the Minister and probe the issue.

In particular, what will be the position in the interim period of our leaving the European Union? My noble friend the Minister pointed out in our debate— on Monday, I think—that there would be a period for these agreements, having been initialled, to be signed and approved by the relevant Parliaments. My understanding is that if we leave under World Trade Organization rules, agreements in this interim period will be on the basis of non-discrimination. So, if we, as a third country—my noble friend Lord Lansley correctly identified that we would be—chose to extend agreements to current European Union members and said, as many noble Lords have suggested, that we wished to impose zero tariffs, those agreements would have to be extended on a reciprocal, non-discriminatory basis. Is my understanding correct? In an interim period of what might be one or two years before such agreements are rolled over, whatever our preference, whatever we offered to our existing European partners would have to be offered to every other country with which we wished to trade, on the basis of non-discrimination. I do not think we have grasped that point. Obviously, it would be helpful to understand the implications for our trading arrangements.

There is deep concern among the farming community that tariffs imposed could be as high as 40% for certain products and 60% for lamb, at a time when we are exporting more meat than we ever have, historically. That would hit our producers particularly hard. It is causing real hardship in the hills because many of our farmers do not know whether to produce lamb; the supply of lamb to the home market could dry up. We would therefore import more lamb, beef and pork at a time when we should be increasing our exports there. I simply want to take this opportunity to seek answers to those queries from my noble friend.

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[Baroness Fairhead]

I hoped and believed that I had addressed that question. The answer is yes: that certification would continue as it currently does. That is the information I have but if the situation is any different, I will write to the noble Lord.

[Lord Lansley]

I hope my noble friend will forgive me for interrupting. Just so that we are absolutely clear on which question we are having answered, it is about reciprocity. If, in relation to these agreements, we in this country are treating EU content as UK content and having it accepted as such, the question that we are looking to have answered is: will the EU’s continuing agreement with that same third-party country mean that UK content is treated as EU content for the purposes of its origination?

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[Baroness Fairhead]

I stress one more time that this legislation is not about no deal. It is about making sure that we have the capability and powers to implement, whatever happens. Plan A is for a deal and the clauses in the Bill aim to achieve the powers and make sure that we can put them into effect. We have to be prepared for no deal. I reiterate that it is not the desired outcome, but we have to make sure that the Bill has the ability to cover both.

I hope that the statement I have made, and my answers to questions, have provided clarification and some reassurance to the Committee, and I therefore respectfully ask the noble Lord to withdraw—

[Lord Lansley]

If my noble friend will permit me, I wanted to ask one question. I know we are not debating future agreements but the manner in which rules of origin are to be established in UK legislation in future. We should work with the chamber of commerce movement to try to make that work with the business community as well.

My noble friend might also like to note that Clause 6, which was new Clause 17 on Report in the other place, was an amendment tabled by Dr Phillip Lee, the Conservative Member for Bracknell.

[Baroness Fairhead]

I thank my noble friend for that clarification. I should have said that it was not a government amendment. But I take the point.

I meant to respond to that question. We are trying to do whatever we can to provide help to SMEs and other organisations to help trade. That includes working with them on procedures and practices which will reduce the cost of, and barriers to, trade. I confirm that we are actively engaging with the chambers. If it is not on this particular point, I will take that back to the department and make sure that we include this too.

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[Viscount Younger of Leckie]

I thank the noble Lord for that. It does indeed take us back to the debate we had last week, and I hope he remembers that I gave certain reassurances on that point. What I can say—without having the details in front of me—is that, as he knows, there is ongoing dialogue with the devolved Administrations to ensure that they are kept fully in touch with what we are doing. That will be the general tenor of the ongoing discussions as we look forward to FTAs.

I would like to pick up on some of the remarks made by the noble Lord, Lord Bilimoria, in the last debate as they are relevant to this point. He asked how our approach differs from the role of the European Parliament in EU trade negotiations. He may well know this but I shall spell it out: the European Parliament’s role operates in relation to EU trade policy. We are offering scrutiny for the UK Parliament at every stage of the process in a way that is appropriate and proportionate to the UK constitutional context. In the UK, the power to make treaties is a power held by government, but the context of the negotiations will be different. The European Commission negotiates free trade agreements representing the interests of the 28 member states. It is given the mandate to do so by the Council, and final agreements are approved by the European Parliament and the Council before they can come into force. UK-only free trade agreements will be negotiated by the elected Government in the best interests of the UK. The Ministers responsible for the negotiations are directly accountable to Parliament.

[Lord Lansley]

My noble friend might also reflect that there is some truth in what the noble Lord, Lord Kerr of Kinlochard, reminded us of in previous debates. American negotiators often find there is significant benefit in having what I think they describe as “Congress reserve” in negotiations—what we might call “parliamentary reserve”. That sense of engagement with Parliament during the course of negotiations is important in itself. What happened last night in another place might give anybody engaged in such negotiations pause for thought; it is important that they know during the negotiations that they can take Parliament with them.

[Viscount Younger of Leckie]

I said at the beginning that this is likely to be a wide-ranging debate; my noble friend’s remarks will indeed be fed into the processes being considered at the moment.

I would like to address a question raised by the noble Lord, Lord Stevenson, who asked what access parliamentarians would have to negotiating texts. We take seriously our commitment to keeping Parliament apprised of the Government’s negotiating intentions. That is for the purposes not just of transmitting information but of inviting scrutiny and allowing Parliament and its committees to take informed views. While we support Parliament’s important scrutiny role, Ministers have a specific responsibility, which Parliament has endorsed, not to release information that could undermine our negotiating position. On transparency more generally, I reiterate our commitment to a transparent approach. We are developing proposals for the release of updates on negotiations; we will bring these forward shortly.

Let me say more about the consultation process, an issue raised by the noble Lord, Lord Stevenson. The amendments also seek to ensure wide consultation on FTAs, which is a good idea; indeed, that is the approach the Government are taking. We conducted one of the largest consultation exercises ever undertaken for the new FTAs we are considering with partners without an existing FTA with the EU—the US, New Zealand and Australia—and for our potential accession to CPTPP. This included a 14-week public consultation open to all businesses, individuals and other organisations in the UK and abroad, and 12 outreach events throughout the UK, including in each of the devolved nations. We have also conducted ongoing engagement with stakeholders on trade policy, including “town hall” style briefings, roundtables with different groups of stakeholders, regular stakeholder briefings and webinars designed to engage with smaller and regional stakeholders.

I would also like to touch on impact assessments. I do not propose to address—