Trade Bill

Lord Grantchester Excerpts

2nd reading (Hansard): House of Lords
Tuesday 11th September 2018 Lords Chamber

[Lord Grantchester (Lab)]

My Lords, I welcome the Minister to her first Bill in your Lordships’ House and I look forward to the maiden speech of the noble Baroness, Lady Meyer. This Second Reading debate offers us an all-too-rare opportunity to consider in detail what should constitute the UK’s future trade policy and what changes to our legislative structures, now and into the future, are required. At the moment there is still huge uncertainty about what relationship the UK will have with the European Union, or about how the Government think that our national trade policy will be built around that relationship. Certainty is what our business community needs.

As the Minister has just explained, the Government believe that all that is needed at this time is a technical Bill, aimed at facilitating our engagement with the government procurement agreement, establishing the Trade Remedies Authority and making sure that the UK can roll over the existing free-trade agreements negotiated by the EU with some 80 third-party countries. On the latter point, Japan and Chile have both indicated that they are not happy to simply roll over their agreements and George Hollingbery, a Minister at the Department for International Trade, said in evidence last week that,

“it is not an absolute given that we can get them all transitioned”.

Is a technical Bill sufficient? What is our trade policy, and who operates and agrees it? What powers lie with the devolved Administrations and how are disputes to be resolved? What impact will these agreements have on ordinary people, on consumers, on companies and businesses up and down the country? How will our trading activities as a nation impact on third countries, particularly developing ones? These issues are still to be determined.

One of the most disappointing shortcomings in the Bill is that it proposes to restrict trade policy almost entirely to the UK Government. In doing so, it ignores the devolved authorities and largely bypasses Parliament. It has no engagement with civic society and, ultimately, fails to offer accountability or to offer opportunities to nations, regions or cities. Even if the right thing to do at this stage, given the massive uncertainties around Brexit, is nothing more than rolling over the trade deals that we currently enjoy as part of the EU, what happens if these trading partners ask to renegotiate? Is it possible that countries such as China and South Korea may wish to change the terms of the agreement when dealing with a market of 65 million people, when the original deal was premised on access to a much more diverse and remunerative market of over 500 million? We must make plans for how the UK will approach such challenges and take into account all the diverse viewpoints and outcomes.

On transparency, the Bill fails to guarantee the disclosure of any information relating to negotiations or to mandate consultation on continuity agreements, while essential scrutiny of secondary legislation is compromised in some of the most crucial areas. It offers few checks and balances—fewer, indeed than those the EU currently routinely guarantees for its trade deals to the European Union Parliament and civic society. It tries to set up the UK’s trade policy as a simple continuation of where the EU has got to, but it ignores the growth in public interest in trade agreements.

The Bill also misses an opportunity to act as a framework for our future trade policy and set out the UK’s pitch as an ethical trading nation right from the beginning. Trade policy should not be pursued only for self-interest but should also be used to shape a world that better reflects our ideals. I refer to advancing human rights, eliminating poverty, promoting sustainable development and reflecting the UK’s concern for high environmental and welfare standards in production methods.

This gives me the opportunity to touch briefly on the issue of tariff rate quotas, which deal with the split quantity of certain goods within the overall EU allocation, which can be traded at reduced tariffs following our departure. A large share of such goods is related to agriculture, so the issue is central, not only to our economic prosperity but to the food we all eat. I am sure many will be aware of the disputes that have arisen as a result of nations such as Canada and the US claiming that plans to divide these quotas will disadvantage them. This is an issue that must be resolved, and it can be examined at later stages to allow the Government to best do so.

The Trade Bill should guarantee that even our continuity agreements promote these principles, and that our trade policy has its sights on goals beyond benefiting our own economy. I am sure the Minister will offer assurances that our trade policy will be principled, but if her Government are serious about this commitment then they should enshrine these ideals in the statute book. The Bill also paves the way for the UK to participate in the government procurement agreement, and we welcome that. However, there is no detail in the Bill about what constraints, if any, will be placed by the UK on third-country companies bidding for UK public bodies contracts. We will be putting down amendments to scrutinise that and making suggestions for how procurement can be used to advance social objectives.

As the Minister said, the key proposal in the Bill is the establishment of the Trade Remedies Authority. Labour recognises that, provided it is set up properly, it is guaranteed independence from the Government and has the right powers to protect UK industries from unfair trading practices. I am sure the House is well aware of the dumping of Chinese steel, where the market has been flooded with goods being sold below the cost of production without profit, leading to dreadful consequences for the UK steel industry. Unfortunately China’s dumping of steel is not an isolated case. Trade dumping has become a major feature of the international trading market. The House also needs only to look towards the aggressive and protectionist trade policies of President Trump to demonstrate the need for strong defences. This is a serious issue with serious ramifications for jobs and the economy. The TRA will need substantial resources if it is going to do the job required. We will be looking carefully at the structure proposed for it and how best to guarantee its independence.

