Trade Bill
Lord Stevenson of Balmacara ExcerptsWednesday 30th January 2019
(5 years, 3 months ago)
Lords ChamberRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 127-III Third marshalled list for Committee (PDF) - (28 Jan 2019)
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.
Lord Stevenson of Balmacara (Lab)
My Lords, what is now Clause 6 was an amendment introduced by a Conservative Back-Bencher in the other place. Did I hear the Minister correctly when she said that it was still the Government’s contemplation that this might be amendable? I point out to her, in case she is in any doubt, that this would require a government amendment, which I have not seen on the Marshalled List so far. Is she saying that this is something they are actively considering for Report?
Baroness Fairhead
The Government do not endorse the wording of the amendment, and consider that the wording has legal and technical difficulties, so we are reflecting on what should be done.
“Trade agreement impact assessments
(1) Before the end of the initial five year period after an international trade agreement has been implemented under section 2 of this Act, the Secretary of State shall lay before both Houses of Parliament—(a) an assessment of the qualitative and quantitative impact of the agreement on—(i) the economy, broken down by the different parts of the United Kingdom and different regions of England,(ii) the environment,(iii) human rights standards,(iv) labour standards, and(v) individuals with protected characteristics under section 4 of the Equalities Act 2010,in the United Kingdom; and(b) an assessment of the qualitative and quantitative impact of the proposed trade agreement on—(i) the economy,(ii) the environment,(iii) human rights standards,(iv) labour standards, and(v) individuals with protected characteristics under section 4 of the Equalities Act 2010,in any other state which is a proposed signatory to the agreement.(2) Before the end of the initial five year period after an international trade agreement has been implemented under section 2 of this Act, the Secretary of State shall lay before both Houses of Parliament an assessment of the extent to which the provisions of the agreement conflict with, or are consistent with—(a) the provisions of international treaties ratified by the United Kingdom;(b) the provisions of the Sustainable Development Goals adopted by the United Nations General Assembly on 25 September 2015;(c) the provisions of the United Nations Guiding Principles on Business and Human Rights;(d) domestic human rights law;(e) international human rights law and international humanitarian law, including but not limited to—(i) the International Convention on the Elimination of All Forms of Racial Discrimination,(ii) the International Covenant on Civil and Political Rights,(iii) the International Covenant on Economic, Social and Cultural Rights,(iv) the Convention on the Elimination of All Forms of Discrimination against Women,(v) the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment, (vi) the International Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families,(vii) the International Convention for the Protection of All Persons from Enforced Disappearance,(viii) the Convention on the Rights of Persons with Disabilities, and (ix) the Convention on the Rights of the Child;(f) the United Kingdom’s obligations on workers’ rights and labour standards as established by the United Kingdom’s commitments under the International Labour Organisation’s fundamental conventions, including but not limited to the Declaration on Fundamental Rights at Work;(g) obligations relating to animal sentience by which the United Kingdom is bound, or any principles relating to animal sentience to which the United Kingdom adheres, and any provision in domestic law (including retained EU law) relating to animal welfare standards and the welfare of animals in the production of food;(h) the principle of eliminating poverty;(i) the United Kingdom’s environmental obligations in international law and as established by, but not limited to—(i) the Paris Agreement adopted under the United Nations Framework Convention on Climate Change,(ii) the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and(iii) the Convention on Biological Diversity, including the Cartagena Protocol on Biosafety;(j) offences under section 1 of the Modern Slavery Act 2015 (slavery, servitude and forced or compulsory labour);(k) the sovereignty of Parliament;(l) the legal authority of UK courts;(m) the rule of law; and(n) the principle of equality before the law.(3) The Secretary of State must make arrangements for the assessment to be laid before the Scottish Parliament, the National Assembly for Wales and the Northern Ireland Assembly.(4) In preparing the assessment under subsection (1), the Secretary of State shall consult—(a) the Scottish Ministers, the First Minister or the Lord Advocate,(b) the Welsh Ministers, and(c) a Northern Ireland devolved authority.”
Lord Stevenson of Balmacara
My Lords, we move from future prospects and problems around definitions and what other partners will do to a matter which will lie very much in the hands of the Government as we go forward. As and when trade agreements become the responsibility of this Parliament, there need to be procedures for establishing how and on what basis these are agreed, but also, as is the subject of Amendment 32, for reviewing our progress in carrying these forward.
The amendment is rather full. It contains a long list of issues so it is perhaps not a probing amendment, but I hope the Minister will accept that we would be open to further discussion on the wording. It is meant to set out broadly all the issues that we think need to come into play on this issue but the detail itself could be subject to discussion.
I hope all Members of the Committee will agree that we need to have a system under which we have confidence that any trade negotiations taking place on behalf of the people of this country are subject to effective periodic review of the issues involved, what the process will be and how many dimensions are involved in the consultations and engagement with the devolved Assemblies and Parliaments, as well as the involvement of those affected by the negotiations, such as consumers, those who work in the industries concerned and the companies themselves.
Of course, there is an issue about what impact these trade agreements will have regionally, not just across the national regions but within England in particular, with variations that will need to be picked up. We need to make sure that Parliament, in assessing how these trade deals are done, has access to all the information that is required.
The whole process is set out in Amendment 32. Amendment 81, in the name of my noble friend Lord McNicol—he did so well with his previous amendment that we have given him the afternoon off to recover, so I am speaking for him on this amendment; we are working together, of course, as noble Lords would expect—sets out in more detail the question of independence for the responsible body. There are many candidates for that. We do not need to go into it, but it is important that there is separation between those who set up and agree trade agreements and those who review them for the benefit of the public interest.
This issue can be developed across various activities. I think there will be contributions from those who will wish to see more stress placed on the social rather than the economic issues. The Government are involved in international treaties that will come into play on this. There is a great deal to be said about how you would do this, with what process and everything else. The amendment attempts to set that up. I beg to move.
Baroness Neville-Rolfe (Con)
My Lords, I shall speak to Amendment 64 in my name in this group. I also welcome the noble Lord, Lord McNicol of West Kilbride, to the joys of tabling amendments. They provide the ability to lead scrutiny and discussion of significance in a very freewheeling way. I was also going to say “succinct”, except that the previous group, on rules of origin, took nearly an hour.
My amendment is inspired by Amendment 32, which was just moved by the noble Lord, Lord Stevenson. However, having studied other amendments to the Bill and the Government’s reaction to them, I have opted for a simpler formula in the hope that this might attract support across the Committee. It provides for a review, after five years, by the Secretary of State of the impact and effectiveness of each international trade agreement under Clause 2, but it deliberately omits the long list of criteria in Amendment 32. That is because I believe in simplicity. I do not believe we should lay down detailed areas that the review should cover, worthy though they may be. As we know, policy priorities change over time and the review should be conducted from a contemporary perspective.
I pray in aid a precedent that the noble Lord, Lord Stevenson, will remember well: the report on innovation and economic growth provided for under the Intellectual Property Act 2014. I believe that was the result of an amendment that he tabled during the passage of that Act. As a Minister, I found the process of producing the report every year very helpful, as did the Intellectual Property Office. In fact, its CEO confirmed that to me only last week.
I have some doubts about the wisdom of setting up a special compliance monitoring agency, as proposed in Amendment 81, which is also in this group. It seems a big stick, given the Bill’s scope. However, on a separate point, compliance would appear to be in the purview of a general review of effectiveness. I have provided for such a review to be laid before the devolved Parliaments, to which the noble Lord attached importance, because I believe this would be a good way to keep them up to date, ensuring that the reviewers, looking back, think about their interests as well as English and UK interests. Such a review would also cover SMEs, which we discussed in another long debate last week. I look forward to hearing from my noble friend the Minister.
Baroness Fairhead
I am happy to confirm that.
I turn to Amendment 64. Trade continuity agreements, which Clause 2 would be used to implement, simply continue the effects of existing EU trade agreements. Many of the benefits are already being reaped by UK businesses. I hope that my noble friend can take comfort from my reassurance in my responses to Amendments 32 and 52, and I would like to reassure her further by confirming that any impact assessments published at the time the agreements we are transitioning came into force remain valid. On the international agreements referenced by my noble friend, I can confirm that we have not changed our commitment to them. The process of exiting the EU will not alter the UK’s commitment to upholding either international laws or our international commitments. These include commitments on climate change and the sustainable development goals.
The noble Baroness, Lady Thornton, and my noble friend Lady Hooper both raised issues in a number of areas such as human rights, labour and environmental standards around the world. In an earlier debate in Committee we confirmed that we will proudly continue to comply with those international obligations. In response to the comment of the noble Baroness, Lady Thornton, on monitoring by independent bodies, I can confirm that that too will continue.
I turn now to Amendment 81, tabled by the noble Lord, Lord McNicol. Let me be clear that the Government will continue to ensure that Parliament and the devolved Administrations play a crucial role in the scrutiny of the UK’s trade agreements. We are in discussions at both official and ministerial level on this.
Specifically in relation to compliance, I must stress that the UK will not bring into force any international agreement without first ensuring that it is fully compliant with its obligations. Where we are transitioning existing ratified EU trade agreements, we have been complying with those agreements as a member of the EU. We are working hard to ensure that we continue to be compliant after leaving the EU, for example by using the powers in the European Union (Withdrawal) Act to make UK law operable without reliance on the European Communities Act 1972. Any secondary legislation necessary to ensure that we are in compliance will be made before ratification, following the usual parliamentary processes. This means that we will start from a point of being in compliance with our agreements. We would expect the same of our international partners. This is simply what is required when it comes to making international treaties.
Normally within trade agreements there are mechanisms for monitoring and reviewing the agreement through bodies such as joint committees. This applies both to our compliance and the compliance of our partner countries. We will of course look to replicate the functions of these existing mechanisms. The noble Lord, Lord Purvis, mentioned that we should make sure that we reflect the regions and the devolved Administrations. Again, I am happy to meet with him to discuss how that can be done. We will operate the mechanisms according to the terms specified in the relevant agreement. These will of course differ by agreement, but we will be accountable for compliance overall. I hope that this reassures the Committee, and I would ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
My Lords, it is pretty much an open secret that amendments of the type we have just spoken to are usually tabled by Oppositions when they have very little to say about a topic. You call for a review and that usually ties up the civil servants for days trying to work out what that is supposed to do. It gets the Minister into a knot and allows you to have a relatively easy passage, especially if the Bill is a bit boring at that particular point. That is not what has happened today, and indeed we have been reminded that it has worked in the past. I recall the discussion during the passage of the Intellectual Property Act and it has worked out well.
There is a case here for thinking really hard about what we want to see happen as a review. I accept absolutely that my amendment is ridiculously overspecified and gold-plated. I am happy to learn from noble Lords who have served as Ministers and those who have experience of this on the other side. We could probably with advantage put together quite a sensible, minimalised amendment which would cover the ground. The Minister spoke about wanting to meet to discuss this; that would be worth while. If we can get sensibility, scale and scope in a reasonable approach, we can make some progress here.
I do not think this can just be left to the passage of time. It is true that the Bill as currently drafted has considerations of reviews, but these were late additions and are not well drafted. We have already noted earlier in Committee that while Clauses 3 and 5 make provision for reports to be provided, Clause 4 provides an opportunity for Ministers to duck out of that; and they deal with the process of agreement, not of review. I therefore think there is a bit of a lacuna here in the Government’s approach. We may be able to resolve it by statements in the House, but there may be a case for having at least something in the Bill to cover it.
Other points were made in this very rich debate. I do not think we need to look too hard—I was going say to the noble Lord, Lord Lilley, but he is not in his place. The EU model, although it exists and operates, is not perfect, and there is already much documentation on how it needs to be improved if it is to be effective. The question of independence is not dealt with in the current drafting of the Bill. I think there is a sense around the Committee of a coming together on this issue. We should take advantage of that—a meeting would be very useful—and I look forward to being able to make some progress on this in a relatively easy way. I beg leave to withdraw the amendment.
“Establishment of Committee on Trade Agreements
(1) A body corporate called the Committee on Trade Agreements is to be established consisting of nine members who are to be drawn both from the members of the House of Commons and from the members of the House of Lords in accordance with the provisions in Schedule (Committee on Trade Agreements).(2) Negotiations towards a free trade agreement may not commence until the Secretary of State has laid a draft negotiating mandate before the Committee and it has been approved by a resolution of that Committee.(3) Prior to considering a resolution approving a mandate relating to the negotiation of a free trade agreement, the Committee must produce a sustainability impact assessment in accordance with the provisions in Schedule (Committee on Trade Agreements). (4) Before either House of Parliament may approve by resolution the text of a proposed trade agreement in accordance with the Constitutional Reform and Governance Act 2010, the Secretary of State must lay the text of the proposed agreement before the Committee and that text must be approved by a resolution of that Committee.(5) Prior to considering a resolution approving the text of a free trade agreement under subsection (4), the Committee must produce a report setting out a recommendation in relation to the ratification of the agreement.(6) The Secretary of State must lay the report produced under subsection (5) before both Houses of Parliament.(7) Schedule (Committee on Trade Agreements) contains further provision about the Committee.(8) In this section, “free trade agreement” refers to any agreement between the United Kingdom and one or more partners that includes components that facilitate the trade of goods, services or intellectual property including but not limited to—(a) Free Trade Agreements (FTA);(b) Interim Association Agreements, Association Agreements (AA);(c) Economic Partnership Agreements (EPA);(d) Interim Partnership Agreements;(e) Stabilisation and Association Agreements (SAA);(f) Global Agreements (GA);(g) Economic Area Agreements (EAA);(h) Cooperation Agreements (CA);(i) Comprehensive Economic and Trade Agreements (CETA);(j) Association Agreements with strong trade component;(k) Transatlantic Trade and Investment Partnerships (TTIP);(l) Investment Protection Agreements.”
Lord Stevenson of Balmacara
My Lords, in moving Amendment 33 I will introduce some of the discussion topics raised by the other amendments in this area. I look forward to the response from the noble Viscount, Lord Younger, who is standing in on this issue. The subject of the amendment is, as previously described by the noble Lord, Lord Hannay, a key—probably the most important—part of the Bill. I take his advice and am happy to try to man up and make sure that I establish the case in the sorts of terms he would like to see. We have also had contributions from the noble Lords, Lord Lilley and Lord Bilimoria, and the noble Baroness, Lady Kramer, which have set out some of the scene, so I do not think we need to go right down to the very basics of it. I would like to focus on some of the principles that are important in trying to assess this issue.
We are talking here about how Parliament and wider civil society get engaged with a process that we in this country have not really had much direct involvement with since 1972 because the function we are talking about—trade—has been a sole competence of the EU. Yes, there have been occasions when issues have come back but, as we heard in earlier discussions, they have not been very detailed and there has not been proper scrutiny. I think there is a general feeling that the procedures set out in the CRaG Act 2010 do not now satisfy those with an interest in this area.
I have eight principles that I think should inform our discussion. These are: how do the Government intend to ensure that formal consultation with external stakeholders, in advance of any negotiation mandate being drawn up, is exercised? How do the Government intend to ensure proper transparency of trade negotiations and negotiating mandates, and what role will Parliament play in that process? How do the Government intend to ensure maximum transparency in advance of those consultations? Obviously, they are constrained to some extent by issues that would be regarded as necessary to be taken under some level of secrecy if they involved security or other issues, but how will that transparency happen? In particular, how will the Government prepare proper impact assessments and make these available to inform the debate?
There is a general question about reviewing reporting on trade agreements after a specified time period, but also in relation to progress—we touched on this earlier, but it is part of a principle that we need to build in from the beginning. How do the Government intend to ensure that parliamentarians are able to access the negotiating texts? Without knowledge of the texts, very little scrutiny can take place. Some texts will be very sensitive, but nevertheless it is important that there is a mechanism under which they can be reviewed and discussed.
What will be the formal process or procedure for the ratification of trade agreements? The current arrangements under CRaG are not satisfactory. What will be the formal procedures for changes that need to be brought forward—not new trade agreements but how, particularly in light of the need for broader discussion and debate, we amend and change agreements found to be deficient, unfair or working badly in relation to any aspect of our economy or our part of the country?
Those are the issues the amendment seeks to open up. Again, it is gold-plated—I accept that—but it is important that we see the full range and depth of the issues raised and I hope to have a good debate around that. I beg to move.
Lord Hannay of Chiswick
I support Amendment 33, about which a great deal was said in the debate on the previous amendment, although some of the contributions more properly belonged to the discussion of this amendment. I have no hesitation whatever in suggesting that this is probably the single most important article in this legislation—except that it is not there, of course, at the moment, but it needs to be there.
Why is it so important? It is because until now the British Parliament has had no clear role in giving mandates or setting out the broad lines under which the Government should negotiate trade agreements, nor has it had any proper system for oversight of them. Possibly that did not matter in the far distant days before we joined the European Union, but it certainly matters now when free trade and other trade deals are, as the Government have said again and again, at the heart of their Brexit strategy. Britain’s ability to negotiate on its own on trade is at the heart of the Government’s pleading to back their deal.
This is really urgent now because the Government have made it urgent by refusing to take no deal off the table. If they took no deal off the table, as the Spelman amendment passed by the House of Commons did last night, we would have time to look at this. However, if no deal remains on the table—and the Prime Minister has said that it does—we have to realise that the Bill we are now discussing may be operational in 60 days’ time on 30 March this year. As currently drafted, the Bill says nothing about approving mandates before the Government can negotiate on trade with a particular country. That is a lacuna which cannot be left unfilled.
When he replies, I would like the noble Viscount the Minister to repeat what the noble Baroness the Minister said: that the Government will table amendments before Report and explain how they believe that Parliament’s authority should be established in the context of an independent trade policy. I agree that it may not be needed on 30 March and we would be mad to leave without a deal on 29 March. But the Government have decided to go on saying that we may and therefore we had better be prepared. I hope the noble Viscount will deal with that point as soon as he starts his response.
