(6 years, 1 month ago)
Commons ChamberOn the rules of origin, the hon. Gentleman may wish to read the pan-Euro-Mediterranean convention on rules of origin, which covers a broader area than just the customs union. It is possible to have agreement on rules of origin outside the customs union.
My experience is very different in terms of the information I have. If we look across the range of goods as a whole, there are problems with rules of origin outside the customs union.
The second problem with the facilitated customs arrangement is that it breaches article 3 of the General Agreement on Tariffs and Trade—GATT—which is part of the World Trade Organisation rules. Article 3 is the national treatment principle, which says that we should not treat imported goods unfairly relative to domestically produced goods. Because of the track and trace requirements in the facilitated customs arrangement architecture, we will have to treat imported goods differently to those produced and made in the UK.
The third problem is that if we want to make free trade agreements with the rest of the world, the Government are shooting themselves in the foot with the facilitated customs arrangement because article 24 of GATT states that we have to eliminate substantially all trade barriers between constituent trade authorities. If the UK is having to collect tariffs on behalf of the EU, that introduces a barrier that will have to fetter future free trade agreements. I do not particularly believe we can get better FTAs beyond the customs union; I think our leverage as part of the EU is superior, but on a technical level a facilitated customs arrangement, I am afraid to say, is just not going to wash.
(6 years, 7 months ago)
Commons ChamberI remind the hon. Gentleman of what the Financial Secretary said from the Dispatch Box: any new free trade agreement that the UK signs up to will be subject to the affirmative procedure in this place.
Of course, that is an unamendable procedure. I think that, at the very least, the Government will be pushed by the other place into a super-affirmative procedure whereby the Commons has a Committee that looks at the details and suggests amendments and changes. Ministers may then plough ahead if they want, but a super-affirmative procedure would mirror more the powers of MEPs in these matters. A simple aye or nay would be a dilution of the scrutiny powers that we currently have democratically via elected Members of the European Parliament.
I want to focus on part 3 of the Bill. In the past couple of days, a lot of attention has been given to the number of firms that do business across the European Union. They think of their trade not as imports and exports, but as arrivals and dispatches. Whether they are buying components from Birmingham or Bristol or from Brussels or Berlin, they treat them all the same for customs and excise and VAT purposes. That will potentially not be the case under the Bill.
Even if we stayed in the single market and the customs union, we would not necessarily be in the EU VAT area, which is outwith the customs union. That is another decision that Ministers will have to face up to and take. I would like the Bill to be amended so that we stay in the EU VAT area or, at the very least, have a proper impact assessment of the implications of leaving it. That is the position of the British Retail Consortium, which argues that leaving it would mean a potential bureaucratic burden for businesses that currently, if they are importing goods from EU member states, can treat the acquisition VAT through the normal quarterly lodgings of their VAT returns. Henceforth, those firms will potentially have to pay VAT up front—it is known as import VAT—at the point of entry, so at the border, at the port, at Dover, at the channel tunnel or wherever it comes in, each time there is that level of transaction. To look at it in the round, the customer would pay the same amount of VAT at the end point, but it would be incredibly disruptive to the cash flow of those firms.
I looked online and at the explanatory notes, thinking that there must be a regulatory impact assessment of that situation, because the Bill abolishes acquisition VAT and introduces import VAT on goods, including those from the European Union. There does not seem to be a particularly rigorous impact assessment. I do not know whether I have missed it. There was one for the Trade Remedies Authority, but there does not seem to be one for the import VAT proposals. There ought to be an impact assessment, because that is Cabinet Office best practice, but I cannot seem to find it.
Again, I do not think voters were necessarily tuned into the implications on the EU VAT area when they cast their votes on the ballot paper. I may be criticised again for saying this, but I did not see the EU VAT area on the ballot paper. Perhaps I was not looking closely enough. Perhaps Government Members will help me out and point to where it was.
Currently, 140,000 British companies have to go through the rigmarole of registration and compliance when importing from outside the EU. A further 132,000 firms that do not trade beyond the EU but source their imports and components from within the EU will potentially be added to that. Knocking on for 300,000 businesses will be hit by this. According to HMRC’s own statistics, the number of transactions that are hit by customs duties and, therefore, potentially by import VAT will go from 55 million trades to 255 million trades a year, with all the paperwork and rigmarole associated with that level of bureaucracy.
It has been a great pleasure to listen to the debate tonight. I have always said that when it comes to EU negotiations, the devil is in the detail. It has been good to hear many Members discussing real detail tonight, because that will give us more confidence that we will be able to address the specifics in the negotiations ahead.
Some colleagues have suggested that we should try to maintain the status quo and stay in the customs union permanently, but I do not believe that that is practicable. I speak not only as a former Member of the European Parliament but as the person who chaired the European Parliament’s Committee responsible for the customs union. Staying in the customs union might help to sort out our trade with Europe, but what would it do for our trade with the rest of the world? Perhaps we would be able to negotiate to continue the existing free trade agreements that Europe has with other parts of the world, but the EU does not stand still. It will be negotiating new trade agreements. Trade negotiations are always controversial and always involve trade-offs. British interests are not always directly aligned with the rest of the EU, and having to accept future trade deals without any say over the terms is not a practicable solution, so a new relationship with the EU is needed.