Lastly, I come to the greatest missed opportunity: the chance to settle the question of whether the UK will negotiate a new customs union. One of the many myths peddled by this Government is that the UK is better off outside the customs union with the EU. Surely we can trust businesses to know what is best for them, and the clear majority of them say they are best off in a customs union with the EU. The reason is simple: a customs union could allow for frictionless trade with the EU and offers the best possible basis for dealing successfully with the Irish border issue. It could also pave the way for access to over 50 trade agreements with third countries. Together, these markets accounted for 62% of UK goods and services exports in 2016.

The country was encouraged by the Prime Minister’s recent trip to Africa. We were all pleased to see efforts to expand into these markets. However, it is worth reminding the House that South Africa, the focus of the trip, already has an agreement with the EU, from which both South Africa and the UK greatly benefit. In addition, 34 of the least developed African countries already benefit from tariff- and quota-free access to the EU through the Everything But Arms policy. Nearly all African countries receive preferential access to EU markets. The Prime Minister is right to look to Africa and elsewhere for future trade, but a customs union with the EU is the best way to do so.

With Britain outside a customs union, there seems no remotely realistic scenario in which British businesses would find it easier to sell their goods and services abroad. This is for the simple reason that the UK alone is unlikely to secure trade deals more effectively than it does in the EU. First, there is the question of capacity and experience. While the EU has more than 40 years’ experience negotiating trade deals, the UK would be starting from scratch. Secondly, it is a question of negotiating power. While the EU can offer access to a huge market of more than 500 million people and extract large concessions in exchange, the UK can offer access to a market of merely 65 million people and will have to accept fewer concessions in return. A customs union with the UK at the front and centre is a solution for our future trading policy. This would allow us to broker new trade deals and expand markets through the joint bargaining power of the UK and the EU, while solving the Irish border question. A trading bloc is inherently more powerful than an isolated nation state.

It should be noted that services—on which the customs union has limited impact—must also be protected. We hope to provide for this issue during the later stages of this Bill. The enhanced equivalence provisions on services, set out in the Chequers proposals, are inadequate and erect significant barriers to trade.

Ultimately, this Bill is a missed opportunity to prepare the UK for a new chapter in our trading history. It betrays the principle of accountability and devolution which are so vital for any future trade policy. It creates a Trade Remedies Authority which will be woefully unprepared to fulfil its responsibilities. It misses the opportunity of mandating the Government to remain in a customs union with our major trading partner. The UK’s trade policy should have both our nation’s self-interest and the advancement of our ideals globally at its heart. Unfortunately, this Bill fails to prepare our nation to build a trading policy which can achieve any of this.

Trade Bill

Lord Grantchester Excerpts

Committee: 2nd sitting (Hansard - continued): House of Lords
Wednesday 23rd January 2019 Lords Chamber

Moved by

[Lord Grantchester]

28: After Clause 5, insert the following new Clause—
“UK support towards an Environmental Goods Agreement
It shall be the objective of an appropriate authority to take all necessary steps to enable the United Kingdom, after exit day, to fully participate in and fully support negotiations towards an Environmental Goods Agreement at the World Trade Organisation.”

[Lord Grantchester (Lab)]

My Lords, I rise to move Amendment 28 in the name of my noble friend Lord Stevenson of Balmacara. I declare my interests, as noted in the register, on this amendment and on Amendment 30.

Amendment 28, which proposes a new clause, is a probing amendment to better understand the Government’s intentions in transposing or rolling over current EU trade agreements into UK law. Behind EU directives are policies and aspirations. Following on from the previous amendment, how far do these necessarily transfer over with this legislation? I point to the intentions specified under Clause 5(2) and Clause 3(3) that these trade agreements will mirror the existing EU agreements and that, where differences may occur, they will be specified. The relevant words are “any significant differences”, on page 4, line 26, and page 3, line 37. I ask the Minister to give the Committee a definition of “significant differences” and how we should interpret this. It is pertinent to many businesses and regions within the UK, as I shall draw attention to when we discuss Amendment 30 on geographical indicators. The Government may have a different interpretation that a trade agreement could affect existing and future trade.