The substantive issue at stake relates to the provisions—or lack of them—for parliamentary mandating and oversight of all negotiations with third countries once we are able to conduct them on our own. They are important because without them, if the Bill remains as it is currently drafted, together with the provisions for the approval of international agreements, the only say that Parliament will have will be after the Government have conducted and concluded negotiations and then put before Parliament an up or down, yes or no agreement to what is in them. That is what we call in this House, when we are talking about statutory instruments, the nuclear option. It would be absurd if we went into the conduct of an independent trade policy with nothing for Parliament except the nuclear option. What does the nuclear option mean if it is ever deployed? It means that the Government would in good faith have negotiated with a third country—reached agreement with it, settled all the tariff details and the non-tariff barriers—and then the deal gets rejected. How much negotiating credibility would we have left after that? Zero.
Lord Stevenson of Balmacara
My Lords, I am grateful to the Minister for his extensive response. He has been attempting, within the constraints he is undoubtedly under, to give us as much information as he can. I will need to read Hansard to be absolutely sure what we have and have not been promised. I certainly heard the word “amendment” in one of his sentences, but it may have been a misunderstanding on my part. If there are not to be amendments to this Bill, I am intrigued—that is parliamentary language for “a bit confused”—about what exactly the Government are going to offer us to resolve the obligation placed on the House by the Motion passed in the name of my noble friend the Leader of the Opposition relating to progress on this Bill, which is a point that the noble Lord, Lord Hannay, has also raised.
We can hope that the two aspirations at play here come together, because despite the Minister’s valiant attempt to remind us that this is a continuity Bill—an aspiration negated in the second amendment after we started this process, and continually ignored in every amendment we have discussed so far—we should get real and understand that the mess we are in will not be helped by having an artificial distinction between what is a continuity issue and what will be a non-continuity issue, or, in other words, the real world in which we live. We need to get this right, and we on this side of the House have offered—I am sure the party on my left has also offered—to work through this with the Government, and that offer remains on the table. We will meet at any time, at the Government’s request, to see if we can come together to make something of this that will work for the future, because it is that important.
That said, I endorse what has been said by others: any attempt to rely on the procedures in the Constitutional Reform and Governance Act 2010 will be doomed to failure. The Government have to get over that hurdle before we can make significant progress. The 2010 Act is inadequate as a process, and would be inadequate under any terms, because it allows the Government to use the negative resolution procedure for secondary legislation, so that the treaty we agree comes into law automatically, irrespective of any opposition or amendments Parliament might want to make, provided it has been laid before Parliament for 21 sitting days. That is not the right process, as we are talking about trying to get Parliament to engage with the process by bringing it back to the mandate arrangements, and allowing Parliament plenty of time, lots of information, a good process and a proper committee structure for proper decisions to be reached in the public interest. The Government should not play games with procedures and say, “We’ve got that already, so why are we bothering about it?” This needs to be dismantled and rebuilt in a way fit for the 21st century.
A new system is required, and the time has come. If there is any doubt about the interest in that, the Minister should be aware that six major business federations—the CBI, the BCC, the EEF, the ICC, the IoD and the FSB—have taken the unprecedented, in my experience, step of bringing forward a joint statement with the TUC, Unite, the Trade Justice Movement, the Consumers’ Association, Which? and other industry bodies calling for a proper model of consultation and scrutiny to govern the UK’s policy-making process in the future. The Government cannot ignore that; it has to be something that they will do.
We will come back to this, whether in the form articulated by the Minister, or in amendments we consider at later stages. I hope there will be a Report stage, because the Bill is important and needs to go through, but the danger is that delay or difficulty in coming forward with something clear enough for this House to respond to will mean the Government finding themselves in real difficulty on the Bill. I do not say that lightly; the last thing we want to do is use procedural issues to hold back what is, at its heart, a good piece of legislation, which we support. I beg leave to withdraw the amendment.
Brexit: EU Free Trade Agreements
Lord Stevenson of Balmacara Excerpts(5 years, 3 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Stevenson of Balmacara (Lab)
My Lords, I am grateful to the Minister for repeating in the form of a Statement the Answer given to the Urgent Question in another place. The Government have made it clear that prudence dictates that sensible planning should be undertaken as we are only some 10 weeks from leaving under a no-deal scenario—except, apparently, in the Department for International Trade. Yesterday in Committee, the Minister said that while the Government have been engaging actively with the countries which currently have a free trade agreement in the variety of forms that it takes with the EU, she could not say what steps are necessary in each of those countries to roll over their agreements to the UK, how many are ready to do that and how many are not. This seems incredible.
If we do crash out on 29 March, we will not be in a free trade agreement, a customs union or a preferential agreement with any of these countries. Have the Government told these countries what tariff rates the UK will apply from one second after 11 pm on 29 March 2019? More importantly, have they told UK businesses what the rules will be? If not, why not?
Baroness Fairhead
My Lords, I thank the noble Lord for the question. The Government have been clear. We are aiming to have a deal and an implementation period. On that basis we are confident of the continuity. My honourable friend Minister Hollingbery said in another place that he was confident that most of those 40 agreements would be continued.
Trade Bill
Lord Stevenson of Balmacara ExcerptsWednesday 23rd January 2019
(5 years, 3 months ago)
Lords ChamberRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 127-II(Rev)(a) Amendment for Committee, supplementary to the revised second marshalled list (PDF) - (23 Jan 2019)
“Regulations under section 2: state aid
(1) If regulations under section 2(1) make provision in relation to the issue of state aid for the purpose of implementing a free trade agreement, then a statutory instrument containing those regulations may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.(2) The Secretary of State may not lay a draft of the instrument containing regulations under this section until—(a) he or she has consulted—(i) each devolved authority,(ii) public bodies, businesses, consumer groups, trade unions and non-governmental organisations which, in the opinion of the Secretary of State, have a relevant interest, and(iii) the public, and(b) he or she has laid a report of the consultation under paragraph (a) before both Houses of Parliament.”
Lord Stevenson of Balmacara (Lab)
My Lords, Amendment 16 in my name deals with state aid and whether it will continue under any new arrangements brought forward by the Government. It is essentially a probing amendment. I welcome the Minister to the Dispatch Box for his first response on the Bill. I look forward to working with him on this and related topics.
The reason for proposing the amendment is because we have very little information about what the Government’s intentions are on state aid, which is arguably a key component of all trading activity and can materially affect how and in what ways individual companies can operate and be successful within the home market and abroad. It has been operating since we joined the Common Market in 1972 and is a very strict and well-observed rule. It relates primarily to whether goods can circulate freely in the EU area, or the EEA, although there are some quite interesting exceptions, mainly on a cultural level, where changes are made relating to support for indigenous and widely spread cultures. Indeed, this country has benefited considerably from support for the arts, particularly film, theatre and television. State aid has also extended to fringe areas such as horseracing. For example, in France, it has been ruled that the support of a horserace betting levy system not unlike our own is a cultural exception to single market rules. That rule has been applied for the last couple of years, and is now being followed within the United Kingdom. It is an interesting area.
It appears that the Government have already decided that the existing rules will continue. Why was that decision made and on what statutory basis? Is there any opportunity for parliamentary procedure and process to be involved? It has also been announced that the Competition and Markets Authority will be responsible for ensuring trade rules within the state aid area. This was decided without any debate, discussion or consideration of alternative bodies. Again I ask: what was the statutory basis for that and is there an opportunity for parliamentary scrutiny, now or at some future stage?
The Minister of State, Department for International Development (Lord Bates) (Con)
My Lords, I join others in thanking the noble Lord, Lord Stevenson, for moving this amendment. In response to my noble friends Lord Trenchard and Lord Lansley, I think that the noble Lord intended this as a probing amendment, as he said, to give the Government the opportunity to put some issues on the record. It has been very timely, not least because under the EU withdrawal Act, mentioned by the noble Lord, Lord Purvis, on Monday we laid the regulations on state aid before the House. That 77-page document will now make its way through the rigorous scrutiny of the Joint Committee on Statutory Instruments and then the Secondary Legislation Scrutiny Committee. Then, of course, it will be subject—because it is by the affirmative procedure—to scrutiny later in this House. For that reason some of the specific issues referred to by my noble friend Lord Lansley and the noble Lords, Lord Purvis and Lord Lea, might be usefully dealt with in that area.
Clause 2 is not about making changes to existing agreements, and the regulations cannot be used for future free trade agreements, as my noble friend Lord Lansley rightly identified. In answer to the noble Lord, Lord Stevenson, we also need to recall that the Competition and Markets Authority has been given this responsibility domestically, across the UK jurisdiction. When it comes to free trade agreements and the EU, the Trade Remedies Authority would undertake that responsibility.
To provide further reassurance that we do not expect to need to use these powers to set up a domestic state aid regime, I can inform the Committee that we have laid the instrument I referred to. This instrument, the State Aid (EU Exit) Regulations 2019, will be made under the European Union (Withdrawal) Act 2018 and establish a domestic state aid regime that will work for the whole of the UK at the point that this is required. No doubt Noble Lords will be offered an opportunity to scrutinise this in detail.
Subsection (2) of the proposed new clause requires the Government to consult relevant stakeholders prior to laying implementing regulations under Clause 2 which make provision on state aid. We have been clear that proportional consultation is of the utmost importance to us. We have engaged with a large number of stakeholders through our programme of trade continuity. The Government will always consult stakeholders as appropriate, so to set out specific provisions concerning consultation on state aid is not needed at this stage. The Bill already requires the Government to lay reports before Parliament in which we will provide detail of any real-world changes to free trade agreements. These will be laid before the agreement is ratified or regulations are laid under the Clause 2 power in relation to that agreement, whichever comes first.
Any significant differences in agreements that are relevant to state aid would be identified in these reports and Parliament would then be in a position to take an informed decision in relation to the making of the regulations or the conduct of the ratification process. I say again that we do not expect to need to make regulations under this power in order to implement state aid commitments in existing free trade agreements.
I turn to some of the specific points that were raised. My noble friend Lady McIntosh raised the horserace betting levy and the tripartite agreement. This is something we will come to in Amendment 48 in a later group, so perhaps I can leave it to the lead Minister, my noble friend Lady Fairhead, to respond, but the relevant provisions of the horserace betting levy were notified to the Commission and approved by the Commission under state aid rules. I confirm that the TRA—the Trade Remedies Authority—will not be responsible for state aid prioritisations in FTAs. It will be a matter for individual free trade agreements to establish a dispute mechanism.
Lord Stevenson of Balmacara
I was going to ask the Minister about the TRA—I am glad that he tried to clarify what he had said, because he did raise a doubt about what was arranged. Have I got it right? I would be grateful if he could confirm that we are proceeding on a continuity basis and using the withdrawal Act to ensure that, under the statutory instrument he mentioned, the existing set of rules that currently apply, because of EU directives and regulation, will be applied under UK law after exit day. Therefore, that process does not require any further discussion or debate, because of the reasons he has given, and he is not saying that in future trade agreements there will be a specific role for state aid rulings by the TRA—that will remain with the CMA—but there will be an opportunity to discuss that broadly when we get to the point at which we are, post continuity, talking about the real world and what is actually going to happen in trade. Is that right?
Lord Bates
That is correct. I am grateful to the noble Lord for setting that out. My noble friend Lord Trenchard mentioned the Government’s commitment to the state aid system. That point is contained in Command Paper 9593, The Future Relationship between the United Kingdom and the European Union, which says in section 1.6.1:
“The UK has long been a proponent of a rigorous state aid system—this is good for taxpayers and consumers, and ensures an efficient allocation of resources”.
Moreover, the political declaration which accompanies the withdrawal agreement points out in section XIV, paragraph 79:
“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards”.
That will all be fleshed out as the future economic agreement is worked on. Again, I thank the noble Lord for the opportunity to clarify some points on the record.
Lord Stevenson of Balmacara
I am grateful to all those who have contributed to this debate. It was indeed a probing amendment and an attempt to elicit a series of responses from the Minister. We have those on record and I am grateful to him. Having said that, we have raised one or two issues that need consideration in the non-continuity mode, if we ever get to that point, about exactly why we are doing what we are doing, how it might be modified in future, and what the appropriate regulation would be. The point made by the noble Lord, Lord Purvis, is absolutely right. We have to avoid getting ourselves into the wrong side of the argument that relates to engaging those who have trade responsibilities. There will be significant and important trade responsibilities when they eventually end up with Scotland, Wales and Northern Ireland, and they should not be excluded from proper consideration and debate. With that, I beg leave to withdraw the amendment.
“Regulations under section 2: Joint Ministerial Committee
(1) In making regulations under section 2, the appropriate authority must have regard to, and take into account, the views expressed by a Joint Ministerial Committee appointed by the Prime Minister.(2) The Prime Minister may, for the purposes of this Act, determine that the Joint Ministerial Committee shall consist of representatives of the governing authorities of the United Kingdom, Scotland, Wales and Northern Ireland.”
Lord Stevenson of Balmacara
My Lords, we are moving to a point that has already been raised and given a small trailer by the noble Lord, Lord Purvis. We need a system in place, although I am sure that the response from the Government at this stage will be that this is not necessary for continuity issues. However, we have already seen that there will be issues around trade and related matters for which we need to be sure that structures are in place that will allow for those resolutions.
Amendment 17 seeks to place a duty on the Government to consider a formal structure under the joint ministerial committee system that would allow debates on trade—particularly future trade arrangements, but I think other issues as well—to be dealt with in a systematic, transparent and trustworthy way. In that sense, I do not think that we differ from where the Government would like to be. What we lack is any understanding of where the Government are on this matter and what negotiations are coming forward. This is a probing amendment to try to make sure that we have some sense of that as we go forward.
In an attempt to help the Government, the noble Lord, Lord Purvis, and I have also put down Amendment 76 as a way of expressing in the Bill what the different agencies involved in this can and cannot do. Currently this is dealt with by a convention known commonly as the Sewel convention, although it has been overtaken by other legislative approaches. It attempts to set out, in this Bill at least—although it may apply to other areas—a set of rules allowing certainty on under what conditions and with what powers the UK, in operating its reserve powers, may or may not legislate on devolved matters where it is agreed that responsibility lies with the devolved areas.
I understand fully that the Minister will feel that many of these issues are subject to discussions elsewhere that are probably way above his pay grade. I do not seek to diminish him in any respect with that, but we want to flag up the importance of this matter to our trading relationships, not just because trade is important but because we are moving into an era where, irrespective of how and under what conditions we move from our current position with the EU, trading responsibilities will be applied in Scotland, Wales and Northern Ireland in a manner that has not been seen before. Issues that are specific and germane to those countries will be raised. We do not have a robust structure under which this can be resolved, and it is time for us to move forward on that. I beg to move.
Viscount Younger of Leckie
I can help the noble Lord. I was very careful to use the word “forum”—but perhaps I should have used “fora”, which of course is the plural. The reason for that is that the process is designed to mirror what has worked with the EU up to now. We want to replicate the terms that are used for EU negotiations by not calling it a joint ministerial committee. But I understand the intention behind the noble Lord, Lord Stevenson, using that term.
Lord Stevenson of Balmacara
I am on the same page as the noble Lord, Lord Purvis. Why is it so complicated? The joint ministerial committee system has, as he said, worked well for more than 20 years. It provides an opportunity for those who are required to be present around the table to sit down, discuss and arrive at conclusions. In a debate on an earlier Bill, the noble and learned Lord, Lord Mackay of Clashfern, suggested a way of developing that into a formal structure within which there would be appointed chairs or elected chairs and rotating responsibilities. We seemed to be heading down that route, but now we are talking about this rather curious IGMF, which I had not heard of before. It is nice to know that it does indeed exist and may be working on EU matters. But I have always understood the relationship around EU matters as being—as the noble and learned Lord, Lord Mackay, picked up rather cleverly—around a settled set of responsibilities, where there is not the problem of geography meeting functionalism. That is the problem here, because as soon as we have a situation where the responsibility is devolved because it is not reserved, and there is a need to arbitrate and barter out the various competing interests across the nations of the United Kingdom, there has to be some formal structure. I do not think a forum provides that.
Viscount Younger of Leckie
We may be dealing with semantics here, but I will certainly write to the noble Lord, Lord Stevenson, and the noble Lord, Lord Purvis. My understanding is that there is a reason, but it is not a particularly big reason, which is that the difference between a joint ministerial committee—the expression that the noble Lord, Lord Stevenson, has just used—and a forum is that for a forum the devolved Administrations are seeking and are getting more regular and frequent conversations with us in the UK Government. I think a letter should clarify that.
Lord Stevenson of Balmacara
I am grateful to the Minister for that full reply. I am looking forward to the letters, which I will read very carefully.
It is sufficient to leave the position on Amendment 17 as it is at the moment. It is more complicated than can be dealt with within the confines of the Trade Bill. It needs a much wider conspectus of views and to be informed by other debates elsewhere. The principles that we have been articulating are important. I hope the Minister recognises how valuable they will be within what appears to be the Government’s view that rolling forward existing trade arrangements on the continuity model will be uncomplicated and not difficult. I have my doubts—“I hae ma doots”, as I would normally say. Hansard will not necessarily pick this up.
The key is: how does it work in practice? It is really important to use our words carefully, as the Minister has done, to assure ourselves that we are not getting into exactly the same position as we did on the withdrawal Bill. In effect, he said that the Government will not normally legislate in areas that are devolved. Of course, the key is: what does “normally”’ mean? How exceptional does it have to be before we see an extraordinarily difficult situation leading to contests between the two agencies? He went on to say that they would not do so without the consent of the devolved Administrations. Consent is a crucial word. The noble Viscount, Lord Trenchard, used the word “consult” as if that took both meanings, but it does not. Consult is one thing; consent is so different. We have to be sure exactly where we are. The discussion and debate around this would then result in an agreed position between both Parliaments as to how it would operate in practice. That is the Sewel convention.
