Taxation (Cross-border Trade) Bill (Fourth sitting)

Julian Sturdy Excerpts

Thursday 25th January 2018 Public Bill Committees

[Kirsty Blackman]

Quotas have concerned us for some time, particularly the question of how they will happen post-Brexit. I understand what the Minister is saying, and I have read the clause and understood what it says about the regulations and how quotas will be put in place by this Government, but I am still not entirely clear how those quotas will be decided in advance and what circumstances will be used to decide an appropriate level of quota. I am not sure if the plan is for that to follow in regulations. I have tried to work it out from the legislation before us; it may be in the Trade Bill rather than this Bill.

Quotas are important, particularly on agricultural products. If our farmers can only produce a certain percentage of the beef consumed, we must allow a certain amount of beef into this country, but not so much that our farmers will be squeezed. We must protect our farms here. It is about ensuring balance.

The UK and the EU Commission agreed in September 2017 how they would divide the quotas currently in place. They agreed that the tariff rate quotas lodged with the WTO would be divided on the basis of consumption. For example, there is a tariff rate quota for sugar cane. Sugar cane is consumed mainly by the UK—the EU generally uses not sugar cane but sugar beet, which it grows itself—so it makes sense for a more significant proportion of the quota to go to the UK than to the EU. Division by consumption seems like a relatively sensible way to do it.

[Julian Sturdy (York Outer) (Con)]

Actually, a lot of sugar beet is produced in the UK, as well as in Europe.

[Kirsty Blackman]

That is absolutely the case, but generally the sugar cane that comes into the UK and the EU is consumed in the UK; very little of it is consumed in the EU. This is specifically about the consumption of sugar cane, rather than about the production of sugar beet. I understood that probably most of the sugar beet produced in the UK is not for human consumption, but I could be wrong in that regard. I am happy to chat to the hon. Gentleman afterwards, if he is keen.

[Julian Sturdy]

I will have to be careful what I say here but, without promoting British Sugar too much, if someone sees Silver Spoon in the supermarket, that is British sugar produced by British Sugar.

[Kirsty Blackman]

I thank the hon. Gentleman for that clarification. I appreciate that his knowledge of sugar is better than mine.

On quotas in particular, the situation is that the UK and the EU Commission have now decided how to divide the quotas and the amount that is lodged as a schedule with the WTO. However, in September 2017, Uruguay, Canada, Thailand, Argentina, Brazil, New Zealand and the US wrote a letter to say that they contested the way in which the UK and the Commission had decided to divide up the quotas, and that they had a concern about the decision taken. I can understand that concern.

For example, let us say that beef is coming into the UK and the EU. If we have a collapse in the beef market in one of those places, the beef cannot simply be redistributed to other countries. That is particularly so in the case of the UK. If the UK ends up with a tenth of the EU’s quota for beef, and the quota allows for 100 tonnes of beef, 10 tonnes of that are a quota allocated to the UK. If something strange happens in the UK, everyone decides that they do not want beef burgers or steaks any more and the market collapses, the country exporting the beef to the UK cannot just send it to another country, because the UK schedule will be the UK schedule alone.

I can therefore understand why countries are unhappy with how that division is working and why they have come back to say that they do not think it is a technical rectification. That is a serious thing in the WTO, because if the change of quota is not a technical rectification but a modification of the schedule, it needs to go through more of a process in order to be agreed.

My big concern is that none of that seems to be in this legislation. None of the way in which the UK Government will be dealing with the WTO on quotas or defending itself against challenges brought to the WTO seems to be in the Bill. While I am on the subject, to throw the cat among the pigeons, I have not seen anything in the European Union (Withdrawal) Bill, in this Bill or in the Trade Bill that gives the UK Government the power to lodge schedules with the WTO. I hope the UK Government have not missed that and it is written somewhere in one of the pieces of legislation, because it would be rather unfortunate if the UK Government were, post-Brexit, unable to lodge schedules with the WTO or to have its most favoured nation tariffs lodged with the WTO.

I hope that that power is in one of the pieces of legislation—I am happy for the Minister to come back to me and mention it afterwards—because clearly we want to be in a situation in which, post-Brexit, the UK continues to be a functioning country and is able to have tariffs, not just preferential ones but most favoured nation ones as well. Generally, I have concerns about the provisions on quotas because I am not sure that they adequately fulfil all the things that the UK will need to do on quotas.

I have thrown an awful lot of things at the Minister—not literally, I hasten to add for anyone reading this later—and I am happy for some of them to be dealt with at a future sitting. My concern, however, is that because we are leaving the EU and doing so in a short period of time, so legislation has been hastily drafted, some things might be missing. If that is indeed missing, that would be amusing because it is pretty fundamental going forward. I will appreciate the Minister’s providing some clarification, if he can, on the clause.