One such issue relates to an environmental goods agreement, one of the ethical themes drawn attention to in our debate on Monday on Amendment 8 concerning international obligations. If the UK is to begin an independent trade policy, it is vital that sustainability is at the forefront of our intentions and agreements, including through a renewed commitment to the environmental goods agreement. It is important at this stage that everyone is familiar with the concept of environmental goods. They are not any particular product as such but more like a public benefit, in the same terms as the concept in the Agriculture Bill of “public goods”—not necessarily a profit-and-loss item to be bargained with. It is important that such environmental goods, as a policy background already in EU thinking to be transferred over on exit, do not get squeezed out of trade talks. At the very least it should be recognised that the EU has been a very good international forum for initiating these developments.

Although talks are currently on hold, the EU and 17 other participants of the WTO have indicated a willingness to negotiate an agreement to abolish tariffs on items used to achieve environmental and climate-protection goals. The idea, which unfortunately has lain dormant since 2016, has great potential and, despite the reluctance of some of the world’s key players to take the ambition seriously, there is hope yet that the agreement can be revitalised. Even in recent months we have seen positive signs that talks can return. In July last year, a white paper from the Chinese Government used previous talks on the issue as evidence of their commitment to sustainability. If talks are eventually going to be successful, and there is good reason to believe that they will be, an agreement would reduce and remove tariffs on environmental goods, including those aiding and abetting efforts to control air pollution, generate clean and renewable energy, improve resource efficiency, and manage and treat water waste and waste of all kinds. Such components aid our efforts at home to be more sustainable but will also help us to meet targets, ranging from the UN sustainable development goals to the Paris climate change accord.

Talks relating to the environmental goods agreement have stumbled, in part due to the lack of enthusiasm from some of our allies, but the core principle is one that the UK should get behind and re-energise. The UK should present itself as a champion of the negotiations, using our influence on the world stage to persuade those who seem reluctant to re-engage in negotiation. As the UK evolves into a separate entity from the EU, we should focus efforts on playing a central role in future negotiations with the vision to fully participate. I hope the Minister will agree and will assure the Committee that this is within the Government’s intentions. More specifically, I ask the Minister to tell us how the Government interpret “significant differences” and to assure us that the transposition of EU law will include the approach initiated at EU level towards trade agreements. I beg to move.

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[Viscount Younger of Leckie (Con)]

My Lords, the UK Government support an ambitious environmental goods agreement. We believe that a high-standard environmental goods agreement would have three effects. First, it would enhance global access to clean technologies. Secondly, it would advance environmental protection. Thirdly, and not least, it would benefit UK workers, businesses and consumers.

Negotiations on the environmental goods agreement began in 2014 but stalled in 2016 due to disagreements over the scope of products to be liberalised and increasing global trade tensions. While the UK supports the objective of having an environmental goods agreement—and we have been a particularly active supporter in the WTO negotiations—I understand why the noble Lords, Lord Stevenson of Balmacara and Lord Grantchester, have proposed this amendment. I took note of what the noble Lord, Lord Grantchester, said. However, there is a reason we are not able to take this forward: it is already the objective of the UK to continue to support and participate in the negotiations on this agreement. That position will not change. It is not clear what “all necessary steps” in the amendment are, who would decide what those steps are, or what benchmark would be used to decide whether these legal conditions had been met.

I will attempt to answer the noble Lord’s question about significant differences. In our reports under Clause 3, we will be giving details and explaining reasons for all differences that have an effect on trade. There is no official definition, in fact. The noble Lord said that he is talking about the differences—let us be clear about this—in rolling over continuity agreements set out in reports which are prepared under Clause 3. If that does not satisfy the noble Lord, I am very willing to write a letter with the necessary legal ins and outs on this particular matter, but I hope with that explanation the noble Lord will be prepared to withdraw his amendment.

[Lord Grantchester]

I thank the Minister for his suggestions. It might be very useful to have a look at those, so that they are more widely known. I do not know how far they are already known or not, but I was unaware of them, so if he could write on that detail it would be significant. I thank him. I am pleased to have it confirmed that the intention and ambitions of the Government include the very point we wished to make with this amendment. With that, I am happy to withdraw the amendment.

Amendment 28 withdrawn.

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Moved by

[Lord Grantchester]

30: After Clause 5, insert the following new Clause—
“Geographical Indications
It shall be an objective of an appropriate authority to take all necessary steps to implement an international trade agreement which ensures mutual recognition of Geographical Indications in the United Kingdom and the European Union.”