If we accept everything that has been said in this debate—and we will get contributions on other Bills and issues of policy as they come forward—why do the Government not look very carefully at the wording of Amendment 76? It was provided to us by the Welsh Government as a proposal for reaching a point of unanimity on this issue. Why is it not appropriate to put it in this Bill, or, if not, in some future Bill very closely aligned to this? I think it will be required. My guess is that we will need it quite soon. It is not legally unenforceable. It is what we do. So let us get it right. I beg leave to withdraw the amendment.
Baroness Fairhead
My Lords, I know the European process in outline; I cannot say that I understand it in the depth that the noble Lord, Lord Hannay, does, given his experience in that area. I want to differentiate between the continuity agreements and future trade agreements. Because we are talking about rolling over existing agreements, we expect to replicate the effects as closely as we can, so as not to disrupt trading patterns, so this is a different type of progress report. The noble Lord makes an important and valid point about the scrutiny of future trade agreements and we will discuss that later in the debate.
Lord Stevenson of Balmacara
I go back to an earlier question asked by the noble Lord, about whether or not the Government are in a position to notify those who are directly involved in this in a no-deal situation, which we all hope does not happen but in which we are out of the EU at 11.01 pm on 29 March, to be accurate. What conditions need to be satisfied before those who are directly involved in trade on that day and at that time get access to information about the proposed tariff arrangements? Absent that, we are talking about a very short period for those who have businesses to organise, decisions to make and loans to raise, as has been said. The other half of this is that if we are talking about continuity arrangements at that stage, when will we be in a position to know exactly how many countries are ready to do a deal with us at 11.01 pm on 29 March, how many are not and how many will take time to get their own arrangements sorted? Without that information we are not really in a position to judge whether or not the Government are making a good fist of this.
Baroness Fairhead
My Lords, on the 11.01 pm—or one minute past midnight—point, technical notices have already been sent out and no-deal planning has been ramped up, as the noble Lord will have seen in the Prime Minister’s announcement. Communications are planned for businesses and there are training programmes to make sure that the Civil Service and various departments are ready with information as required. Clearly, our primary focus is on achieving plan A and a deal, and therefore this is contingency planning, but that planning has been ramped up in the event—that we do not want—that there is no deal. I cannot say the exact moment that those notices will come out but I understand the noble Lord’s concern, and businesses’ concern, about what will happen in the following hour. Obviously, that will be taken into account.
As for third countries and where they are, I do not think I can add to what I said, which is that we are actively engaged and if there is a deal followed by an implementation period, we will be an awful lot more comfortable about the process.
Lord Stevenson of Balmacara
My Lords, my noble friend has done us a great service in introducing this amendment with considerable verve and in such detail that nobody feels it necessary to pick it up. I put on record that we support what she is saying. There must be an advantage in having a proper external scrutiny system. These things should be done with independence and a wider concern for the issues than can be done from internally within the department. My noble friend makes the point—others have made it before—that we have a long way to go if we are to emulate the EU in its current practices, let alone try to get best practice going. I hope the Government, if they cannot accept the wording here, will at least take the sentiment behind the amendment and think about how that can be brought forward, both in the narrow work required in the department and its relations with Parliament but also in trying to improve the way this information is made available to the wider world.
Also in this group, I have given notice of my intention to oppose Clause 3 stand part. The reason is not directly related to the amendment tabled by my noble friend Lady Henig, because the substance of what she proposes is very much in line with the work done in the Commons to try to improve the reporting requirements, and I do not dissent from that. My reason for giving notice of my intention to oppose Clause 3 stand part is that later in the Bill we will discuss the broader question of what happens when we are talking not about continuity but about free trade agreements more generally. At that stage I have Amendment 33, which gives in some detail a possible way of doing this. It is certainly not in any sense meant to be the prescriptive answer, but it does raise all the issues raised within the terms of the current procedures under Clause 3. When it comes to later amendments, I will also talk about Clauses 4 and 5.
Baroness Jones of Moulsecoomb
My Lords, I should have stood up earlier, but I was being polite. It seems the system set out in this Bill has been rendered obsolete by the passage of time and the sheer urgency with which the Government now have to act. The amendments from the noble Baroness, Lady Henig, do a good job of trying to plug some of the gaps, but I really think the Government have to go back to the drawing board on all of this. A government amendment is needed on Report that proposes a realistic set of procedures that can be used without undue delay while ensuring proper safeguards and accountability. This should not be a battle but something we can all work on together. This Bill has dragged on for so long that we all have the benefit of hindsight. A quite prescient question has emerged: where will the Government ever find time to use the procedure set out in Clause 3? I really think we need a lot more drafting on this Bill so that at some point we might get it on to the statute book.
Baroness Henig
My Lords, I will be extremely brief—I am sure that noble Lords will be happy about that—in moving Amendment 22 and speaking to Amendment 23. They are two very short probing amendments for the particular circumstances when Ministers do not feel the need to lay a report before the House. Once again, given the importance of trade agreements and the need for scrutiny, this is something that the Government need to consider carefully. Can it really be right for the Government to lay regulations before Parliament without informing us what they are and what impact they might have?
We can deal with the matter fairly straightforwardly. The Government will know in advance of the proposed changes to an agreement, not just at the point of laying it. There is therefore no reason whatever why we cannot be told what the change is at the time, as part of whatever reporting system there is. That is the purpose of Amendment 22.
In relation to Amendment 23, I say that the phrase “as soon as possible” is far too vague. I appreciate that the Government have many issues to consider and to juggle, but they should have the means to tell us what is being proposed. We need to know within a clear timeframe so that we can scrutinise the Government effectively. I have to hear a convincing reason from the Government as to why they need the wide-ranging powers under this clause. I therefore propose these amendments to seek further information from Ministers, and to signal the kind of openness and levels of scrutiny that I am sure Parliament will demand in terms of both these rollover agreements and the new trade agreements. I beg to move.
Lord Stevenson of Balmacara
My Lords, once again I support the amendments of my noble friend Lady Henig; I will also speak against Clauses 4 and 5 standing part of the Bill. Counterintuitively, I will deal with Clause 5 stand part first, simply because it follows exactly in the same vein as the reasons I gave for suggesting that Clause 3 should not stand part. Clause 5 deals with reports to be laid with regulations under Section 2(1). In an expanded, more amplified and better and more rounded policy dealing with both the continuity of free trade agreements and the new free trade agreements, we would have a completely different system sitting in place, so Clause 5 would be otiose, which is why I put this forward. I will not press this and I do not need much response from the Minister because we will return to this issue later in group 13.
However, I wonder about Clause 4. It seems at a superficial level to give the Government a “get out of jail free” card in relation to any reports that they might feel obliged to make, particularly if they are expanded in terms of my noble friend Lady Henig’s original proposal under Clause 3. Clause 3 states:
“Before the United Kingdom ratifies the proposed agreement, a Minister … must lay before Parliament a report which gives details of, and explains the reasons for, any significant differences between—
(a) the trade-related provisions of the proposed agreement, and
(b) the trade-related provisions of the existing free trade agreement”.
But Clause 4 states:
“Section 3 does not apply to a free trade agreement if a Minister of the Crown is of the opinion that, exceptionally, the agreement needs to be ratified without laying before Parliament a report which meets the requirements”.
I stress that phrase,
“a Minister of the Crown is of the opinion that”,
and the use of “exceptionally”, which is an interesting word. In other words, you do not have to do it if you have sufficient gravitas and the ability to convince Parliament that you are not of that opinion and that it is exceptional, so you can get away with it. That is not satisfactory drafting.
This is not a good clause to be in a Bill of this nature. It certainly does not meet the questions that we have been raising about proper transparency, accounting and independence of reporting. When the Minister comes to reply, I hope that she will consider taking this away. If she cannot bring herself to agree that this needs redrafting, perhaps she can write to me explaining why it does not.
Baroness Fairhead
My Lords, I too will try to give a short response to the amendments before us, and first on Amendment 22 tabled by the noble Baroness, Lady Henig. Clause 4 creates an exemption from the reporting requirement so that, in exceptional circumstances, the Government may seek to ratify an agreement without having first published the associated report on changes made to it. Let me categorically reassure noble Lords that we intend to draw on the reporting exemption provided for in the Bill only if we are in exceptional circumstances.
I am sure the Committee will agree that we may find ourselves in exceptional times. We cannot predict the speed with which continuity agreements will be ready for signature. Moreover, the exemption is narrow. It does not remove the requirement for a report to be laid. It simply provides a little leeway to enable a trade agreement to progress to avoid a cliff edge. The Government would still be required to lay a report as soon as possible following ratification. I hear the noble Lord, and will reflect on the drafting, but in a sense it was because of the uncertainty about the speed.
Amendment 23 would ensure that, if this exemption is invoked, the report would have to be laid no later than 10 days after ratification. Again, to be clear, we have drafted this exemption for use in only the most urgent of circumstances. If we were to need to rely on this, it would be necessary to ensure that we could continue to operate in the most uncertain of contexts, and avoid that cliff edge.
Clause 5 will ensure that the Government lay their report 10 days in advance of using the Clause 2 power to implement any obligations of a continuity agreement. That will ensure that Parliament is wholly informed about how we intend to deliver continuity for an agreement before it is required to consider implementing legislation. If we removed Clause 5, as the noble Lord, Lord Stevenson, suggested, the Government would not be bound in any way to report, so we should set that aside.
Before I conclude on this point, I would like to inform the Committee about an amendment that the Government will bring forward on Report. As the Committee is aware, the purpose of the Government’s trade continuity programme is to seek continuity of the effects of existing EU free trade agreements as far as possible as we leave the EU. The vast majority of these existing trade agreements, which we are part of as an EU member state, are already in operation and have been scrutinised by Parliament. Let me make it clear to the Committee that we do not expect to need to change existing domestic equalities legislation as part of this programme. In the unlikely event that we choose to make minor or consequential changes to this legislation, we will aim to ensure that this does not result in reduced protection against unlawful discrimination or diminution of equality rights.
However, to ensure suitable transparency and accountability on this particularly important issue, we intend to provide that a ministerial Statement is made alongside any draft statutory instrument laid under the Clause 2 power. The Statement would outline whether the statutory instrument repealed, revoked or amended any provision of the Equality Acts 2006 and 2010 or any subordinate legislation made under them. In addition, I am happy to confirm that the reports under Clause 3 will explain any changes that would be required to equalities legislation as a result of our shift from an EU to a UK agreement if, and I stress if, any changes are needed. My officials have agreed to work together with the Equality and Human Rights Commission—and I put on record our thanks for its efforts in helping us to design the process so far—on designing the content and templates for these reports.
I hope that that reassures the Committee and I ask the noble Baroness to withdraw her amendment. Additionally, I commend that Clauses 4 and 5 stand part of the Bill.
“Customs union
It shall be the objective of Her Majesty’s Government to take all necessary steps to implement an international trade agreement which enables the United Kingdom to participate after exit day in a customs union with the European Union.”
Lord Stevenson of Balmacara
My Lords, this amendment, for which I am grateful for the support of the noble Lords, Lord Patten of Barnes, Lord Purvis of Tweed and Lord Kerr of Kinlochard, has a long and distinguished history in that it has been discussed over a number of years. In moving it today, I first apologise for the drafting. It was devised by committee, which of course is never the right way to go about these things; it was a very good and small committee, but nevertheless the drafting reflects some of the tinkering involved. It probably does not stand the test of time and, if we were to return to this at a later stage—and we might want to do that—slightly different wording might emerge. But in proposing it I am in no sense worried about the central principle. I hope to spend a little time introducing the amendment and will then listen to the debate that comes forward.
The question of whether the UK should remain in a customs union has become an issue around which many people can agree. It does not involve them all, but includes many MPs, businesses, trade unions and the wider public. The reason is not hard to find. It would provide the certainty that we need to protect UK jobs, secure opportunities for our industries and create prosperity at home. It would also give us a voice, front and centre, at the world’s most powerful trade negotiations and help to ensure that global goals on development, climate change and the natural environment are met and continue to be met. On Northern Ireland, Ministers are bending over backwards to explain how exactly the backstop they have agreed to and have been supporting will actually work in practice. But at a stroke, a customs union would properly guarantee the peaceful legacy of the Good Friday agreement. That alone must make it a most important issue.
At present, the Government are steadfastly ruling out a new customs union. However, the trade unions, the CBI and other business interests are highly supportive of the idea, saying that a new customs union will protect jobs. The Scottish and Welsh Governments are also on board, as are a growing number of members of the Cabinet. At a time of seemingly insurmountable division in our country, the opportunity to unite in common purpose should be grasped with both hands. I beg to move.
Lord Bates
The Committee will come to rules of origin shortly, but on that point, that is the reason why, in the agreement that we are proposing—the deal that is on the table—we propose that to ensure that trading goods between the UK and the EU remains frictionless in the UK, there will be no routing requirements for rules of origin on trading goods between the UK and the EU. What we are talking about with Israel is consistent with that.
Lord Stevenson of Balmacara
My Lords, it is impossible to summarise what has been a very wide-ranging discussion. It certainly ended up in a rather more heated and fetid atmosphere than I expected when we set off. I have to say to the Minister, for whom I have the greatest respect, that it is fine to listen to what he is saying about what we ought to be doing and how we should do it, but he should point behind him when he is talking, because we do not get the arguments in the same way.
We started off with a description of hell, and what it might be to be listening to the same debates and discussions. I think we have justified the argument that we have moved on. The interesting thing that I took from this debate was how positions are being nuanced and changed as we move forward. There is an attempt from all sides to try to find common ground, and I wish that had reached all of our speakers. We are in a place that might be redolent of hell, with the colours that surround us and the flames leaping around, but I actually quite enjoyed being here. I am bound to go to hell anyway because of my previous life, so if this is what it is like, I quite like the prospect. But not yet—not yet. I call on the aid of the right reverent Prelate at this moment.
So what have we got out of this? We have got a sense around the Committee that there is something here that needs to be pushed to the next stage, and the Government should take away from this that this is a matter that will not go away, irrespective of what happens next week. By the time we get to Report, I am sure this will still be bumping around. I hope that by that stage we will have picked up on some of the points made by the noble Lord, Lord Lansley. We are getting hung up on what we mean by “customs union”, when we should be thinking behind the name—thinking about the process. It may be that we are likely to be close to, if not necessarily aligned with, EU current practice—and we ought to be, because, as my noble friend Lord Liddle said, size matters in these negotiations. Size matters, and always will, in any trading arrangement.
We are not really talking about tariffs. Tariffs are probably the 20th-century problem. The 21st-century problem is the regulatory barriers, and working on services to try to ensure that there is proper and fair trading, and that the issues at the heart of negotiations are rights and responsibilities, and the opportunities for providing benefits all round—a sort of development agenda meets trade, and coming together for the benefit of both.
The short, sharp intervention by the noble Viscount, Lord Ridley, was the most difficult to answer. I hope that, if he has the time, he will come back for the next group, when we will talk about some of these issues in more detail, and I will be able to give him a response. However, the truth is that I am quite happy with where the EU has got to with some of these trade deals. They are very good, and they would not be achieved by any smaller country on its own. We must not lose them, whatever arrangement we finally come to.
Viscount Ridley
The noble Lord has mentioned size twice. Can he explain why Chile, which is a smaller country than the European Union, has more trade deals with bigger countries than the European Union has?
Lord Stevenson of Balmacara
Maybe Dr Fox has an analogue that we do not know about, hopping around. “I do not know” is the answer.
Lord Patten of Barnes
Perhaps I can help the noble Lord. One reason why Chile has such good agreements around the world is that the agreement between it and the European Union—which is a very good agreement—was negotiated by your humble servant, as well as by others.
Lord Stevenson of Balmacara
In a spirit of mutual congratulation, I think it best to say that on this occasion we will withdraw the amendment—but we will probably want to look at the debate carefully and think about the wording of a future amendment. The subject will come back.
Trade Bill
Lord Stevenson of Balmacara ExcerptsWednesday 23rd January 2019
(5 years, 3 months ago)
Lords ChamberRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 127-II(Rev)(a) Amendment for Committee, supplementary to the revised second marshalled list (PDF) - (23 Jan 2019)
“UK participation in EU’s Generalised Scheme of Preferences
It shall be the objective of an appropriate authority to take all necessary steps to implement international trade agreements which enable the United Kingdom, after exit day, to fully participate in, or replicate the objectives of, the European Union’s Generalised Scheme of Preferences (GSP) for low-income and lower-middle-income countries.”
Lord Stevenson of Balmacara (Lab)
My Lords, I sense there has been a bit of a change in the composition of the House—I cannot imagine why, because we have reached some of the more interesting elements of the Bill. Had the noble Viscount, Lord Ridley, who is absent, been present, he might have learned quite a lot. That will help me avoid the more sharply put questions.
Amendment 27 is a probing amendment in the sense that it is there to invite the Government to set out their plans, should they be necessary, in relation to GSP, the EU’s generalised scheme of preference. It is open to a wider range of issues, and in his dual capacity as Minister responsible for development, the noble Lord, Lord Bates, might well have a view that will add to our overall understanding of where we are. The noble Lord, Lord Lansley, has a similar amendment, although it is much more detailed and sharply drafted than mine is, and I look forward to hearing his comments.
It can be said in very few words that one of the things that one gets by being part of the EU is participation in schemes of the type that is being discussed here, which is an attempt to try to bring some sort of structure and order to the way in which trading relationships can sometimes impact on development activity and vice versa, by recognising that very often a good trading opportunity in a developing country is perhaps going to do more than any amount of aid, however well delivered and whatever focus it has. On the other hand, the impact of either favourable tariffs, reduced costs or support for various aspects of work on the trading side of that relationship can have quite a devastating effect.