It is also not practicable simply to do nothing and to try to cut and paste the relationships that we have with other parts of the world on to our trade with the EU. That particularly applies to our trade across the channel, because the journey times are too short for paperwork to be processed and the trade volumes are too high. There would be delays, which would push up costs and raise prices, hitting the interests of consumers and businesses on both sides of the channel. It is therefore good that both the UK Government and Governments across Europe are looking at bespoke solutions, and the Bill keeps our options open, including the potential for a customs union with the customs union, which may be the exact sort of deep partnership we look for in the future.
It is important to look at the detail. Import VAT and when it falls due is really important for small businesses in all our constituencies, but the Government have recognised the issue and do not want small businesses to face more costs. The Manufacturers’ Alliance has pointed to concerns about the detailed methodology on calculating remedies, the supremacy of the lesser duty rule, and the timing and nature of the economic interest test, but all those issues can be dealt with in Committee and are not good reasons to vote against the Government tonight. There is the really important issue of the cumulative rules of origin, which are vital for advanced manufacturing and the car sector, but Ministers have again made it clear that they are aware of the issue, which affects manufacturers on both sides of the channel.
In an ideal world, we would want our future customs relationship to be agreed before we agree the legislation here, but we are not in a position to do that. Any future trade deal with Europe needs all 27 other countries to agree to it, and we need to be ready to act with whatever the solution is. I am particularly pleased that Ministers have said that they are committed to delivering either the streamlined customs arrangement or a new customs partnership, and I urge Ministers and Governments on both sides of the channel not to give up on an innovative solution yet, because it is in the interests of businesses and consumers on both sides of the channel to find and deliver such solutions.
On a point of order, Mr Speaker. The Bill that we are discussing has been designated as an aids and supplies Bill, and potentially as a money Bill, which I understand is in your gift at the end of the Commons proceedings. Could you confirm that no decision is imminent on your part on the designation of the legislation as a money Bill? I am not seeking a ruling from you this evening, but perhaps you could reflect on whether it is fair use of procedure for the Government to have unilaterally designated the Bill as an aids and supplies Bill, because there are measures in the Bill, particularly in relation to the customs union, that the other place might have a great appetite for amending. Obviously it is not for us to determine the procedures that take place in the House of Lords, and while that is not a matter for you, will you confirm that you have not yet made a decision on the designation of this Bill as a money Bill and that, as far as you are concerned, the House of Lords can do what it will with the Bill, should it pass to the other end of the building?
(6 years, 9 months ago)
Commons ChamberIt has been a huge honour to listen to the debate, and to hear so many contributions from so many wise colleagues.
I want to talk about the fundamental right to personal data protection, an issue that I have raised before in the House. It is a very important issue, because we are in the middle of a digital revolution—in the middle of the fourth industrial revolution. The ability to process vast quantities of data is vital to our tech and digital sectors, and is driving the future of medical research. If we want to continue to play a world-leading role, we must continue to be able to exchange data easily with other parts of the world.
In the history of our country privacy has largely been protected, but that has not always been the case in many European countries. Data protection—the right to have one’s personal data protected—is a treasured right. Let me point out to the Solicitor General that data equivalence will be not just a legal but a political issue, and we must therefore leave no one in any doubt that Britain intends to respect personal data.
It is excellent that the Government have agreed to implement the general data protection regulation. It is a highly complex directive, but it was not just agreed in some far-off place in Brussels. The process was led for the Liberals by a British Liberal who sits in the House of Lords and for the Conservatives by a British Conservative who also sits in the House of Lords, and was chaired by a British Labour MEP who is still chairing the relevant committee. So Britain was very much involved in the establishment of the GDPR.
There is a technical difference between the GDPR and the Data Protection Bill. The GDPR makes it clear that its first principle is to protect the right to personal data, and it is important that we too are seen to give that direct protection. It is in the interests of both sides to provide data adequacy. After all, Britain is responsible for more than 10% of world data flows, more than three quarters of which take place between Britain and the rest of Europe. Other European countries need to maintain that data flow, but the field is continually evolving: for instance, the European Commission is looking into ePrivacy law.
The hon. Member for Argyll and Bute (Brendan O’Hara) seemed to suggest that the Government were somehow not treating data adequacy negotiation seriously—we are—and told us that the Government had said they might want something “akin to” a data adequacy agreement. That is because the current agreement, the EU-US data privacy shield, is not as stable as data adequacy might be as part of a free trade agreement. There are many different ways in which that could be agreed, so let us ensure that we keep all the options open.
I hope I have given an example of an area in which rights are continually evolving—and, in a rapidly changing world, the rights that each of us has will need to evolve continually. Having listened to the debate, I think that we should not cut and paste the charter into British law now, but that we should take the matter seriously. We have been promised today that within the next two weeks—by 5 December—the Government will go through every single one of those rights, will list the parts of British law in which they already exist, and, if there are parts where they do not yet exist, will show us the process whereby they will be introduced. I think that, on that basis, we will create a more stable agreement to protect not just the rights of today but the rights of tomorrow, which is why I will vote against the amendments.
The debate on new clause 16 and the myriad other amendments has been held in a collegiate atmosphere. We have focused on the specific rights and wrongs of a number of quite technical legal points, but the one thing that stood out for me was the debate on the charter of fundamental rights. I have to tell the Minister that I am not convinced by the Government’s case. We were sold the idea that this would be “copy and paste” legislation, but that turns out not to be so. We were told that there was no need for the charter of fundamental rights, but if that is the case, what is the harm in retaining it? Those rights are incredibly important. They include the rights to privacy, personal data, freedom of expression, education, data privacy and healthcare, as well as the rights of children and elderly people. There are many rights in that charter, and it is important that we keep it within our legislative framework.