[Lord Grantchester]

Amendment 30 is a probing amendment. It may not be of great intent but it is of wide importance to rural areas and the food chain in general. Following on from my earlier amendment which sought to understand the rollover nature of EU trade agreements into UK law, this involves the protection of geographical names designating agricultural products that have been in existence for more than 100 years. This is where the Minister’s definition of “significant differences” will be most helpful.

At present, as an EU member state, the UK falls under three specific geographical product designations. The first is the protected designation of origin—PDO—such as that for Stilton cheese, of which I know the Minister is well aware, which is designated to cheese-making dairies in three east Midlands counties. Secondly, there is the protected geographical indication framework, such as for West Country beef and lamb. Thirdly and lastly, there is the traditional specialities guaranteed framework, such as for traditionally farmed Gloucestershire Old Spot pork. These co-ordinated efforts have given some of the UK’s most well-respected and internationally renowned produce the legal protection it deserves. From each corner of the UK, British produce of world-class quality with links to a certain area or using certain traditional methods has had its reputation enshrined, preventing outside manufacturers reproducing or passing off the product and selling it as a regional one. There is great concern that these protections will be lost post Brexit.

I ask the Minister: what is the status of the recent EU-Canada trade agreement that has been mentioned throughout our proceedings? The noble Lord, Lord Purvis, brought up this issue under Amendment 18, and the noble Baroness, Lady Jones, did so under other amendments. Under the Comprehensive Economic and Trade Agreement—CETA—no UK geographical indicator was given protection and only two European indications were included. What was the role of the UK Government in negotiating this EU agreement? Will it be included in the rollover of EU agreements, or will it be challenged or disagreed to by Canada as a counterparty in any rollover? The ink is barely dry on this new agreement. What the Minister has said so far needs to be clarified further in this respect.

With the UK leaving the EU, the position of the food chain, including retailers, in rollovers, and the relative importance given to the issue by the UK Government, these matters will impact on the ability of UK products to be designated foodstuffs under the GI schemes. I understand that the Government wish to set up a UK register of designations after exit. Will these be exclusively British? Will it include the register under the EU scheme, including those products registered by non-EU producers who also use the scheme as a marketing tool, aiding their promotion within the EU? How comprehensive will this register be? It is important to recognise the high percentage of UK trade that goes to the EU. Will the UK Government seek to enable products designated on the UK register to be considered for inclusion on an EU register? Will the Minister confirm that reciprocal arrangements will be maintained without any sunsetting? She will recognise the importance of Welsh lamb exports to the economy of north Wales and the whole of Wales.

If I may, I have some further issues about which I would be happy for the Minister to write to me. First, there will be various transitional costs, such as branding and labelling. As changing labels is a resource-heavy activity, can she give reassurances that changes will be considered together in future regulations? Secondly, can she say what will be the resolution scheme or body that hears disputes? Will the future TRA adjudicate immediately on these PDO issues or will there be a role for the First-tier Tribunal, which presently presides over branding issues? These and other issues are not important for the proceedings tonight, but I merely flag up how essential it is to businesses, especially SMEs, to be aware and informed of the changes happening, even on transition.

The Minister will be aware of the wide benefits that these designations bring to the food chain—the reduction of food waste, the provenance and security for consumers, and the quality of the product—and export markets across the world, as well as the obvious financial and employment benefits. I would welcome confirmation that this amendment is among the objectives of the Bill and future trade arrangements, taking at face value the task of the Bill merely to transfer existing EU agreements into UK law. I beg to move.

[Lord Tyler (LD)]

My Lords, I am a signatory to this new clause and I am delighted to endorse everything that the noble Lord, Lord Grantchester, has already said. By way of background, I was responsible for my party’s policy when some of these issues were addressed in the other place when I was responsible for agriculture, food and drink. I also represented a Cornish constituency and I shall come back to that in a moment.

It is very dear to my heart, as I know it is to the Government’s Chief Whip, that we should recognise the particular contribution of the agriculture industry in this country and that we should recognise that it is going to go through some very difficult times in the near future if what is projected comes to pass. In those circumstances, it is extremely important to address the issues to which the noble Lord has already referred.

Protected geographical status was introduced throughout the EU in 1993, when I had that responsibility in the Commons. I was especially delighted when the schemes were updated under Regulation 1151/2012 during the coalition Government. This has been a great success by Ministers of all three major parties—we should recognise that. It is instructive to see how influential UK Ministers have been on an issue such as this when they have played a full part in the EU. It has also been a very interesting example of how the EU has provided essential trading encouragement and protection for uniquely significant food and drinks products from all parts of the United Kingdom.