It is to the credit of the EU—and I am sure that Ministers have been heavily involved in the shaping of the way this goes—that the GSP arrangement is being set up so that it is constantly monitored. We have recently seen the interim relationship of that. In short, the results are broadly supportive of the way the EU has taken forward this programme, with some reservations in the sense that it is probably too soon to say quite what some of the outcomes will be. It is recognising that there are longer-term benefits that will not be picked up by short-term measuring techniques, and of course there are dangers that come in relation to trying to focus too narrowly on some of the econometric figures without thinking about some of the wider social issues.
The GSP relationship, combined with Everything But Arms arrangements, is a way of seeing development happen in a constructive and progressive way, which is something that we support. In moving this amendment, I invite the Government to respond to the thoughts behind it. I beg to move.
Lord Lansley (Con)
My Lords, in following the noble Lord, Lord Stevenson, I am grateful for his kind remarks about my amendment. I was not required to produce any amendments and I produce relatively few but, by virtue of his responsibilities, he has to produce quite a lot of them so I think we will forgive him for the sighting shot that, in a sense, many of these amendments are at this stage.
The generalised scheme of preferences, for those who are reading our debate afterwards—I am sure that many will do so—is about giving preferential tariff reductions to developing countries to stimulate their economies and their exports to the European Union, as one of the world’s largest potential markets. It can be fairly said that it is something that we subscribe to and that we encourage. For that reason, in the Taxation (Cross-border Trade) Act 2018, the Government and Parliament have already legislated for a preference scheme in the future. Therefore, that is not the issue, which is why my amendment is structured in the way that it is. The issue is: how do we go about this? That is the point of Amendment 27. How far should the United Kingdom’s preference scheme—that is, the unilateral preferential tariff rates that we offer to developing countries—be structured in such a way as to correspond directly to what is presently the generalised scheme of preferences as reflected in EU regulations?
The starting point for this is that the EU regulations will last until the end of 2023. For the purposes of this debate, I am going to assume that we are not in a customs union with the European Union, because if we were that would automatically solve this problem. Therefore, we are outside the customs union and we have to make our own decisions about to whom we give a preferential tariff rate and when we vary from it. We did not have a debate here on the Taxation (Cross-border Trade) Act because it attracted financial privilege, so we are getting the benefit of that now. Quite a lot of the debate on the relationship with developing countries focuses on tariff reduction. That is important but, for the least developing countries, the objective is nil tariffs on—as it is expressed—everything but arms and ammunition. That is reflected in Schedule 3 to the Taxation (Cross-border Trade) Act. For the other developing countries—the eligible developing countries, as they are known—there is an objective to try to reduce tariffs to the fullest extent possible. That is already in there.
But of course the issue then is: under what circumstances do we depart from that? The fact that the GSP says nil tariffs does not mean that in all circumstances that is maintained. The European Union has not done this, but the regulation would permit the European Union to suspend the nil tariff, or indeed to withdraw the preferential rate, in respect of transgressions on the part of other states. That is a possibility where a country has flagrantly been abusing human rights. If a country chose to produce large numbers of goods for export to other countries on the basis of a flagrant disregard for child labour laws, for example, should one continue to offer a preferential rate? Many of us would say that we should not necessarily do that. We should then suspend the preferential rate in some circumstances where human rights abuses and the rule of law have ceased. The European Union has not permitted countries to be in the Everything But Arms GSP, so we have to make those judgments under those circumstances.
The point of my Amendment 65 is to say, as we proceed, that we should start with a scheme that conforms to the structure of the EU regulation, because everything is starting from the position of continuity—that happy word—but we would have the ability to move on. We may make our own judgments about the circumstances in which we would suspend or withdraw the preferential rate. It might apply in the circumstances I described. It might equally apply if we had to safeguard the industry of the United Kingdom. The same would be true in the EU, but we might choose to do it in different circumstances. For example, last week the EU applied a safeguard measure in relation to imports of rice from Cambodia and Myanmar. That may not be something that we in the United Kingdom would choose to do because we do not take the same view about rice production in this country as, for example, they do in southern European states. There will be differences and we will have industries to protect, but we do not necessarily have to follow the same approach as the European Union.
As a way of proceeding, my amendment would insert into the Taxation (Cross-border Trade) Act, under those circumstances, that the Government should come forward to Parliament, make a report and seek views before proceeding down the path of suspending or withdrawing this preferential rate, because we should be participants in that discussion.
There should also be an intention before January 2024—when the EU regulation expires—to look independently from the European Union at what our future structure on preferential rates should be. In my amendment I suggest that the Government should report to Parliament by the end of 2022 on their proposals, with a view to legislation being passed by the end of 2023 for introduction from 1 January 2024. Of course, EU competence has dominated this area of policy, but the time will come for Parliament to think about what our trade policy looks like in terms of unilateral preference rates for developing countries.
It is quite difficult even to work out the relationship between our structure of preferential rates and the EU’s. Simply to say continuity is probably misleading because I cannot actually find absolute correspondence between the benefiting countries under the EU’s standard generalised scheme of preferences, or what it calls its GSP+, which is for eight vulnerable countries. I cannot even find that we can correspond between that and what is set out in Schedule 3 to the Act. For Everything But Arms, the list is the same, so we know where we are with that. I think I found 28 EU countries that benefited from the standard GSP or the GSP+, but 43 countries that are intended to benefit from what is referred to in Schedule 3 to the Act as “other eligible developing countries”. The difference is obvious: the EU does not include formally the GSP countries which, by virtue of other agreements, have access to tariff reductions that are at least as good as would be available under the GSP—for example, it has association agreements with Egypt, Tunisia, Morocco and so on.
For us to replicate the EU’s GSP would mean significantly fewer countries having access to the GSP and to those preferential rates than would be the case in the European Union. I just say gently to the noble Lord, Lord Stevenson, that that is another reason why he and I will have to go away and think about our amendments again. It is not about reproducing the GSP regulation or the EU’s list. It is about ourselves arriving at a full list of the developing countries, particularly those which are not the least developing but countries eligible for the GSP that should get preferential rates but at the moment get them through other EU agreements. Those are not necessarily free trade agreements that will get rolled over. I am not aware that this is necessarily the case for all these association agreements; it may be for some, but not necessarily for all of them.
Therefore, I commend Amendment 65 to the extent that it raises the issue of having our own scheme, consulting on it and asking Parliament when we have to change the preferential rates. I do not commend it to the extent that I think it can be adopted at this stage, but I think we should come back to it. I hope Ministers will be willing to look at that and how they would go about managing the preferential scheme in the future.
Lord Bates
Yes, and my noble friend Lord Lansley touched on this point. He talked about the treatment of different countries. We work from a World Bank list and an OECD DAC list of the least developed countries. As countries graduate—which is a normal procedure—they need to move to other agreements as well.
Lord Stevenson of Balmacara
My Lords, I am grateful to the Minister for his full response. We would welcome the opportunity to meet up with him.
We are converging on this point, though the noble Baroness, Lady Neville-Rolfe, is coming from a slightly different direction. She is hoping to see some quite quick change towards—I cannot think of the right word—a family relationship, involving Commonwealth and other markers which are not a feature of the other lists we have been talking about. It might make sense to try to work out where this is going.
We are among friends, so I can confess that I tried to do exactly what the noble Lord, Lord Lansley, did, which was to go back to the Taxation (Cross-border Trade) Act 2018 and try to work out where we were. I gave up, but he did not. I could not make out the list markers. The confusion comes because we are working from two different directions, as the Minister said. One is from a World Bank list of economic measures and the other is from a trading and development list which gives a different feel. Clearly, you get a different group of countries if you look at different indicators—not just poverty but the potential to export, the development status of their industrial arrangements and their other markets. We would have to think hard about all these. This does not vitiate the main point that it may not be necessary to put an amendment into this Bill, but it would be quite useful to have something where we, on all sides of the House, roughly understand the basis on which the Government are progressing. The Minister did say rather remarkably—but I hope it is true—that, whatever the timing, even if it were 29 March, they would be ready to make sure and clarify full details of what would be available to all the countries in scope on the GSP and on the Taxation (Cross-border Trade) Act approach. If that is true, he is obviously ready for the meeting and we are too. I beg leave to withdraw the amendment.
“Involvement of judicial systems in trade disputes
(1) A trade agreement is not eligible for signature or ratification by the United Kingdom unless the agreement includes the provision in subsection (2).(2) Legal proceedings brought against the United Kingdom under investment protection provisions included in a trade agreement will be heard by the courts and tribunals system of the United Kingdom.”
Lord Stevenson of Balmacara
My Lords, in speaking to Amendment 29 in my name I will also speak briefly to the amendment with which it has been grouped: Amendment 56 from the noble Baroness, Lady Kramer.
At the forefront of my amendment is whether we should retain the rather disputed separate mechanism for resolving investor settlement disputes—this applies to rollover and new FTAs. The concept of ISDS is not new; it certainly predates us joining the EU in 1972. Over the years, we have had a very large number of trade agreements—some several hundred—which Members of the House will be aware of, and many of these contain clauses under which the ISDS was created. In the early days, it was done with some justification in some countries to try to ensure that investment from third parties—particularly private investment, which was obviously necessary to unlock the activity that was the focus of the trade agreement—could be protected in situations where political issues or other issues intervened. Given that the legal systems in some countries will not be regarded as being as well-developed as in other countries such as ours, it is not unreasonable to therefore concede that some sort of special protection was required. That is really where it came from.
I do not think that there is very much more to say about it, except that our argument is that these ISDS schemes are of a bygone age. They relate to a situation in the world that does not really exist anymore. It certainly does not apply to many of the countries with which we will be creating free trade agreements or rolling over existing arrangements. In so far as they have legal systems that we can respect, there should be no question that we should work with our own legal system and with theirs to reflect any requirement for the need to ensure that parties to the agreement can pursue the establishment of a tribunal and appellate mechanism for the resolution of investment disputes.
I should wait for the noble Baroness, Lady Kramer, to introduce her amendment, but in case she has any doubt at all, I do not support where she is coming from. I want to make it very clear that I am not alone in this: the most numerous of the very large number of submissions we received on the Bill were on ISDS. I am sure the Ministers are aware of that. It is worth thinking about the role that civil society more generally will play, but if just about everybody is saying that the Government should move away from these as a model and should think, as the EU is doing, about moving to a system that relies on existing tried and tested systems in the countries, this is something we should bear in mind. I beg to move.
Baroness Kramer (LD)
My Lords, I share one point with the noble Lord, Lord Stevenson, on this issue: many of the various systems for investor and trade dispute resolution are broken. A search is on for new, more effective mechanisms to deliver much more satisfactory resolution, particularly as trade arrangements become far more complex and encompassing, and disputes have much greater significance for the global economy.
The Committee will be aware that the WTO’s arbitration system is on the verge of collapse. It relies on a panel that includes a minimum of three judges and a maximum of seven. The panel, through death and retirement, is now down to three. The United States has made it clear that one further death or retirement will mean the end of the WTO’s arbitration mechanism—it will not agree to replace any retired or dying judges. That mechanism is now effectively teetering on the verge.
Many will also have been involved in the debates around TTIP when that was active in this House and will understand that the resolution methods contemplated under it created a great deal of concern that private companies—specifically American companies—would be able to use the mechanism to wade in and counter local law and local decisions. The structure under TTIP relied on arbitration panels chosen specially for the purpose, against which there was no appeal. They were not part of a traditional judicial system.
We do, however, have an example of a system that works exceptionally well for trade resolution: the European Court of Justice, working for the currently 28 members of the European Union. As Trade Minister, when I talked with the Chinese, the Japanese and a number of other countries with which we were trying to build trade relationships, it was very often in the casual relationships that the issue of dispute resolution would come up. They all spoke, with sad envy, of the system we had in the European Union, known to be incorruptible, fair and efficient, and to have judging panels of real intelligence that were then supported by the collective Governments. They kept wistfully saying what a pity it was that, on a global level, there is nothing that mirrors that.
This is why I differ from the noble Lord, Lord Stevens, who is basically saying that a British company with a complaint will go to the British courts, an American company will go to the American courts and a Japanese company will go to the Japanese courts. It would be hard to persuade anybody that they would be justly treated under those circumstances and that there would not be national bias. I can see this becoming an inhibitor to trade. I also believe that on trade issues generally we need to look to international co-operation and shared sovereignty solutions. We need to recognise that, frankly, the best example we have of trade resolution is the ECJ, and see what lessons and mechanisms we can pick out of that. This is relevant in discussing the continuity agreements as well as future agreements. As this House and the Minister will know, the European Union is now making dramatic changes to the way it structures dispute resolution, recognising the problems and criticisms around the existing system.
The noble Lord, Lord Stevenson, referred to the investor-state dispute settlement system. That is largely an ad hoc arbitration system, but it is in many of the EU’s various trade agreements. He will know, or certainly the Minister will know, that the EU is now migrating from that. In CETA, we have an example of the first new version of the European system: the investment court system. It is a permanent standing court with a panel of judges; it is not ad hoc; and it is two-tier, so there is an appeal mechanism. Interestingly, under CETA, the EU and Canada will collectively appoint 15 judges—five from the EU, five from Canada and five third-country nationals—who will hear cases on a rotational basis. It is therefore bringing in a much more multilateral dispute resolution system with a great deal of independence and the opportunity to create a much more broad template. There is an intention to migrate many of the existing EU trade agreements on to this system over the coming years, which is why the continuity arrangements pose real questions that have to be answered. In the continuity arrangements, are we copying over the rather unsatisfactory investor-state dispute settlement system? Are we going to try to migrate? It is going to be difficult. Look at the EU and Canada. You can see that the capacity to create a panel of 15 judges might be a little tricky if you were trying to do it simply between the UK and Canada. I do not know what sort of system the UK is looking at as it tries to establish a continuity agreement with CETA, but we need some answers on all this.
Baroness Fairhead
I am happy to meet the noble Baroness and the noble Lord with officials to go through the detail of this, and then we will prepare a letter for the Committee if required. The discussions on whether the UN Commission on International Trade Law—UNCITRAL—should seek to establish a multilateral investment court are in their preliminary stages; there are no firm proposals on the structure, governance or cost. We are actively engaged. However, discussions on that possible reform are at an early stage. We should not prejudge the outcome of that process, because to do so could preclude the UK from making a later judgment when proposals are more advanced. We look forward to working with international partners. In addition to the discussion I offered, I welcome discussing this topic further. There are a range of views on this question. At this stage, should the UK require a universal commitment to pursue a multilateral investment court in all future agreements, that could result in the loss of our negotiating space.
In respect of the true aims of this Bill and the resolution systems that are already in place, and given our commitments to discuss MICs, I ask the noble Lord to withdraw his amendment.
Lord Stevenson of Balmacara
I am grateful to the Minister for her full discussion of these issues. As she started I was thinking that we could have got a better result if we had drafted Amendment 29 in the positive rather than negative tone—to make it optional in, rather than to restrict out, which was the main complaint she had about it. As the argument has extended, I can see there is a lot more going on here than we were aware of at the time we drafted it. I am sure that I share with the noble Baroness, Lady Kramer, the idea that if we can have a discussion about all the various things going forward, we might be able to have a better understanding of where, if at all, there is any need to move on that.
Having said that, the Minister mentioned that there was a lot of interest in it. I stress again that this is the one single issue that I have had the most correspondence about. Just about every group involved in trade and development has picked this as its number one issue. It is good that work is being done on it, in the sense that one is not trying to constrain good and effective systems that arrive at having a fair, efficient and highly regarded court that will have all the details and be able to deal with the various aspects of it. Clearly, we do not want to disadvantage other countries in relation to anything we might be doing. These are the pieces in play, as it were, and it is a question of trying to get confidence from Ministers and officials that things are moving forward.
In some ways—although this may be the wrong line to follow—it is quite like the discussions on the Unified Patent Court. There is a person not too far away from the noble Baroness who has quite a lot of detailed experience of that. That is an ad hominem—I do not know what the Latin is—but it relates to a particular issue: patentem. It has a link into but is not part of the European Court of Justice, which would play back to the noble Baroness, Lady Kramer. It might be too elegant a solution, but I wonder if that might be something we might also pick up, because there is something in there that might square all the circles. With that, I beg leave to withdraw the amendment.
Trade Bill
Lord Stevenson of Balmacara ExcerptsMonday 21st January 2019
(5 years, 3 months ago)
Lords ChamberRead Full debate Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 127-II Second marshalled list for Committee (PDF) - (21 Jan 2019)
“( ) Before making regulations under subsection (1)(e) or (f) an appropriate authority must consult such bodies as represent the interests of persons likely to be affected by the regulations including, where appropriate—(a) the Scottish Ministers;(b) the Welsh Ministers;(c) a Northern Ireland devolved authority;(d) a local authority or local authorities; and(e) representatives of appropriate consumer groups, businesses, trade unions and non-governmental organisations.”
Lord Stevenson of Balmacara (Lab)
My Lords, we intend to exercise a considerable amount of scrutiny on the issues in Committee, but—as hinted at by the Chief Whip in his elegant speech, in which he kindly named me—we will also raise other points not specifically relating to the original narrow focus of the Bill but fitting more closely into the debate we have just had. I make no apology for that, because it is important that we probe the Government on their longer-term intentions and receive some assurances about where the particularities of this Bill fit in relation to that.
In moving Amendment 1, I shall speak also to Amendments 2, 3 and 100. This first group relates to the provisions in Clause 1(1) to set out the arrangements under which the Government can sign up to, and through regulations make changes to, the Agreement on Government Procurement. The GPA is an agreement between the EU and currently 18 countries to open up their public procurement markets, operating under a WTO framework. The Government intend that the UK should remain part of this system, becoming an independent member, and the Bill provides delegated powers to facilitate this, should it be required.
