Draft Trade Barriers (Revocation) (EU Exit) Regulations 2018

Debate between Hannah Bardell and George Hollingbery

Tuesday 27th November 2018 General Committees

[The Minister for Trade Policy (George Hollingbery)]

I beg to move,

That the Committee has considered the draft Trade Barriers (Revocation) (EU Exit) Regulations 2018.

This statutory instrument revokes the European Union’s trade barriers regulation, which sets out a process by which businesses, trade associations and member states can report trade barriers to the European Commission. If a request passes a particular threshold, the regulation obliges the Commission to make a report. It can then take appropriate action, such as raising it in bilateral discussion or at the World Trade Organisation, but it is not obliged to do so. It should be noted that this applies only to unlawful barriers outside the EU.

After we leave the EU, tackling trade barriers will become the UK’s own responsibility, and it is important that we get this right. Trade barriers cost our economy billions of pounds every year, so it is crucial that businesses can continue to report them after Brexit, but that only makes it more crucial that the system for reporting them works as effectively as possible. The current EU system has a number of issues: it is complex and time-consuming and, in practice, has already been superseded. Those issues cannot be resolved without making policy changes to the regulations, which would take them outside the scope of our powers under the European Union (Withdrawal) Act 2018. The only course available to us in this circumstance is to revoke the regulation.

The Government have decided not to replicate the EU’s trade barriers regulation, but to use an alternative, non-statutory system instead. Why is that? First, the process in the regulation is drawn-out and complex. There are five steps: a complaint is submitted; the Commission has 45 days to decide whether to investigate; the Commission announces the decision in the Official Journal of the European Union; the Commission investigates; and a report is submitted to the trade barriers committee. Unsurprisingly, that process takes a long time, during which businesses could be losing exports, thanks to unfair rules. In addition, businesses are required to submit lengthy reports involving complex and often expensive economic and legal analysis. That is a barrier for any business, but particularly for small businesses. I will give an example. In the EU’s own evaluation of the regulation, one organisation said that it had wanted to bring a case but decided not to do so simply because of the amount of information that the Commission had requested—and that was only at the pre-initiation phase.

Secondly, the current process is superfluous. All the regulation does is commit the Commission to writing a report; there is no requirement for the Commission actually to take any action. Unsurprisingly, businesses are already voting with their feet. About 70 new barriers were reported to the EU last year. In only one case did the business involved choose to use the statutory process; the rest of the complaints were submitted informally. There is no evidence that the informal complaints were any less likely to be resolved than those submitted through the regulation. Therefore, in practice, the regulation has been almost entirely superseded. In fact, the process has been used only 28 times in the 25 years for which it has existed, and the majority of those cases were in the first three years. The number declined rapidly thereafter, which speaks volumes about the experience of the process for business. Only one case has been brought in the past 10 years.

Our new, non-statutory process will be an improvement. It will be accessible and user-friendly, with a simple online form at gov.uk for businesses to fill in. The process is already well under way and will be ready for 29 March. Because the process is non-statutory, it will also be flexible. Businesses will be able to tell the Government about the full range of barriers that they face, whether they breach the letter or the spirit of an international agreement. The Government will use the full range of tools available to tackle those barriers—tools ranging from economic diplomacy, to regulatory dialogues, to WTO dispute settlement and committees.

This will be a two-way process: as well as being easier for businesses to use, the new approach has been designed to let the Government better understand the barriers faced by businesses, so that we can target our resources more effectively. Much of this happens already. The Department for International Trade and its posts, our network overseas, are already extensively involved in that sort of activity. The new system is designed to improve on the existing network and formalise it.

We will of course provide reports to businesses and to Parliament, within the bounds of confidentiality. The Government will in due course be able to share information with businesses on where barriers exist or have been removed, to help inform business decisions.

[Hannah Bardell (Livingston) (SNP)]

The position of the Scottish National party is clear—we want to stay in the EU—but, having said that, we recognise that if we are to leave, having regulation is important. Will the Minister speak a little about how the devolved nations and the businesses there will be represented and resourced appropriately so that the interests of all parts of the UK will be properly represented?

[George Hollingbery]

Clearly, under the auspices of the draft regulations, we are looking at trade barriers. The Scottish Government have their own trade policy and trade exporting teams, and I have no doubt that they have a network overseas. Indeed, that network works closely with the UK network. There will therefore be avenues into this process for anyone from any devolved nation who wants to make a representation on any issue about a trade barrier. I hope that satisfies the hon. Lady.

Furthermore, we are expanding the market access team at the Department for International Trade to support that work. Our new Her Majesty’s trade commissioners overseas will spearhead and champion action on market access across our nine overseas regions. We are upgrading our capability to deal with market access barriers, including our IT infrastructure, better to enable collaboration and work not only within DIT and across posts but across all Departments, for which many trade barriers will be relevant.

As the UK delivers an independent trade policy for the first time in 40 years, the Department for International Trade is here to ensure that our businesses have as many exporting opportunities as possible. Part of that is to resolve trade barriers as effectively as possible. I am confident that the Government’s approach is the right one.