This is not nostalgic parochialism, as I think the noble Lord has emphasised. It has real economic marketing benefits, as well as protecting our producers from cut-price and inferior competitors. The UK could never have achieved anything like this benefit without the support of our European partners.

There are 65 products with protected status under this scheme in the UK. They are designated to protect the reputation of regional products, to promote traditional and agricultural activity and to eliminate non-genuine products of inferior or different character that may mislead consumers—I will come back to that point. Obviously, I will not go through all 65 products at this time of night, but I will take one or two examples: the traditionally farmed Gloucester Old Spot pork, which I know extremely well because I have neighbours who produce just that, introduced by the coalition in 2010, West Country lamb and beef, Dorset Blue cheese, Single Gloucestershire cheese and Export Jersey Blue. There were very significant improvements to the marketing opportunities for those products, but also, much more generally, for West Country farmhouse cheddar, Cornish sardines—again, dear to my heart—and Fal oysters in 2013.

However, we have to be very careful about the use of these descriptions. As the noble Lord said, one of the particular characters is protected geographical indication. It happens that in my constituency we had one of the best vineyards in the whole of the United Kingdom, the Camel Valley vineyard. That is not in England, it is in Cornwall—and as all Members will know, Cornwall is not part of England, it is not an English county. I have a particular attraction to the wines from that vineyard, not just because it was local to my constituency but because one of the partners of that extremely enterprising vineyard was Annie Lindo, who stood for the Labour Party against me in a general election. She did not win, but the Guardian said that the wake would be one of the best in the country—and it certainly was. The vineyard now produces an excellent rosé as well as sparkling wine.

Cornish clotted cream was another big issue—and I will come to another very important dish in a moment. I remind the House that the difference between Cornish and Devon clotted cream is that Cornish clotted cream is so good that you must have it on top of the jam, while in Devon you can put the jam on top—otherwise, you do not get enough.

Cornish pasties were another big issue. My noble friend the then honourable Member for Truro will recall that it was on St Piran’s Day, I think, that one of our coalition colleague Ministers announced that the Cornish pasty was to be protected. That is a classic example, because of course the recipe for a Cornish pasty is quite precise. It is not permitted to add carrots or peas, let alone minced beef or lamb; it must be skirt of beef. I have had pasties in different parts of the world. Indeed, a part of Lithuania produces its own pasty, originating in the Middle East—but it is not a Cornish pasty. This is a serious issue. I ask noble Lords to recognise that this can be of huge importance to not just small enterprises but substantial ones, too.

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[Baroness Fairhead]

The departure from the EU is just between the EU 27 and the UK. It is true that, legally, UK GIs are protected under EU law indefinitely and in the UK the matter is subject to negotiation under the FEP.

I have assured your Lordships that we understand the desires of UK GI producers for continuity. We will continue the protection in the UK, and the public statements of the European Commission give us assurance. If this amendment passes, it would remove the flexibility necessary for the UK’s negotiating position to successfully build new trade relationships with the EU. I believe that a number of my answers addressed the questions raised by the noble Lord, Lord Grantchester. If he feels that they have not, I am happy to write to him, but I ask him to withdraw his amendment.

[Lord Grantchester]

Following up on the assiduous questioning by the Liberal Democrat Benches, I entirely understand what the Minister is saying about the EU and the UK and that the position will be maintained indefinitely going forward. However, can she clarify the situation of the two registers and how reciprocal they will be? Will it involve two applications from a UK producer, one to the UK register and one to the EU register, or will reciprocity maintain throughout, such that when they appear on the UK one, they will necessarily appear on the EU one at the same time? Will there be one system with two applications, as it were, both inside the EU when the UK is within it and outside the EU when the UK leaves? I hope I have made myself clear on that point.

Could the Minister say anything at all about the appeal process—the dispute mechanism—or will that be included in her letter to me on the more erudite questions I have asked her?

[Baroness Fairhead]

My answer on the application procedure is that there will be a very similar procedure of application when the UK leaves the EU. There will be two processes that are very similar, but equally the UK will have to comply with TRIPS and with the European Court of Human Rights.

I just wanted to add a word about the CETA agreement without taking too much time. There are no UK GIs recognised in the CETA agreement. That was because Scotch whisky already had protection in Canada. The final decision on which GI products were submitted in the trade deal negotiations was made by the EU in an agreement negotiated with all parties. On leaving the EU, the UK will be able to take back that decision-making, but I am happy to confirm that and I will write to the noble Lord on that subsequent point. On that, I invite him to withdraw the amendment.