We have a number of concerns at that, some of which, in Amendment 1, are largely connected with the question of consultation about this process. The GPA itself is not a particularly interesting or informative document, but it does attempt to do something that I think all Members of the House would regard as a very good process and something we should support. It attempts to level the playing field for those who bid for and get government procurement contracts. It therefore makes it fairer, as all those involved in the GPA are able to bid for and secure work for their workforces, to earn money and to make profits out of that. In a sense it is an economic growth scheme founded on work that has been going on for some time trying to identify why relatively small numbers of companies bid for contracts offered by government under this system. I am sure the Minister, when she comes to respond, will say the UK is at the forefront of trying to open up its procedures; I know previous Ministers have also been concerned that we should have an open playing field and an open market here, so anything that can do that must be good and we would support that.
However, it is important that it is done in a process that reflects the wishes of the people more generally. It is therefore a little unfortunate that the Bill does not spell out the need for consultation not just among those directly involved, particularly local authorities and those groups, but also the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, when it is resumed, which have a considerable amount of contract work going forward. So this is a widely spread requirement that the GPA will open up for broader discussion and debate and, I hope, greater access to it; it is reciprocal in the sense that it should also make it available to UK companies. Before we make regulations, we should encourage much more consultation to make sure that the regulations are appropriate and that the benefits and interests of those concerned are taken into account.
Amendments 2 and 3 are largely taken from comments made in the report referred to in earlier debate on the Select Committee on the Constitution in its report in October on the Trade Bill, which raised a few issues on how the regulations will be framed and brought forward. The starting point is that these regulations will be enacted with powers under the provisions modifying retained direct EU legislation, but the committee pointed out that there was some variation in the wording. I do not wish to quote the committee directly, but the conclusion is that the Government were recommended to include in the Trade Bill the definitions of retained direct principal EU legislation and retained direct minor EU legislation as used in the European Union (Withdrawal) Act 2018, and these make the substance of our Amendment 2.
Amendment 3 follows the comment made in the next part of the report that the Bill’s Explanatory Note states:
“Parliamentary approval for ratifying the UK’s membership of the GPA will be sought separately from the powers in the Bill itself and will be done in accordance with the procedures set out in the Constitutional Reform and Governance Act 2010”.
However, there is some doubt about exactly what the sequencing of that should be and which particular regulations and powers would relate to which. The suggestion therefore made in our Amendment 3 is to restrict the timing and quantum of regulation to a point in the system where previous approval has been received from Parliament under the CRaG Act.
The final amendment relates to what type of regulation should be required. The comment in the Constitution Committee’s report is that the regulations should be subject to the affirmative procedure and our Amendment 100 would put that in clear prose on the face of the Bill. The Bill itself may have been due to be amended by the Government when they came to respond to the Constitution Committee report, but so far I have not seen those amendments so we have aided them by tabling them and I commend them to the Committee. I beg to move.
Lord Purvis of Tweed
My Lords, I support these amendments and will speak to Amendment 100, which is in my name and that of the noble Lord, Lord McNicol. The Committee will be grateful to the noble Lord, Lord Stevenson, for tabling these amendments and allowing us the opportunity of looking in a little more detail at some of the consequences of the Government’s intention to, in effect, join an institution by virtue of leaving it. It is not automatically as straightforward as the Government may suggest. My understanding is that the approval in principle that has been made for the UK to join the GPA in its own right, separate from being a member of the European Union, has a number of riders attached to it that we will discuss when we come to Amendment 4A in my name. But on the strength of the amendments tabled by the noble Lord, one core element of consultation will now be important.
I took the opportunity to look at the schedules to the Canadian annexes relating to its membership of the GPA. It was interesting. One annexe specifies the 82 federal bodies; there are further annexes for each of the federal provinces with the organisations, bodies or elements of government that are included at a provincial level and the exceptions that they all bring to the GPA agreement. There is no automatic consistency across Canada because it is a federal system. In many respects, it is a model of what the United Kingdom’s could be when it comes to procurement policy and procurement agencies.
Baroness Fairhead
I thank my noble friend for that important question. I think this issue comes later in the amendments, but I can confirm that we intend essentially to take exactly the schedules that currently exist for the UK, as they exist through membership of the EU, and put them into our new independent membership, so that those do not change.
Lord Stevenson of Balmacara
With respect, I think that the noble Lord had a second and more important part to his question. What happens if we want to change them?
Baroness Fairhead
My understanding is that any regulations would go through the normal procedures of scrutiny. No changes in law would be allowable without scrutiny.
Lord Stevenson of Balmacara
The Minister must put me right if I am wrong. She just said that these were such small changes that they would not warrant anything other than simply negative scrutiny. However, as the noble Lord pointed out, they could affect the materiality of how we administer and run our National Health Service, which would be a major change. Surely the whole argument that she is making needs to be resolved: if the Government are going to say that these changes are so small and trivial that they do not warrant the full scrutiny of consultation, the corollary of that is that they would need to be done by the affirmative system, not the negative.
Baroness Fairhead
I can confirm that we are copying the existing schedules directly across. There are no changes, so there is no need for scrutiny of changes, because no changes will be brought across.
Baroness Fairhead
I thank my noble friend for the question. My understanding is that it puts us in the same position as we are today. When parties want to withdraw from or join the GPA, a process is gone through with the EU in which they demonstrate their intention and present their schedules to the WTO. Each member then decides whether they are prepared to accept that new addition or withdrawal. That is the process that we would go through. If that should happen, the Bill gives a power to implement under SIs. Parliament would be able to decide whether new members could join or leave.
Lord Stevenson of Balmacara
I thank all speakers in this short debate. The early contributions were to do largely with devolved issues. I think that we will come back to them, but they raise exactly the thorny difficulties that can emerge from making this work in practice. My noble friend Lord Hain spoke of not wanting to see an action replay of the “power grab”—his words, not mine, but I understand where he is coming from—by the Government in relation to the withdrawal Bill. We do not want to see that repeated, so I hope that the Government are able to reassure us that progress has been made on this and that some sensible and effective negotiations will be in place to allow it to be done effectively and with support all round.
It has not taken us very long to stumble into areas which were exactly the point of the amendment to the committal Motion made by noble friend Lady Smith. We are talking about “what happens if” rather than just about continuity. The noble Lord, Lord Lansley, has stumbled across quite an interesting point—I am in no sense making a point about him; the noble Baroness the former Minister also picked up something about “what happens if” and how it is resolved. I am not saying that we are doing anything wrong here, but it illustrates the difficulty of trying to narrow down to a continuity mode without thinking about the wider context.
I draw from this several things. First, on whose powers we are talking about when the regulations are in place, the Bill uses curious phraseology:
“An appropriate authority may by regulations make such provision as the authority considers appropriate”.
That could be extended to the power being exercised by Ministers in the Scottish Parliament, the Welsh Assembly or the Northern Ireland Assembly when it is reformed. There is nothing wrong with that—if they have the powers and the right to use them, they should do so—but it is a very different scenario from that pointed to by the Minister, about us always having the security of the negative resolution procedure when looking at how the regulations operate. The noble Baroness, Lady Neville-Rolfe, made exactly that point: these things are live and moving. They will change quite rapidly and we will have to exercise some of these arrangements. I am not sure that the negative resolution procedure is right for that.
However, the Minister’s reliance on the procedures under the Constitutional Reform and Governance Act 2010 is surely misplaced. Much of our debate on this Bill will be about the inadequacies of the CRaG procedures at present. To rely on them taking us forward because they are already in statute is to deny a whole series of debates and questions raised by them. I will not go into this at this stage; it will come up later. But it surely cannot be right for this Parliament to accept that a simple Motion to approve a complicated trade agreement, a complicated set of arrangements around procurement, or anything else that falls into that category can be done without amendment, debate or the ability to go through them in the form of primary legislation. We will come back to that.
We have had a good debate on these issues; I shall read Hansard carefully, and I am sure that there will be things that we pick up later in correspondence. For the moment, I beg leave to withdraw the amendment.
“( ) Regulations under subsection (1) may make provision for all contracts for services tendered by Her Majesty’s Government under the 1994 GPA or the Revised GPA to include conditions, so far as these are consistent with the 1994 GPA or the Revised GPA, with regard to—(a) the transparency of laws, regulations, procedures and practices regarding government procurement;(b) minimum employment standards, rates of pay and similar employment rights;(c) maximum periods for the payment of invoices;(d) environmental standards;(e) human rights obligations;(f) equalities legislation;(g) any other such measures as may be required to protect national security interests, the public interest, human, animal or plant life or health, and intellectual property.”
Lord Stevenson of Balmacara
My Lords, the previous debate was about process and how approval mechanisms were in play. This amendment has been grouped with Amendment 5, in the name of the noble Lord, Lord Lansley, which I support.
Amendment 4 shows the sorts of arrangements and concerns that we might have in trying to ensure that procurement works more generally in favour of social objectives—a point made earlier by my noble friend Lord Monks about the work he did in Europe in relation to trade Bills and discussions on these areas. We do not need to spend much time on Amendment 4. The list that appears in it is a familiar one to anyone involved in policy on business during the last three or four years. There has been a sense of the Government beginning to emerge from a period of non-engagement with many of these issues into having similar concerns to those on this side of the House about the way in which it is occasionally necessary for government to raise standards, by making it clear that certain behaviour within business is not acceptable. For example, many Members of the House present today will be aware of the long-running saga over the maximum periods for payment of invoices. Over the years, we have tried to get some movement; yes, there has been some, but it would be nice to see the Government pick up and run with this issue for a change.
The list in the amendment is variable in what it does. There are some high-level issues, for example, to do with,
“the transparency of laws, regulations, procedures and practices regarding government procurement”.
I hope that that provision would be unexceptional. The amendment refers to,
“minimum employment standards, rates of pay and similar employment rights”,
which I think feature in the Statement that we are shortly to receive which was made in the other place earlier this afternoon. I have mentioned the payment of invoices and the scandal of late payment; the drag on the economy from that is now worth something like £40 billion. The list also refers to,
“environmental standards … human rights obligations … equalities legislation”,
and all those arrangements have been well worked through in terms of discussion. Would it be so difficult to require that anything done under the GPA in relation to Her Majesty’s Government’s work, or by those devolved authorities which are also involved, tries to ensure that we raise standards in the workplace? These proposals are worthy of consideration and I beg to move.
Lord Lansley
My Lords, Amendment 5 is in my name. At the risk of being chided gently by the noble Lord, Lord Stevenson, to an extent I guess it must be regarded as moving from continuity. We will inevitably enter a series of such debates, but this Committee will be none the less useful for at least exposing some of the issues that policymakers will need to consider as they look at using the powers that we propose to give the Government.
Amendment 5 is intended to reflect that under the government procurement agreement, a number of other countries—not the European Union—take the opportunity to put in exceptions to their procurement arrangements that are consistent with pursuing objectives for promoting small and medium-sized enterprises in their own economies. I suppose that the most prominent such example is the Small Business Act in America. Those countries have done this because, in certain circumstances, it can lead to some discriminatory behaviour on the part of government entities undertaking procurement. I freely acknowledge that the European Union does not do this; essentially, because it takes the view that it has created EU public procurement rules that are intended to be wholly non-discriminatory. Those are non-discriminatory between all 28 member states and, by extension, the view the EU took was that it would be unreasonable for it to attempt to discriminate between EU and non-EU countries in taking advantage of the general procurement agreement.
Lord Stevenson of Balmacara
I am grateful to the Minister for her comments. I think she summed up very accurately the sense in the debate that we have issues here that are worthy of further consideration and should be brought forward and considered, but in another place—and that they can inform and improve the quality of what we do more generally in terms of the Government adhering to high standards in the work they commission, but also that there is a role for SMEs in that which is embraced by the Government. She gave some evidence of work moving towards that.
I think all noble Lords who have contributed to this debate will get something from it—even my noble friend Lord Davies of Stamford, who counselled us not to get too carried away with the drift of trying to get everything included, particularly for SMEs in relation to the safety of our Armed Forces, whom we count on to defend us and for whom only the best can do. The SME world would not necessarily accept that it is not performing at its best. It will have a role. I think the key was in something that the noble Lord, Lord Lansley, said: we need to be quite clear what we are talking about here. It is not main contracts.
Lord Davies of Stamford
I want to be absolutely clear about something. I did not suggest for a moment that SMEs do not have a valuable part to play in defence procurement. I said simply that it may be impossible or expensive in terms of the risks for our soldiers and other servicemen and servicewomen if we insist on a particular quota of procurement from small businesses. We should first of all decide what is necessary to procure for our Armed Forces, then we should procure it. We should hope that as a result SMEs have as large a part as possible, and we should encourage the major contractors to have as large a number of small suppliers as possible, but we should not take any risks to meet some arbitrary quota.
Lord Stevenson of Balmacara
I fully accept what my noble friend has said, and I am sorry if I misrepresented him. I think he has the right point there. It picks up what I was going to say about the point made by the noble Lord, Lord Lansley, that contracting is often seen in terms of large contracts issued by central government to very large manufacturers, and of course it is not like that. The work of the BEIS department in setting up not only the industrial strategy itself but the way it will roll out to the smaller end of the market is a very important element of that. I am sure we all accept that there is a future there for a much broader engagement with big and small projects, but also for a wider range of activity where innovation, skills, flexibility of movement and the ability to adapt to new environments—such a hallmark of SMEs—are used and capitalised on for the benefit of our public good.
In a sense, it is good to hear from the Minister the progress in setting and achieving high standards in our procurement arrangements. The points that need to be brought forward are not just the range and need for these issues to be picked up in all our consideration of contracting; we must not be left behind if other countries are using the GPA, or indeed other measures, to achieve change in their environment and economies, and benefiting from it. We must not miss out on that; we need to have a strategy for it.
The points made about the SME end of the market, particularly in relation to making sure—
Lord Lansley
I am sorry for interrupting. It might be helpful to say that one thing it would be useful for the Government to look at is that, other things being equal, we want other countries not to put down exceptions or engage in any discriminatory behaviour and to be as open as we can possibly make them. We should therefore at least look at what a number of other countries seek to do by putting down their own exemptions—such as the US, in relation to the Small Business Act—and from that arrive at an understanding of what position we will be in relative to them. The GPA should be very much about reciprocal openness of markets, rather than discriminatory behaviour.
Lord Stevenson of Balmacara
I absolutely agree with that.
My final point is to pick up on the SMEs and the need to consider them not so much as one amorphous group but to try to find ways of reaching out to them in terms of how they operate. I think there is a feeling abroad—it may not be correct—that the Government have a one-size-fits-all approach. That will not work when you are trying to look for innovation, change and the other points I mentioned. So, picking up the points made by the noble Lord, Lord Livingston, we should be very careful about how they can contribute and what will make them engage more than they currently do. The noble Baroness, Lady Neville-Rolfe, said we should make sure we have material help that is actually useful to them, rather than them having to fill in thousands of forms and go through impenetrable websites—I think we are all quite aware that that happens; indeed, we have had examples in this House. I think the point made by the noble Lord, Lord Risby— that there is so much there that can be done—was also well taken. It is an effort we all have to be engaged in if we are going to do it. With that, I beg leave to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, this group of amendments plays back themes that we have already discussed in the first and second groups, so I will not spend much time on them.
Amendment 6 suggests that additional consultation with relevant stakeholders would make it easier to understand what the process is in the clause. Amendment 7 tries to pick up the point which was made in a number of committees of your Lordships’ House and was raised in the other place when this issue was discussed. It replaces “appropriate” in line 16 on page 2 with “necessary”, because it implies that it is not a judgment on a passive basis of what may be considered appropriate, which may be a variable, and it has a particular purpose. I hope the Minister will respond to that.
Amendment 11 again came from the Constitution Committee’s comment, although it has not been picked up elsewhere, that it would be helpful to insert a refining phrase into the documentation related to whether legislation that is retained EU law might be better defined. We touched on this already. There was a concession that, although it was not thought to be strictly necessary in an earlier phase, it was appropriate that that phrasing could be adopted. I wonder whether that will also be the case here. I look forward to hearing the debate. I beg to move.
Lord Purvis of Tweed
My Lords, I support these amendments. They make eminent sense. I shall speak also to Amendment 101 in this group which, in essence, suggests that in moving forward on these agreements the CRaG process is not the most appropriate; and that there is a better way forward by ensuring a more appropriate role for Parliament, and for Parliament to have greater knowledge of why an agreement should be approved. In many respects, this is now becoming fairly standard procedure in other countries, where the Government give much greater information to Parliament about why agreements should be ratified and where each House of Parliament has a greater role on the basis of scrutiny by committees. I am convinced that when it comes to complex, deep and comprehensive agreements, the CRaG process will be shown not to be the appropriate route, and we will need to decide another. This Bill is a very good basis from which to start on a more transparent and open process.
As I mentioned earlier in the debate on whether the House resolve itself into Committee, our agreements amount to 60% of UK trade and are therefore highly significant. The complexity of trade agreements now—they go far beyond simply a discussion of tariffs and the financial element, and have wider impacts on domestic policy, as the noble Lord, Lord Kerr, mentioned—means they require a different form of engagement with Parliament. It starts with information and with greater understanding of the consequences of these agreements. It will no longer be acceptable that agreements such as these can be made under traditional prerogative power for Parliament simply to approve without there being a more meaningful process. That is the intent behind the amendment. It is meant in a positive manner. I believe it is framed in a better way than CRaG, and I hope it will gain support.
Baroness Fairhead
My Lords, as I repeated, the Government’s priority is to bring certainty to businesses and the public so that we will have continuity in our current trade and investment arrangements with non-EU markets after we have left the EU. Certainty is something for which we have heard widespread support in both Houses of Parliament, and not having the ability to implement our continuity agreements fully could jeopardise our ability to deliver it. Both the International Trade Select Committee and the Trade Bill Committee have heard from external witnesses that continuity is what businesses want. The report published by the International Trade Select Committee on 28 February 2018 clearly stated:
“Almost no one who contributed to our inquiry suggested that the Government’s policy objective of seeking continuity was the wrong one”.