[Lord Grantchester]

I thank the Minister for all her clarifications. They have been very helpful. I also thank the noble Lord, Lord Tyler, and his colleagues on the Liberal Democrat Benches. I realise that Cornwall is a very long way away from Merseyside and Cheshire, but I will have to check my passport arrangements. I do know that Cornish people are always very eloquent, and I thank him for all his comments. Having said all that, and understanding the utmost importance and gravity in which this subject is held dear to the Government’s heart, I beg leave to withdraw the amendment.

Amendment 30 withdrawn.

Trade Bill

Lord Grantchester Excerpts

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

Moved by

[Lord Grantchester]

34: After Clause 5, insert the following new Clause—
“Division of agricultural tariff rate quotas
It shall be the objective of an appropriate authority to take all the necessary steps to ensure that after exit day the division of agricultural tariff rate quotas with the European Union remains at the same level as prior to exit day.”

[Lord Grantchester (Lab)]

My Lords, I declare my interests as stated in the register. Tariff-rate quotas have been set for mostly agricultural products, to allow some countries preferential access to the EU single market below the tariff rate set for those products. The UK does not have its own national tariffs but merely shares in the amounts set for all member states across the EU. This is most important to the agricultural sector and industry, as it sets out the quantity that comes into the EU at preferred competitive rates, bearing in mind that products still have to be compliant with the relevant EU standards.

On exit, these TRQs at EU level will need to be split between the remaining states and the UK. The proposal agreed between the EU and UK is that the product quota should be split according to the relevant usage or consumption of the product in the UK and EU. The difficulty arises on the specific quantities, as there is a lack of data to inform the division. Although there is detailed information on the point of arrival of products into the EU, there is not the same detail regarding where the product may be consumed. The EU and UK, in bilateral discussions, have agreed to adjust the schedules without triggering renegotiations under Article XXVIII of GATT. This was submitted in October 2017. However, it was almost immediately challenged by the large exporting countries, such as the US, Brazil, Australia and New Zealand.

I cannot overstress how critical this issue is to British agriculture and the nation’s consumers. It is revealing that so many glib answers are often proposed in the current impasse over Brexit. From a lack of information and knowledge, poor judgments are made, leading to a lack of appreciation of the consequences. I am sure I do not need to explain to the Minister the delicate balances in the market, where price volatility results from small changes in supply, quite irrespective of the huge discrepancies in tariffs under preferential treatment and other third countries that have allowed managed change to take place.

To give one example, Britain’s sheep exports, with large implications for the Welsh economy, comprise more than one-third of production, with almost all of it destined for Europe. This trade is virtually one-way, with minimal imports from the EU. Without agreement, and a smooth transition, tariffs to the EU would render this trade immediately uneconomic. The seriousness of the issue was underlined by a joint letter from the British Retail Consortium, signed by the chief executives of all the major supermarkets—Sainsbury’s, Asda, M&S and Waitrose, among others—only two days ago. The BRC stated that it wanted to maintain the same tariff-rate quotas. The wording of the amendment signifies that it is a probing amendment to ask the Government to provide some certainty in their answers to the challenges, and their approach to the future.

Amendment 54, in the name of the noble Lord, Lord Purvis, calls for a report to Parliament, and I look forward to the noble Lord’s remarks. The concern is that access to the home market—and, hence, the vibrancy and well-being of agriculture and the rural economy—will be sacrificed as a pawn in negotiations in rolling over trade deals to be ratified by third countries in the future, especially in relation to the interests of other industries. The Committee has already debated the fear that standards would also be under jeopardy. It is imperative that the UK Government continue to maintain the present TRQs. I beg to move.

[Lord Purvis of Tweed]

My Lords, Amendment 54 is in my name. As the noble Lord, Lord Grantchester, pointed out, the division of the tariff-rate quotas is of great importance to parts of the UK economy, especially the rural economy, but it is also important to our trading partners. Some likely trading partners when it comes to agriculture have already stated their concern about the agreement the UK and EU have reached.

I admit that this amendment was prepared with the expectation that there would be more than a month between the Act coming into force and exit day. That was a naive hope. I thought that the Government might have been able to have this legislation on the statute book long before, but with the delays that have occurred I admit that one month would be tight between the Act receiving Royal Assent and potential exit day. Nevertheless, the core element of the amendment, which seeks to get clarity on the UK’s position, is important. Clarity is sought in two areas: first, what our current position is regarding discussions with third countries about the division of the tariff-rate quotas; and, secondly, how the Government would consider the impact of these decisions on our economy.