Amendment 6, tabled by the noble Lord, Lord Stevenson of Balmacara, seeks to ensure that before we use the Clause 2 power to implement obligations of a continuity agreement, we have consulted appropriate stakeholders. While I believe I understand where the noble Lord is coming from, this amendment would have the practical impact of delaying our ability to use the Clause 2 power to implement obligations of any continuity agreement until we had satisfied this condition. This would be problematic to the delivery of our programme, as we are working at pace to ensure continuity in existing trade relationships. Once we have signed continuity agreements with our existing partners, we need to ensure that we have implemented all obligations of these agreements to guard against a cliff edge as we leave the EU. This needs to happen before we can bring these agreements into force, which is what will deliver continuity on the ground to businesses which are already benefitting from the terms of EU trade agreements.
We are seeking to balance the need to maintain pace with providing appropriate scrutiny and oversight. That is why, in the other place, we upgraded the operation of the Clause 2 power by requiring a report on each agreement to be laid before both Houses and an affirmative resolution to provide the additional scrutiny that colleagues in the other place were seeking. This means that Members of both Houses will already have the opportunity to consider each use of the power fully through the established affirmative resolution procedure. As I have already mentioned, the power is subject to constraint and will not be used to implement changes other than those necessary to secure continuity in our existing trade relationships.
Amendment 7, tabled by the noble Lord, Lord Stevenson of Balmacara, would mean that instead of using the Clause 2 power to implement “appropriate” changes to domestic regulation, it would be used to implement only “necessary” changes to domestic regulations. Again, I have sympathy with the noble Lord on this point. We are clear that we are going to use this power only to implement changes which are essential to deliver continuity. I understand where he is coming from with his suggested change to the Bill, but we have chosen to use the term “appropriate” following serious consideration of how best to reflect our policy in legislation. We have previously sought advice on this point, and the conclusion of that advice was that “appropriate” is the term which best fits the policy intention. This is because to use the term “necessary” would restrict the use of this power too much. As noble Lords know, our policy aim is to deliver continuity of effect of our agreements. To deliver this, we may need to have some tolerance for changes which may arguably not be strictly necessary but will nevertheless help us to deliver on our commitment of continuity and ensure legal certainty for UK businesses.
Limiting the power to only changes which were strictly necessary would set a very high bar and greatly increase the risk of legal challenge to the use of the power. It is one thing to justify a change as appropriate in all circumstances; it is quite another to demonstrate that that change was absolutely necessary. I am advised that this could provide a field day for lawyers and result in delays to continuity.
An example of a change that we will need to make through this power is ensuring continuity in our procurement arrangements in our free trade agreements. We will need to change the Public Contracts Regulations 2015, the Utilities Contracts Regulations 2016 and the Concession Contracts Regulations 2016 to refer to our UK agreements instead of the EU agreements that they are based on. If we were to amend the wording of this power to say that changes needed to be necessary, we could be drawn into court challenges on whether a change was strictly necessary, thus leading to delays in implementation, which would leave a gap in continuity.
Lord Stevenson of Balmacara
I thank the noble Baroness for giving way. We are in the territory of “may” and “must”, trying to decide whether we are drafting as we speak. I just want to ask her to calm down a bit, although that sounds a terrible thing to say. She has used the term “absolutely necessary”. I never said “absolutely”; the amendment just says “necessary”. Adding “absolutely necessary” would make things difficult. Therefore, it is not a case of changes being absolutely necessary—it is not essential that we do these things. I accept the point but will she accept that she is slightly overegging the case?
Baroness Fairhead
It was necessary for the noble Lord to ask about the word “absolutely”, but I object to being asked to calm down. I was trying to give your Lordships the clear advice that we have had because I thought that that was the advice and information they were seeking.
Given that any use of this Clause 2 power will already be subject to the affirmative resolution procedure, and given that we will lay the reports and our continuity free trade agreements will again be ratified by Parliament, Parliament will be fully appraised of the Government’s actions. I hope your Lordships will accept that that means that it will in fact already be fairly difficult for the Government to use the Clause 2 power without Parliament’s consent in one way or another.
I turn to Amendment 11. Clause 2 helps to facilitate a smooth transition by helping to implement the non-tariff obligations of continuity trade agreements. We realise that there are concerns about this power, so we have sought to constrain it as much as possible, and this has a number of parts. First, the power can be used to amend only UK primary legislation that is retained EU law and not any other UK legislation. Secondly, it is valid for only three years, and its lifetime can be extended only with agreement from both Houses of Parliament. We would seek to extend the powers only if it were considered necessary to ensure that our continuity agreements remained operable over time. Thirdly, the use of the power is subject to the affirmative resolution. Fourthly, the power will be used only in relation to continuity trade agreements, as we have made clear in the Explanatory Notes. Fifthly, to provide additional transparency for our programme as a whole, Clause 3 commits, in statute, the Government to providing reports on all continuity trade agreements, explaining our approach to delivering continuity in each case. In addition, I should make it clear to the Committee that regulations made under the Trade Bill will already comply with Section 7 of the European Union (Withdrawal) Act, so this part of the amendment is unnecessary.
On Amendment 101, tabled by the noble Lord, Lord Purvis of Tweed, I assure the Committee that our existing trade agreements have already been examined by Parliament as part of its regular scrutiny of EU business. Ratified free trade agreements have already been through the normal parliamentary scrutiny process for treaty ratification. Our continuity agreements will also go through the CRaG process. The noble Lord raised some concerns about that but it gives parliamentarians an opportunity to challenge them in the established manner. Any regulations made under the Clause 2 power will be introduced under the affirmative resolution, which will provide an opportunity for lengthy examination if we need to make a change to the law.
Baroness Fairhead
My Lords, my noble friend Lord Lansley has made a suggestion which I will definitely reflect on, as it is important that these reports give appropriate information. With respect to making the Clause 2 powers super-affirmative, I am concerned that the amendment would damage our ability to deliver the promise of continuity, particularly when time is of the essence. That increases the risk of a cliff-edge. We are trying to offer reassurance by providing these reports; as I said, I will reflect on my noble friend’s comments.
My response to the noble Lord, Lord Kerr of Kinlochard, is that I too am thankful for the conversation we have had. It is exactly the kind of conversation that helps because, given his experience, it aids an informed debate. I want to clarify my response about what we will report back to the Constitution Committee: this will be specifically on the Trade Bill, not on the future. However, I have said on the Floor of the House that we are open to views and we will be coming back with detailed proposals. The noble Lord commented on different ways that one can get negotiating leverage. We are always looking for negotiating leverage; sometimes it is really effective and sometimes not so much. But I take his point that we should be thinking about all the things we can do to add to that.
We have already shared some views with regard to future trade agreements. I am open to hearing views from all Members around the House about what our approach should be. Given all the elements of oversight and scrutiny that we have put in place for these trade continuity agreements, I hope that I can reassure the House and would therefore ask the noble Lord to withdraw the amendment.
Lord Stevenson of Balmacara
My Lords, it has been a very good debate. Most of the interchange has been on the latter part, on Amendment 101, but we have made some interesting discoveries, there is food for thought, and the main points are very clear. With that, I beg leave to withdraw the amendment.
Trade Barriers (Revocation) (EU Exit) Regulations 2018
Lord Stevenson of Balmacara Excerpts(5 years, 5 months ago)
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Lord Fox (LD)
My Lords, I thank the Minister for her presentation. I shall try to be brief but I do not want her to interpret my brevity as meaning that I think this is a well-presented policy. There are problems, and the problems are magnified by the nature of the challenge we will face. Assuming that Brexit happens—which these Benches do not—whatever the arrangements, non-tariff barriers will be a real issue for many businesses, big and small, across the country. So it is right that we are having this discussion.
I assume—because the Minister has not said otherwise—that, with or without an agreement, whether we crash out or agree, the Government intend that this is the direction we will travel in in dealing with non-tariff barriers. That is unusual because, in many of the other SIs we have discussed, we have tried to roll over or reproduce in British law things that exist now. That is a change.
The Minister mentioned the necessity of primary legislation if the statutory route were to continue. That pre-empted one of my questions. She then went on to make a virtue of a necessity—or a necessity as far as the Government are concerned—by justifying why a non-statutory route is preferable to a statutory one. We can perhaps come back to that.
The Explanatory Memorandum does a great job of explaining what we are not going to have any more. It goes into great detail about what the TBR does and then offers us eight lines on the proposal. If the Minister, in another life, was sitting on the board of directors of a large company and was presented with a paper making a big, important proposal that used eight lines of a full-page document, she might think that that was a little sloppy, a little cursory and lacking in detail. To some extent, it takes us for granted. There was more detail in the Minister’s presentation, however, and I thank her for that.
The Minister set out some reasons for the infrequent use and for some of the barriers and other issues. To some extent, as she said, we could have debated this in primary legislation and improved the system that we have now. However, it is not clear what is replacing it. It looks like a relatively informal system that is lacking in process. It is not clear how much resource the Government are prepared to put behind it or how individuals will operate within it.
The Minister has given a number of reasons and explanations and yet in paragraph 10 of the Explanatory Memorandum we see that there was no formal consultation. There are six paragraphs of anecdote. If you do not have a formal consultation process you are merely choosing the results; it is not a consultation. Essentially, the argument against a rolling-over of the TBR process is based on a series of anecdotes and not on a formal consultation. This lacks detail about what is to replace it, as well as a formal consultation.
As for what this process may or may not be able to achieve in the event that it is resourced, has a process and all the boxes and wires—which are not set out here—are joined up, we need to remember that the influence that we will be able to exert, compared with the influence that the European Union was able to exert, will be less because our market is smaller, about one-10th the size. So in dealing with the challenge of non-tariff barriers that our companies will definitely face, we might end up with a system that people have access to, but we will have a weaker punch and less of an opportunity to make anything happen. We will ultimately have a system where there is more friction, more problems for our businesses and a weaker way of resolving them. That is why I find this SI disappointing.
Lord Stevenson of Balmacara (Lab)
My Lords, I am grateful to the Minister for her detailed introduction to the SI. I agree almost entirely with the approach of the noble Lord, Lord Fox, and will follow a number of his points.
I am intrigued by this SI. The noble Baroness was right to point out that it does not do what the other SIs are trying to do, which is to replicate in a UK context what is currently happening because of our membership of the EU. I do not quite follow the logic. We are considering these SIs today in such large numbers because they transpose whereas this SI dismantles. The Government’s argument is that we cannot amend it but we can dismantle it. I do not get the logic of that. It seems that the Government could not do anything about it because anything they wanted to do would require primary legislation. That rather suggests that the Trade Bill, which is in limbo, is not appropriate for that. However, it seems to me to fit entirely within the parameters of the Trade Bill. I understand what the noble Baroness is saying but I do not get where we are going.
My second complaint is that the figures I have do not square with the figures that the noble Baroness used. I have just looked at the list of trade barriers which are currently reported to the Commission and, on a quick count, there appear to be about 1,000—there are 116 in agriculture and fisheries alone. If you count them by country—which I can do even as I speak—you will find that many of them are interesting countries, including the USA, which have a substantial number of trade barriers.
I am hearing a different story from the other side of the Dispatch Box about a pathetic structure which is hardly used and has industry turning away in droves. As the numbers show, however, that is not what seems to be happening; there are live cases covering a range of issues that play to this question of non-tariff barriers. It seems rather odd that we are trying to dismantle it. Those are my opening points. It is a system which the Government have taken against. They have decided in principle, for reasons I do not follow, that it would be much better if we were not part of the TBR scheme, or any TBR scheme, as we leave the EU, if we have to, on 29 March.
As the noble Lord, Lord Fox, said, there are clearly issues about trade barriers and how we are going to resolve them. Surely it must be the objective of the Government to make sure that we have a robust system in place to support our businesses and workers, who will otherwise be affected badly by countries which have decided, for reasons best known to themselves, that barriers should be erected. Given the new world order, in which might is right and where protections and tariffs are rife, we verge on the prospect of a very dangerous set of trade wars. It therefore must be appropriate for the UK Government to think hard about this, and it is not obvious that the right way to do it is to dismantle something that has some merit.
Why would the Government decide to replace the present statutory scheme, without formal consultation or proper notification, with a non-statutory reporting mechanism, which seems at its heart to simply rely on emails sent to local ambassadors in the hope that they will be able to do something about it? That does not seem to pass the test of a serious approach to supporting exporting.
I am intrigued why this responsibility—which clearly is not the flavour of the month within the department—is not given, to be beefed up and made more effective, to one of the two bodies that the Government will rely on if the Trade Bill ever goes forward. The Trade Remedies Authority deals with exactly these issues. Why does it not have this responsibility? If there is some doubt about whether it has the range or the skills to do it, the CMA will also be looking, through its state aid function, at similar areas. There is a perfectly good way of taking on this responsibility outside the department. Taking it outside the Department for Trade will give hope to those industries that do not naturally relate to BEIS or other departments such as Agriculture that the new body will set up expertise.
The Minister said that feedback on the effectiveness of the trade barriers regulatory system has been mixed. Without a formal impact statement being available—or maybe an informal one, as we have heard in other SIs—and without knowing what an adequate definition of “mixed” is, there are rather confusing messages coming back. “Mixed” does not mean a unanimity of views, so I take it that there were some dissenting voices. Would it not be sensible to set out clearly what the objective of the trade barriers system should be, what system is required to countermand these things, and to set up a proper consultation to come up with a solution that will command the support of those who have to be involved in it?
The argument seems also to rely on the fact that even though there is this system, it does not achieve very much and has rarely been used. The information I have—I do not know whether it is true—is that when the Confederation of European Paper Industries lodged a complaint that measures imposed by Turkey on the imports of certain varieties of paper were inconsistent with both the WTO and the EU-Turkey customs arrangements, Turkey immediately withdrew the unfair measures because of possible action through the statutory system. Even though it does not have a set of sanctions or a court behind it, the fact that this was formal and statutory-based was sufficient to get action. I do not understand why what might be a developing, long-term programme will be abandoned when the UK might have need of it.
If we are to get rid of it, what about the things that are present and still of value? The Minister did not give any detail. There is a market access advisory committee which monitors arrangements and puts forward recommendations, and there are lists published. Who will do that when we move into this new, semi-informal system? In particular, how will we organise in the UK the variable geometry that arises when different departments have responsibilities here? I do not think the issues that will be affecting Defra—such as the transport of live animals—will be in any way cognate with some of the other issues that have been raised. How will that be managed? In particular, in the future we will have a situation where the devolved Administrations—Scotland, Wales, and Northern Ireland if ever re-formed—will have direct trade responsibilities. How will their complaints be organised? Will that be done on an informal basis, and has that been cleared with the devolved Administrations? I suspect that they will have concerns about that. While we are on the topic of consultations, in the absence of a properly constituted market access advisory committee, where in the system will representatives, consumers, trade unions and businesses be able to feed in views and advice about this non-statutory system? Will this be done in some informal way, through Facebook perhaps?
The trade barriers regulations are only one area of EU legislation that deal with trade barriers and dumping. This SI before the House is part of a process, so where are the other pieces of EU legislation that deal with dumping and other matters? Specifically, what about Regulation (EU) 2016/1036 about protection against dumped imports and Regulation (EU) 2016/1037 on protection against subsidised imports? Can we expect those, and, if so, roughly what is the timescale?
There is also a transitional issue. There are a number of complaints apparently already in the system from the UK. What will happen to those if they have not been completed by 29 March 2019 and we have to leave the EU with no deal? What happens if there is a transition period? These are two separate issues. I put it to the Minister that the department should be issuing advice about those currently engaged. Even though they are small numbers, the issues are substantial.
I end by suggesting to the Minister that, rather than revoking the regulation, it might have been a good idea to make a greater effort to investigate whether the current system was truly effective and whether the fact that the statutory element was not used very often was a sign that it was working rather well, rather than the opposite. I generally agree with the noble Lord, Lord Fox, on this: this SI is somewhat undercooked.
Baroness Fairhead
My Lords, I thank your Lordships for your contributions today. This has been an interesting debate in a particular area and I will try my best to cover all the points that were made. I start with the point made by the noble Lords, Lord Fox and Lord Stevenson of Balmacara, about why we are revoking. Essentially it is because, as I laid out in the briefing, there is a very complex process to submit and all it requires the Commission to do is to investigate and produce a report—it has no teeth or requirement to solve anything. What is the logic of revoking rather than amending? The amendment, as I said, concerns primary legislation—that is our advice. When you look at amending to create primary legislation with the force of just creating a report, you wonder why you would do that. Many countries have exclusively non-statutory approaches, including Australia and New Zealand.
Lord Stevenson of Balmacara
I understand the point the Minister is making, although it was not really at the heart of what I asked. It would be helpful if she could explain what would be the difference. She talked about the informal ways, but let us take the Turkey example. As I understand it, that was properly documented, sent in, appropriately registered, taken up by the European Union and was formally there. Therefore, it is the threat—rather than the practice of it—that the EU might take a range of sanctions and not necessarily just do a report that seems to have caused the change of heart in Turkey. In the new system, what is it—emails to the ambassador?
Baroness Fairhead
Definitely not. What happens when this goes to the MAAC—Market Access Advisory Committee—is similar to what will happen when it goes to the market access team, which is the new team set up inside the DIT. All concerns and market access issues can be raised on an online site and, as I tried to explain, they will be reported on. The concerns will go back to businesses and particular sectors and will also come before this House. So within the bounds of commercial confidentiality, the concerns will be logged as specifically as possible. In fact, it will be similar to the current approach: the areas will be reported on and will not just stay in the ether.
European Union (Definition of Treaties) (Economic Partnership Agreements and Trade Agreement) (Eastern and Southern Africa States, Southern African Development Community States, Ghana and Ecuador) Order 2018
Lord Stevenson of Balmacara Excerpts(5 years, 5 months ago)
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Lord Stevenson of Balmacara
At end to insert “but that this House regrets that the draft Order does not appear to take into account the substantive issues raised to date about the impacts on local agriculture, industry and commerce, and the well-being of the wider population in the partner states to each agreement; expresses serious concern at the fundamental lack of accountability and parliamentary scrutiny available at present for treaties and trade agreements; and calls on Her Majesty’s Government to come forward as soon as reasonably practicable with a series of proposals on how trade policy is to be determined after the United Kingdom’s withdrawal from the European Union.”