As the noble Lord, Lord Grantchester, indicated, agreement was reached between the UK and the EU in 2017. He was right that that provoked immediate objections. The countries considered that the changes proposed by the EU and the UK for the division of the tariff-rate quotas amounted to more than simple rectification of the schedules. The European Parliament said in a report to its own committee that the changes had,

“involved less flexibility and market access for their exporters”.

Its stated objections to the EU-UK quota subdivision, saying that,

“other concessions should compensate for the loss of market access”.

These are the questions that the European Parliament is asking the Commission about what concessions there are likely to be. The questions the European Parliament is asking the Commission are ones that this Parliament should be asking our Government.

The expectation might be that we will want to trade on certified WTO schedules. As the Minister said previously, it is not necessary for us to trade under these, but they are desirable because they mean that the negotiations, on which concessions could be provided, are not ongoing, and that concessions have either been provided and then accepted and settled, or that there are ongoing negotiations in which we have to monitor what concessions are being offered to secure the prize of certification. My amendment asks for a report from the Government to be clear about what that position is.

As with the debate we had on the previous group, I was able to secure information about what had happened at the WTO market access committee in October, and the position of the other countries and of the EU. I was able to see the text of a Council regulation, EC32/2000—the proposal to modify the implementation of the tariff-rate quotas bound in the GATT. The discussions that took place between the Council and the European Parliament have been reported on. On 14 November the Parliament decided to enter into inter-institutional negotiations based on the Council’s report on its proposal. In none of that has it even been suggested that there could be a role for our Parliament in discussing with the Government the potential impacts of the concessions offered to secure approval for our TRQ division. The provisional agreement reached with the Council at the Parliament on 10 December to discuss what the European Union’s position would be is in stark contrast to this place, where there have been no equivalent proceedings with the British Government.

If we are not going to be involved as the European Parliament is on the European side, at the very least we need a report on what the likely impact will be after the Bill becomes an Act, if it does so. On that basis, I hope the Government will accept that we need much more information not only about the current standpoint but, similar to what the European Commission has provided to the European Parliament, on what the likely impact will be.

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[Baroness Fairhead]

I will try. First, the UK is already a member of the WTO; it was a founder member and it is a member. When its schedules have been lodged, they become the schedules, and even if they are not certified, we can continue to operate on that schedule. I committed to respond to the noble Lord, Lord Purvis, following a conversation we had following some press reports about certification and whether one country could operate; I have the draft of the letter and am about to sign it, and again, I will put a copy of that in the Library. It is clear that a country can operate on an uncertified schedule; indeed, the EU 28 are currently operating on a schedule which is not an EU 28 schedule. All that is set out in detail in this letter, which I hope will provide satisfaction.

Having now laid before your Lordships the steps the Government have taken at the WTO, I turn again to Amendments 34 and 54. We have made our proposed apportionment of WTO TRQs on the basis of the best data available to us regarding recent patterns of trade in the relevant products, so that any apportionment does not distort existing trade patterns. However, we have always said that, should trading partners have alternative data, we would be prepared to examine that in order not to distort trade flows in these commodities. If allowed, Amendment 34 would prevent us doing this, and, in doing so, would undermine one of the UK’s obligations to our WTO partners at the moment when we are re-establishing and reasserting ourselves as an independent member of the WTO.

Amendment 54 requests a report detailing our progress on GATT Article XXVIII negotiations. I trust that the Government’s frequent updates on our WTO transition reassure this House that the Government are committed to keeping Parliament informed at every stage of this process. We will continue to update Parliament as we progress and complete our Article XXVIII process.

The report in Amendment 54 also requests an assessment of whether the objections raised by other countries that gave rise to our Article XXVIII negotiations affect the UK’s ability to trade on our goods schedule after we leave the EU. I hope that I addressed that in my previous answer to the noble Baroness, Lady Kramer. We will be able to use and base our trade policy upon our goods and services schedules even if they remain uncertified at the point they become operational—whether that be after the conclusion of the implementation period or in a no-deal scenario in April 2019. We are also able to negotiate, sign, ratify and bring into force trade agreements with uncertified WTO schedules. This situation is not without precedent. Indeed, the EU has done precisely this for years while signing several trade agreements, including with Canada and Japan.

Given the broader work already in train, the impact these amendments may have on that and the Statements that the Government have made and will continue to make throughout our trade policy transitions, I ask that these amendments be withdrawn.