Lord Stevenson of Balmacara (Lab)
My Lords, I am placed in rather an unusual situation because I had understood the conventions of the House to be that the Motion in the name of the Minister would be moved, I would speak to my amendment and she would then respond to that, but she has given her response first, which is extremely good—and of course I am completely at a loss as to how to respond. I do not really have much to say because I do not have a speech that will address that way of progressing. It probably comes to the same thing. The Minister is looking a bit panicked about what I have just said but I wanted to explain why what I shall say will be repetitive, although I will try to adapt it. Hansard will have a great job following me in this, but that is the reason for it.
The narrow thrust of the response concerned the wording of the amendment but, with respect to the Minister, I think she has missed the main purpose of the amendment, which is to try to engage with the Government—although she said she would engage in future—on a much deeper question about how we do trade more generally. In a sense, that is where I shall end up.
I make it clear at the start that I am not opposing the ratification of the EPA and its South American extension, in the agreement with Ecuador, because it should go forward. The process may be flawed and we want to raise issues on it but it is not sufficiently problematic for us to oppose it. In saying that, I speak with confidence that I have support around the House. I have a copy of a letter sent to the Minister by the noble Earl, Lord Sandwich, who I think at that stage could not have spoken in the debate but may be tempted to address us later. I have also had correspondence with my noble friend Lord Judd, who is in his place and may want to contribute. Although what I will say is narrowly written, given what I thought I would be saying when I prepared it—this will have to be adapted as I read it—it comes with support from elsewhere around the Chamber.
The key question that we in Parliament have to address is: how do we assess trade, going forward? For almost 50 years, the EU has been negotiating economic partnership agreements on our behalf. We think there are probably about 40 of them involving over 90 countries, although the numbers are difficult to get. We recognise that they vary in scale and scope, as the Minister said, particularly when dealing with developing countries. The EU has developed a mature system for preparing, negotiating and seeking approval for these agreements on behalf of member states. At present, they cannot come into full force without being ratified by every member country. Although the systems are sometimes a bit different, the process we are in now allows the Government to ratify the agreements before us in a definitional way, rather than ratifying the individual wording.
It is a bit ironic that only now, at the very end of the process, is our Parliament—the interests that I have explained range further than this party—given a chance to consider these agreements. It is surely time to think again about why we do this, even if the opportunity that may come from the EU withdrawal Act allows us to put down something more concrete in future.
The amendment that I have tabled to the Government’s Motion expresses regret, but we will not pursue it to a vote. I have tabled it primarily to afford us the chance to debate these trade deals in the one and only time we have to do so; but secondly, in so doing to highlight the lack of proper scrutiny, consultation and debate given to these EPAs and the other agreement; and thirdly, to point out what needs to change if or when we regain control of our trade deals after Brexit day. This is material and important, and time is pressing.
To repeat a little of what the Minister said, the deals before us are a group of trade agreements which, taken together, share the noble aims of enhancing sustainable development and bearing down on poverty. That is to be welcomed. Some aspects of the deals that she mentioned respect the countries we are talking about. They differ from traditional trade agreements by ensuring that there are asymmetries in favour of the developing country, which include, as she said, long liberalisation periods, flexible rules of origin and the exclusion of sensitive products from direct competition. They also strive to increase regional integration, as she mentioned, through regional preference clauses that make countries in the same region provide the same advantages to each other as they will do to the EU.
However, the worry is that these agreements have not lived up to the intentions of the EU negotiators. Many of the least developed countries already had special access to EU markets through the non-reciprocal “Everything But Arms” scheme. But under these EPAs, developing countries are being asked to open up to 80% of their markets to European goods and services within a decade of signing. Opening up domestic producers to EU competition so fast has led some to fear that it will decimate their local domestic industries. Carlos Lopes, the high representative of the African Union, has said:
“Africans have serious concerns about how the EPAs would affect their industrial development and the African Continental Free Trade Area”.
Some of the partner states have also complained that tariff reductions have eliminated a crucial source of revenue, which Governments desperately need to provide basic public services and invest for future growth. According to the UN economic commission, Ghana alone could lose about $300 million in revenue if it signs the EPA. Tax collection is notoriously difficult in many of these partner countries, where tariffs were a reliable source of otherwise elusive government funds.
Spio-Garbrah, the former Ghanaian Minister for Trade and Industry, says that as the EPA also requires the Economic Community of West African States to open its markets over a period, it is Ghanaian manufacturers, not exporters, who, if they are not competitive, may face challenges from European imports that may be cheaper, of better quality and more attractive to consumers. Yao Graham, co-ordinator of the Third World Network, said:
“In the manufacturing and other industrial sectors, the EPA will cost about 40,000 jobs in ten years. We also anticipate that there will be a collapse of domestic industry especially in the … manufacturing sector … It will also undermine ECOWAS economic integration and the wider process of intra Africa trade and lead to the loss of government revenue from trade duties”.
There are also claims that EPAs might become a barrier to intra-African trade. Carlos Lopes said:
“In most areas, the EPAs will actually hurt intra-African trade, weakening trade revenues and undermining trade-driven industrialisation in Africa”.
There may be unintended consequences in trying to tailor each EPA to a specific country or region. The EU may have created contradictions in treatment between African countries. It is not surprising that certain African countries have claimed that they agreed to sign the agreements only under duress. It has been said that throughout the negotiations the EU threatened not only to remove the special least-developed country preferences available under the EU-African, Caribbean and Pacific group of states programmes but to withhold generalised system of preferences benefits from more advanced African economies.
Of course, we surely need some idea of how these deals will benefit the UK economy, but when you look for an impact assessment, no figures have been produced. The Department for International Trade recognises that there is no econometric modelling for the impact of some of these EPAs on UK trade and assumes, particularly in respect of the Ghana and ESA agreements, that the same modelling that has been applied to the SADC agreement will apply, while noting that,
“the econometric modelling available does not provide the impact of increased exports on UK GDP, so this cannot be included in the NPV calculation”.
So we are a little blind about where the benefits come from.
So, despite good intentions, these EPAs, some of which have been characterised as having colonial overtones, have come to represent the very worst of international trade policy—at least, so it has been argued. Instead of initiating African growth, we are initiating an African decline. Instead of spreading good will, we are spreading resentment. Instead of creating friends, we may be creating foes. Can the Minister shed some light on how the EU came to promote these deals, despite the concerns expressed by civil society and, more importantly, people in the countries themselves?
Surely the lesson to learn from this debate is that trade matters. It matters because it is so fundamental in shaping the world in which we live. Modern trade deals such as this are no longer simply about tariffs, as they cover services as well as vast areas of public policy. Modern trade deals have to be constructed with proper consideration for the environment, workers’ rights and human rights if we are to live by our principles. At the very least, we must respect our international obligations, be they on climate change, endangered species or the arms trade. We should go further and ensure that trade is used to make the world a better place.
We do not yet know whether the withdrawal agreement with the EU will survive. Certainly, from what the Minister said, we have a few years in which we will be able to see how this works in practice. I hope she will accept that there needs to be preparation for a possible future post-Brexit trade policy. We should also be putting pressure on the Government, while they are still part of the rule-making process, to ensure that any other trade deals struck by the EU are based on enduring principles as well as a foundation of transparency and consultation.
For example, the Trade Justice Movement is proposing some red lines for future EU trade policy, and UK trade policy, should that be independent. The points it makes include that trade deals: should be developed with full democratic scrutiny which provides for the involvement of the public, civil society and Parliament; should not take precedence over other societal priorities; should not lead to a race to the bottom on labour rights; should preserve the right to make policy in the public interest and make sure of the precautionary principle; should exclude public services; should allow Governments to regulate and tax international investment; should exclude ISDS mechanisms; should ensure that e-commerce is properly regulated and taxed; and should not prevent government using public procurement to support local communities to achieve social and environmental goals. That is a very ambitious but rather good list of issues that we think should be addressed by any new policy.
Underlying all that is surely the by-now unanswerable case for Parliament being involved in all stages of trade negotiations. Consultation, with committees being sent information, is not enough. We must have a system that will extend to existing EU trade deals that we might wish to roll over from the EU after exit day and will begin the long and difficult process of preparing for new ones.
The Government keep insisting that now is not the time to bring forward new plans, but I see no reason not to use the stranded Trade Bill to establish a new system for considering trade. Indeed, if we ever get to Committee, we have tabled a number of probing amendments on this and related issues that are available from the Printed Paper Office. On procedures, for example, we are proposing a new Joint Committee of both Houses of Parliament, modelled loosely on the Intelligence and Security Joint Committee. It would be charged with agreeing the mandate for future trade negotiations, overseeing the progress of negotiations and producing reports on how the agreements would work for the benefit of our national interest as well as that of the partner state. Such a committee could be responsible for recommending trade agreements to both Houses of Parliament for approval and reviewing the success or otherwise of existing deals.
Baroness Fairhead
We are trying to make these countries long-term trading partners. We provide support to help build and encourage investment, and it is likely that that will increase the processing capability of some of their plants, and will, therefore, potentially create competition for some of our companies. In a sense, however, that is what we are trying to do: to bring up trade. As the noble Lord, Lord Stevenson, said, trade matters and can lift up nations. It is not about a single point in time; we are trying to encourage investment to help these nations move up and become long-term, mature trading partners that we can continue to deal with in the future.
I turn now to another area raised by the noble Lord, Lord Stevenson of Balmacara, the noble Earl and the noble Baroness, Lady Sheehan: the question of regional integration. The EU has been one of the biggest supporters of African integration and efforts to deliver a continent-wide agreement. The EU has aligned the EPAs with the existing economic and customs union, seeing that as the best way, according to the preferences of EPA partners. It is clear that they are numerous and overlapping, not by the design of the EU but because we have worked with the flow of what it has done. To try to support regional integration, we are encouraging the African states to extend to each other the same level of liberalisation. This is to make sure that they aim to prevent increased imports from the EU displacing imports from neighbouring countries.
The issue has not been raised—I can hear it coming—but the most-favoured nation clause that might result from that is specifically designed to ensure that it applies only to major economies, and that excludes most of the African nations. We are genuinely trying to work with the flow of regional integration.
On the point raised about the AfCFTA by the noble Baroness, Lady Sheehan, it is a cross- African CTA that is being worked on and, as she will know, it has taken a while. We will continue to support the efforts to do that but in the meantime we believe that EPAs are a way of allowing those countries to progress.
As to the economic benefits, because these are EPAs they are asymmetric in favour of the developing nations and that is why we are seeing limited benefits in the short and medium term to the EU countries, including the UK.
The noble Lords, Lord Haskel, Lord Judd and Lord Stevenson, the noble Earl, Lord Sandwich, and the noble Baroness, Lady Sheehan, raised the issue of parliamentary scrutiny. The noble Lord, Lord Haskel, was helpful in laying out what the current scrutiny is under the EU system. In taking forward the existing trade agreements, we have said that we will try to replicate them to provide as much continuity as possible. In the interests of providing parliamentary scrutiny, we will make sure that a report is prepared outlining any changes that have been made and provide opportunities for debates in both Houses to allow Members to comment on those change before ratification under the normal procedure. So we have tried to address the issue of trade continuity agreements.
This SI is not about future trade policy nor about our future scrutiny arrangements. As I said in my opening remarks, an Oral Statement was made in the other place by the Secretary of State, who laid out some of the ways in which we will engage. There will be a 14-week engagement across civil society, with unions and businesses, and that consultation is taking place on four potential free trade agreements. We will then create an outline approach which, again, will be made public and available to Parliament. Through that process, reports and accounts will be laid before both Houses.
In this House there are a number of Lords committees but none with a specific remit on trade policy. It is not for me to determine for the House of Lords what committee would be appropriate but, as I said, I am keen to talk to noble Lords and hear their ideas. At the moment we are working out our proposals but, ultimately, if any new committee were established it would be for the House of Lords to make its own decision on what that would be.
On the question of involving civil society on these existing EPAs, as I have said, we are continuing to engage actively with civil society. However, under the existing EU approach, there is a joint civil society engagement which takes place under the existing SADC EPA to allow those states’ approach to an effective implementation of the EPA, and it is on the implementation side where that civil society involvement is continuing.
I agree wholeheartedly with the noble Lord, Lord Stevenson of Balmacara—trade matters. We need to get that right. We remain committed to engaging further with Parliament as we develop an independent trade policy. We will continue to work with stakeholders across the UK to ensure that our policy delivers for this great nation.
I encourage noble Lords to support the UK’s ratification of these agreements, which will demonstrate to these countries the importance to the UK of agreements with them, as well as our commitment to development and global prosperity.
Lord Stevenson of Balmacara
It would be conventional for the Minister to persuade me to withdraw my amendment, if she could. Otherwise, the implication is that the Minister is quite happy for it to be moved.
Baroness Fairhead
I would be grateful if the noble Lord would withdraw his amendment.
Lord Stevenson of Balmacara
I am sorry about that bit of theatre. It just makes the point that the structure has to be right or we cannot get to where we want to be: a mutually agreeable situation.
I thank all speakers for participating in the debate. As I said, the aim all along was to have a debate on issues on which we agree. More about this issue unites than divides us, and it is good to have a chance of an open debate on issues of such importance. In fact, it was a special treat to have such expertise and experience represented by the noble Lords who spoke; we were able to pick up on some important points that I am sure we will want to take away and think about when we come to read Hansard.
In her contribution, the noble Baroness, Lady Sheehan, used the examples of Kenya and Tanzania. She made all the points that had been picked up elsewhere about the difficulties for two countries with common boundaries yet completely different profiles on where they want to get to as societies with different experiences and opportunities. As she said, the present arrangements are unlikely to result in regional harmony, let alone the growth in economic activity that we all want.
I will read the Minister’s second speech in Hansard quite closely. She used “we” quite a lot in relation to the way in which these treaties have developed. It is quite unusual these days to find Ministers of Her Majesty’s Government talking as if they were speaking on behalf of the organisation with which we are all involved—the EU—but I take it that she used that word in the sense of the EU trying to achieve certain aims and objectives. That may be a small point, but I enjoyed it. The EU has done some good work in this area; despite the criticisms we have all heard, there is something of value at the end of this process. We should recognise that.
However, the points made by my noble friend Lord Judd are very important. We must not fall into the trap of assuming that some sort of “Made in Brussels”—I do not mean that in a negative sense—mode of liberalisation is the right one for the range of countries we have to deal with. It must be a question of fitting what is appropriate to where the various areas and countries are. I take the point that, by working with the existing arrangements in Africa and South America, there is a better chance of those arrangements working and bringing us the benefits that we are looking for. On the other hand, it is clear from the comments I read out, which other noble Lords have mentioned, that there is some dispute about that. Again, that makes the point that this issue is important and we must not let it go by default; we must engage with it in some way. Even if we go down the routes being offered to us, the question of who assesses that and under what terms of reference—for example, what success looks like—is uncomfortable for those who spoke tonight. Perhaps the Minister could take that away.
Moving on to the future, I do not want to sound too critical but, although there was a welcome sense that engagement with Parliament is an important aspect of the work going on in the department, I did not get the impression that any of the proposals made by either myself or other noble Lords—such as my noble friend Lord Haskel on behalf of the committees he is involved in—reached out in a way that fits with the purpose of the amendment. We may need to go through the Trade Bill and pick up the points there, because there are amendments down that would certainly open up that opportunity. To make the point more fully, if all we are being offered is a bit more information, a bit more consultation at arm’s length, a bit more engagement with civic society, but no real sharing of the process of agreeing and moving forward the agenda, I do not think that fits where we are in terms of where people want to be on trade. Trade is important because it matters, and if it matters then people need to find an echo of that.
Although I mentioned them in my speech, I did not hear the Minister talk about the devolved Administrations. Clearly, it is not her departmental brief to do that, but if we do not get that right, we will all just go into a brick wall at great speed and it will not work. These matters will be devolved to these Administrations and they will have their own views. There has to be some structure, some constitutional arrangement, which gives them confidence that their justifiable and important issues will be raised as part of the process.
It may be that a Lords committee is the right solution, but I do not think that takes the trick. I will argue very forcibly in the Trade Bill that we need to think harder about what powers are given, to whom, and for what purpose, and what process will help to engage the country thereafter. There is a frustration that the lack of information and movement on this will build up. If I can leave the Minister with this, my feeling is that you cannot leave this too long. It may be that, if everything goes smoothly with the Prime Minister’s proposals, there will be a period of two years, or possibly longer, in which we can work these things out, but there is a lot of interest and expectation now and I think it would be a mistake not to recognise that going forward.
With that, and with the Minister’s strong request that I withdraw my amendment ringing in my ears, I beg leave to withdraw.
Trade Bill
Lord Stevenson of Balmacara ExcerptsTuesday 11th September 2018
(5 years, 8 months ago)
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Lord Stevenson of Balmacara (Lab)
My Lords, I thank the Minister for the many meetings and discussions we have had in the rather extended period while we waited for the Bill to come into your Lordships’ House. We have learned a lot about each other’s positions, as was reflected by her speech today—rather annoyingly, because she anticipated some of the things that I might have said later. But that has been useful in building up a relationship, particularly as she comes new to the job of taking a Bill through the House. I also congratulate her, as other noble Lords have, on the clarity of her introduction; it is rare to have such a clear exposition of a Bill, and it was helpful to the debate that followed.
I join other noble Lords in congratulating the noble Baroness, Lady Meyer, on her maiden speech. She shared with us some dark and difficult moments on a long journey of great interest, and I look forward to hearing more of her contributions as she builds on her career in this House as well as on her previous life.
This has been a good debate, except, as was picked up by the noble Lord, Lord Purvis, for a slight deterioration towards the end of the speeches from the Back Benches. I was sorry to hear that. I do not think that we earned any of the disapprobation levelled at us by the noble Lord, Lord True, and it did not seem to fit in with the generally engaged debate and discussions we have had. Nevertheless, he has the right to make his own speeches as he wishes, and we must learn from them and move forward as best we can. But this debate has been enhanced by contributions from former Secretaries of State, former Ministers and officials who have worked in trade, and envoys who have had experience in the real world; they have brought their experience to bear in the comments they made, and we have all learned a little from that.
The Minister talked warmly about this House’s skills and ability to scrutinise Bills, and I share her view on that. It is therefore something of a surprise, as the noble Lord, Lord Fox, noted in his introductory speech, that while we know about the business through to 21 October 2018, no dates have yet been suggested for Committee. One wonders whether in fact it will proceed; at the present rate, it is unlikely to be ready for Royal Assent until perhaps the end of December 2018, which seems rather late and does not quite fit with the urgency that was expressed about certain aspects of it.
The Minister tried to persuade us that this was not a Brexit Bill and that it raised no issues about the timing or the content of any withdrawal agreement that might be emerging from the current negotiations. But the House, by a ratio of about 4:1, as I made it, has taken a contrary view. Indeed, thanks to the interesting contribution by the noble Lord, Lord Cooper of Windrush, and other noble Lords, I feel much better informed about where we are in the post-Chequers situation. Indeed—although it might have been concealed by my strictly temporary face covering—I allowed myself a small smile of satisfaction at the thought that we might as a country be coming to our collective senses and finding a way through the muddle we are now in. The Government might wish to reflect on why they have misjudged the view of the House on this issue. I suggest that there is more than a grain of truth in the comments made by my noble friend Lord Liddle. His assessment was that it stemmed from the feeling that the Government’s current position on Brexit, and on trade in particular, is economically illiterate and quite probably politically unsustainable.
Let us roll back for a moment and use the benefit of history to review where we are. Many Members of your Lordships’ House will remember that the Cobden-Chevalier Treaty was signed with France in 1860, marking the world’s first free trade agreement. A Back-Bench supporter of the treaty told the House of Commons that it would both advance the prosperity of our country and benefit peace and happiness. His point, of course, was that trade is a tool, not limited to promoting self-interest but also uniting and shaping our world. “Prescient” is a great word for that; he certainly seemed to know what was coming.
In the following century and a half, no agreement has in my view better demonstrated this principle than the European Union. It has brought nations together into sustained peace and, at the same time, offered and delivered economic prosperity: security, peace and prosperity are a pretty potent mix. Yet, as the UK’s departure from the EU looms, our Government are preparing for a trade policy that shies away from that proven principle. They do not welcome calls to allow civic society, trade bodies, trade unions and consumers to feed into negotiations; they have not worked out how to engage properly with the devolved Administrations, the English regions and our great cities.
Ministers are trying to claim that this Bill is nothing more than a technical measure. But the questions raised today go far further, getting to the heart of what we are as a nation and how we engage with the world. What will be the basis of our trade policy? Who will operate it and how will it be agreed? How will it impact on ordinary people in the UK and outside?
Assuming that there will be a Committee stage, we will be laying amendments in the hope of improving this Bill. The way the government procurement agreement will work in practice, how to ensure protection for our high-quality services, labour and environmental standards, and how we will preserve our human rights protections must all be tested and made clearer in the Bill. At the same time, we have to make sure that UK firms can compete for the procurement on offer in signatory countries on a fair and equitable basis.
We need to strengthen the independence and integrity of the TRA, the Trade Remedies Authority. The model here is surely the CMA and the Information Commissioner’s Office, or even Ofcom. It is not, and certainly cannot be, simply another non-departmental public body under the control—or under the thumb, perhaps—of the Secretary of State; it needs resources to be guaranteed on the face of the Bill.
Recognising the calls from all around the UK for a proper, open, transparent and inclusive system, under the control of Parliament but engaging with the devolved Administrations, we need a system, perhaps a Joint Committee of both Houses, for setting up a trade policy, agreeing a mandate, receiving information on the progress of free trade agreements, and making recommendations to Parliament, for Parliament to decide, on whether or not to accept the proposed deal.
The noble Lord, Lord Whitty, was right to spell out the many issues that now need to be included in a modern free trade agreement. This sparks the thought that we are talking at present about rolling over, without question or scrutiny, something like 40 free trade agreements. Some could happen during a period when these issues are not at the forefront of negotiations, or they could fail, as the recent CETA agreement does, to do justice to human rights or other issues; surely this makes the case for proper scrutiny. The Government have begun to move on this issue, but they need to go much further, including continuation deals as well as any new ones. We need to spend some time on tariff rate quotas, as mentioned by my noble friend Lord Grantchester. GIs were raised, as were state aid rules and, more generally, how we protect UK businesses and raise productivity in the United Kingdom as a result of all this work, which was a key point raised by many people.
Finally, we need to return to the question of a customs union. I agree, for the reasons given by the noble Lord, Lord Lansley, with the argument for looking again at this. I add one additional point: there are very few successful customs unions in the world, and very few with the depth, breadth and strength of the EU. I think the evidence is there to make it absolutely clear that there is no remotely realistic scenario under which businesses in the UK outside such a customs union would be in a better trading position than if the UK stays inside. Our businesses will suffer outside a customs union and it will be far more difficult for them to sell their goods abroad.
The noble Baroness, Lady Neville-Rolfe, made the point clearly that trade is the way to prosperity. We have to make sure that, whatever we do, laser like, we focus on that. Put simply, a stand-alone UK is extremely unlikely to secure a more effective trade deal than one struck while we are within the EU. Whether or not we have zero tariffs, non-tariff barriers to trade and their impact on our services—the golden egg of our economy —will destroy the UK economy and reduce living standards. I look forward to the debates that are to follow.
European Union (Definition of Treaties) (Canada Trade Agreement) Order 2018
Lord Stevenson of Balmacara Excerpts(5 years, 10 months ago)
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Lord Fox (LD)
My Lords, the noble Lord, Lord Whitty, was right to highlight consumer and voter concerns about such matters—but I should point out that there are also business concerns about the Government’s stature in the trading environment. It is not just the content but the body language that goes with it. At the weekend we saw some appalling body language from senior Ministers about business and some of our most important exporters, so it is good that we can ameliorate that at least in some way with some positive body language here. It is good for us to be discussing this. Perhaps it is churlish of me to point out that the reason why we are discussing it is that we are in the EU, which has worked hard to deliver this treaty.
It is also heartening that we are discussing something that fits within the WTO legislative procedure rather than—sadly, and increasingly—within a worldview that is moving outside the WTO. So it ticks a number of multilateral boxes. As we have heard, Canada is of course an important current trading partner, and one that we hope to make larger. So CETA and its ratification are to be welcomed. It is a good arrangement and, clearly, as the Minister pointed out, the Canadians have made it clear that this is a framework by which a transition in the event of Brexit can be moved into a bilateral agreement between ourselves and Canada.
As the noble Baroness who spoke before me pointed out, it is clear that this does not include services—that is my understanding. I see that the Minister is shaking her head. Perhaps she might indicate which services are in and which are out. My sense is that very few are in. What would be the attitude towards a bilateral agreement on services between our two countries?
The Minister also pointed out that a working party to transition this has already been set up. Perhaps she could give us some sense of how long “swiftly and seamlessly” really means in terms of moving from one to the other. She used some examples; quite a lot of them were agricultural and food products. Clearly, Canada has a very strong agricultural industry. I would be interested to know what impact analysis has been done of the relative flows in both directions of agricultural and food products between our two countries. The Minister talked about growing trade—I think she used the phrase “hundreds of millions” in extra trade. What kinds of targets do the Government have for increasing the flow between the two countries?
It is all good—except the context in which CETA could be transitioned between our two countries really does depend on the nature of the arrangement we have with the European Union. Canada has already made that clear and has expressed unhappiness on, for example, the division of quotas and other such issues. Perhaps the Minister can tell us how these kinds of things feed in to our negotiations with the European Union.
The investment court system—ICS—has already come up. The Minister mentioned it, as did both the previous speakers. This is clearly an area that has raised people’s concerns. There is a perception that large multinationals will have an advantage in such a system. It is easy to understand that perception because this will be a complex and expensive process. How can the Government allay the fears of smaller traders and individuals that this will not be a charter for the larger, deeper-pocketed companies to play the system? Can the Government confirm that the ICS will be rolled over into any bilateral agreement should CETA be transitioned post Brexit?
Finally, the major exports between the two countries are in the engineering sphere, specifically nuclear reactors, boilers, machinery, vehicles and aircraft. I note that all these sectors could suffer severely under Brexit; for example, due to border friction, the restriction of movement of people, and exiting Euratom. There will be pressure on those businesses, so what assurances can the Minister give them? I note the particular importance in the aircraft industry of the Anglo-Canadian relationship at Bombardier in Belfast. Again, what assurances can the Minister give the workers there?
It is good that, instead of attacks on business by the Foreign Secretary or the Health Secretary, we are having a positive debate about business. CETA adds a long-term view to things, in respect of which business is desperately looking for stability. Within the context of those questions, we welcome this statutory instrument.
Lord Stevenson of Balmacara (Lab)
My Lords, I am grateful to the Minister for introducing the draft Order in Council which classifies CETA as an EU treaty, and to the others who chipped in to this debate. It is the second week running we have had a debate on trade. Let us keep the momentum going and have more of this. It is a good topic and will become even more so as we get on to the Bill that has been prefigured. This debate is important in itself but, as my noble friend Lord Whitty said, it is also a harbinger of how we might do deals in the future; in particular, how the Government might bring Parliament into the process.
It is interesting and therefore a bit ironic that this order is a draft of an Order in Council—one of the most obscure aspects of our legislative structure—and does not actually deal with the content of CETA at all. The Minister was kind enough to go over some of the main points in it, but of course, as the noble Baroness, Lady McIntosh, said, we lack an opportunity to discuss in detail some of the ways in which this framework agreement has been created. I hope that by the time we get to a rerun of this, or to any other free trade agreement that will be brought forward, we will have a much more substantial, engaged and expert debate on the mechanisms being created, the detail of what is or is not included in the free trade agreement and some idea of the process that we will be involved in.
G7 Summit and Future Trade Relations
Lord Stevenson of Balmacara Excerpts(5 years, 10 months ago)
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Lord Stevenson of Balmacara (Lab)
My Lords, I, too, thank the noble Baroness, Lady McIntosh of Pickering, for securing this debate, which comes at a good time, poised as we are to go into the Trade Bill. “Poised” may be an overstatement; I think that we might get to it at some point in the next six months, but we are not being told when. This debate gives us a chance to reflect on some of the issues that arise, specifically from the G7’s failure to reach agreement but also in a wider context.
I agree with the noble Baroness that the G7’s failure to deliver even the pre-agreed communiqué was astonishing, and it was right that she drew attention to it—I think that we are at a crisis point in that sense. I agree also that deteriorating trade relations represent one of the biggest security threats around. More worrying is the US abandoning, or seeming to abandon, a rules-based system—if indeed it is doing that. It may make for good domestic US politics, but it sends a tremor over the whole world, as growth will be affected. I look forward to the Minister’s responses to the noble Baroness’s specific questions.
My noble friend Lord Whitty took a slightly wider approach to this issue, drawing attention to the lack of agreement on the benefits that free trade can bring. I agree that it is also a particular problem. If we are going to make a success of where we are post the EU withdrawal Bill, we will have to spend a lot more time thinking harder about what we want to say to people about the benefits that can flow from a much more engaged approach to free trade. It is also true, as the noble Lord said, that another series of actions is going on in the world, with a different, perhaps more populist, approach to politics that is anti a sense of engagement with an open basis for trade and which will have a wide impact if we do not think harder about how to counter it. His comments were important and should be listened to. The noble Lord, Lord Purvis, also picked up, as did my noble friend Lord Whitty, that we were already in trouble before the G7 summit. The WTO seems to have stalled in terms of its activities; it has lost credibility in the last decade or so and there will be real problems if a trade war gets going in any real sense.
Although the numbers signed up to this debate might suggest otherwise, I believe that there is a burgeoning interest in trade issues, and I think we will be able to capitalise on that as we go forward to the Trade Bill. Having said that, I take the Government’s view that this narrow, technical Bill is not something we can use to expand very widely on considerations to do with trade. However, I argue that if we are seeking to emulate, post Brexit, the arrangements currently in place for the making and amending of EU trade agreements, which is the main, narrow purpose of the Bill, it must make sense to see the Bill in the light of where the Government see us ending up on this more generally. Of course, we have to scrutinise the main measures in the Bill, such as the powers of the new trade remedies body. We need to check that the TRA has sufficient expertise, knowledge and resources; we need to think about government procurement; and there is the question of state aid rules, particularly following the announcement that the CMA is to be given responsibility for this area across the whole country.
We need to have more detail on the Government’s thinking on what exactly our trade policy is. What, for example, is trade? It sounds a very simple question: it obviously includes goods, but what about services, intellectual property and investment? Most modern trade agreements deal with all these issues—they are interwoven and inseparable. Our policy will need to reflect that approach. How does trade interface with development? There is clearly a link between grant in aid and the economic activity that follows from it: it may be based initially in agriculture, but it soon works out that it needs to be involved also in economic growth.
The noble Lord, Lord Purvis, said that one of the biggest threats to free trade was non-tariff barriers such as regulation. How do we approach that? Are we going to look for a mutual recognition approach or will we be reliant on detailed agreement on our regulatory framework, making sure that it stands up to any tests that anybody might wish to put it to? If we are a rule taker, that does not sound a very good place to be. How will we be sure that our regulations will be effective and where will disputes be settled? Does the WTO have the skills to expand and act as an enforcement regulator if we are talking about much broader issues than simply goods and not services?
Others have talked about country of origin rules, which are really important, and not just for the EU. I was at a meeting yesterday at which someone was talking with expertise about what happens to New Zealand chickens. It may be a familiar story to others, but I was completely shocked to discover that the average chicken is divided into 48 different component parts, each of which goes three times around the world, virtually, before it finally gets consumed—the mind boggles. Not just the mind—the stomach boggles as well. And don’t get me started on what happens to chickens in Northern Ireland, where the problem is not so much what happens to the actual chicken but what happens to its feathers, which are apparently taken off early—don’t ask—and taken to another country, probably the Republic, and dealt with under different rules. That will cause real difficulties in any trade agreement. We will perhaps not be working at the level of detail of chickens, but I think we will be going to interesting places on the Bill. Yes, it has narrow issues, but it has to be much broader.
How are we going to balance consumer rights and producer rights? Will we be able to assert professional standards in a way that will allow us to make sure that they are treated properly across the world? Will we even be able to get membership of the world’s standards bodies when we are not part of the EU? On the much broader canvas of engagement with other groups, we are not going to be part of the EU single market, it seems, but we already hear suggestions that we should join NAFTA and the CPTTP, which is the Trans-Pacific Partnership agreement that took over from the TTP when the United States left. Membership of those bodies is a very different concept from engaging with free-standing free trade arrangements—it may indeed be a jump out of the frying pan into the fire.
In some ways, that makes a much broader point. If we are talking about joining other trade blocs, these are also about geopolitical alignment. The fact that we are in a trade alliance with this bloc or another may actually be more important than the volume of trade, however it is defined, that is being done. Who decides that? What interest does the Foreign Office have in these matters?
I will end by talking a bit about human rights. If we are going to take this step into the unknown with a new set of trade arrangements, we have to think very carefully about what we in Britain want to see coming out of them in terms of our respect for the various rights. Most of us will be interested in the fact that many companies increasingly understand that there is a very good business case for respecting human rights. It brings business benefits in various ways. It helps protect and enhance a company’s reputation. It helps it to protect and increase its customer base. It helps it attract and retain good staff. It reduces risks to continuity from conflict inside the company and it appeals to institutional investors, many of whom have interests in human rights. Companies told us that they need policy coherence and clear and consistent policy messaging from the Government. It is interesting that the Foreign Office has adopted the Ruggie principles, emanating from the United Nations Human Rights Council, almost lock, stock and barrel. Can the Minister confirm whether DIT will do the same?
In any case, we have ratified a series of international treaties that need to be accommodated. Our treaties and agreements include the International Labour Organization’s eight core conventions, the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. The Government may have turned their face against incorporating the European Convention on Human Rights, but I sense that the issue has not gone away. In any case, the Human Rights Act ensures that individuals in the UK have a remedy for the breach of rights that are protected by the ECHR, and it applies to all public authorities and to other bodies performing public functions, as private companies sometimes do. So this is definitely going to be in play—and this is before we look at broader legal frameworks such as employment regulations, equality legislation, the Health and Safety at Work Act, environmental protection and most recently, of course, the Data Protection Act.
So there is a lot of regulation already in place and we have a lot of history and practice in this area. There are many instruments, such as the Bribery Act, the OECD guidelines for multinational enterprises, where we have a national contact point, and our own Companies Act 2006, which makes it clear that directors have to have regard to the impact of a company’s operations on the community and the environment, and the desirability of the company maintaining a reputation for high standards of business conduct.
The Trade Bill is not just a simple, technical exercise in making sure that we can move from an EU-led series of negotiated agreements to agreements negotiated with the UK: it is not cut and paste with a word processor. It raises all sorts of questions about where we want to be on trade, how we want to define it and take it forward, which elements are important to us as a country going forward, and which will pay the best dividends in terms of the negotiations we have. Are we going to go to blocs and join them in much the same way as we do with the EU? Are we going to continue to try to plough our own furrow? And all this comes at a time when there are upsets and difficulties in the whole rule-based system that we are used to. We need much more certainty about that. It would therefore be worthwhile taking this forward. I look forward to the Minister’s comments.