[Lord Grantchester]

My Lords, I thank the Minister for her answers and explanations. Once again, I am grateful to the Committee for allowing me to come forward with this probing amendment to understand better the processes and procedures that the Government are currently undertaking. They will be of great importance to large sections of our economy. They were put forward in the context of continuity—very much, as the noble Baroness said, of rolling forward existing trade flows. Hence, I was very happy to take questioning and probing from the noble Baronesses, Lady Byford and Lady McIntosh, on the amendment’s meaning. The answer is that I wanted to get the subject matter down for debate and to understand it better—and, indeed, to underline the difficulties of the word “improvement”, which the noble Baroness, Lady Byford, used for how we might want to change things and go forward. Obviously, improvement means different things to different stakeholders in the process.

I am very grateful to my noble friend Lord Whitty for explaining the background so comprehensively. What is really referred to is market access. Does improvement mean better market access, and for whom? How does this affect other stakeholders and the balance of interests between the countryside, the food chain and consumer interest and consumer prices? I was not really coming from the angle of an importer or an exporter, but I wanted to have the issue debated. The Minister has provided a lot of background interest and information that will certainly take a lot of reading and reflection.

Finally, the process outcome still seems far from clear. We will be talking about the apportionment that can result from it and how this may still give rise to anxieties and the balancing of those interests. Having made those remarks, I am very grateful to the noble Lords and noble Baronesses who have taken part in this little debate. I beg leave to withdraw my amendment.

Amendment 34 withdrawn.

Moved by

[Lord Grantchester]

35: After Clause 5, insert the following new Clause—
“Internal energy market
It shall be the objective of an appropriate authority to take all necessary steps to implement an international trade agreement which enables the United Kingdom to fully participate after exit day in the European Internal Energy Market.”

--- Later in debate ---

[Lord Grantchester]

My Lords, Amendment 35 seeks to set the objective that the UK should fully participate in the European internal market after exit from the EU. This wording may also need to be examined. However, it is once again merely a probing amendment to enable the Government to provide more clarity on their intentions in the Bill and in future scenarios. Full participation may be said to imply continued membership in the internal energy market. While the Government have now been clear that leaving the EU will also include leaving Euratom, they took some time to explain what the close relationship with Euratom would mean. We now know that it means full duplication of regulations and regimes. However, what is the situation regarding the internal energy market, and—turning to Amendment 36—how does this outcome bear on the internal all-Ireland energy market?

Once again, an industry is calling out for clarity over trading arrangements as the UK leaves the EU. In the event of no deal, the outcomes become even more precarious and pose risks to the functioning of the UK energy market. Energy and climate should be among the first topics covered in negotiations to preserve security of supply and aid completion of the modernisation of the UK’s energy system, which requires tens of billions of pounds in investment in a smart power grid, low-carbon transport and heating to underpin the competitiveness of all UK business. Electricity and gas cross-border trading is an increasingly important part of efficient markets. Net imports of electricity accounted for 4% of the UK’s power supply in 2017 and 47% of gas arrives via pipelines from Europe. Increased interconnection and a proposed doubling of these connectors with neighbouring markets are planned—for example, from Peterhead—and will help balance the security of power supplies.

I am grateful to my noble friend Lord McNicol for tabling his Amendment 36, to which I am also speaking in this group. It draws attention to the challenges posed by the integration of the island of Ireland’s single electricity market. Also included in this group is Amendment 46, which proposes that there should be no hard border between Northern Ireland and the Irish Republic. Will the UK continue to participate through membership of the internal market to avoid disruption across both Ireland and the UK and maintain a low-cost, efficient power supply through integrated systems under common international environment laws? Losing access could lead to higher bills for consumers and potential disruptive effects, and raise critical issues regarding the EU emissions trading scheme. It is important that the Government provide clarity. I beg to move.

--- Later in debate ---

[Lord Bates]

I am happy to put some additional comments on the record for the noble Lord, in that spirit. Last night, the majority of MPs said that they would support a deal with changes to the backstop, combined with measures to address concerns over Parliament’s role in the negotiation of the future partnership relationship, and commitments on workers’ rights. We will now take this mandate forward and seek to obtain legally binding changes to the withdrawal agreement that deal with concerns on the backstop while guaranteeing no return to a hard border between Northern Ireland and Ireland. We are keen to work with the Government of Ireland to ensure that the SEM will continue in any scenario, and welcomed their statement in December that they were engaging intensively with the EU to ensure that the single electricity market would continue. I hope that this provides some reassurance.

On the point made by the noble Lord, Lord Hain, we have been consistent in our commitment to avoiding a hard border between Northern Ireland and Ireland, upholding the Good Friday agreement and maintaining the conditions for north-south co-operation. We are delivering on those commitments. We negotiated a withdrawal agreement that delivered on those commitments in good faith; we have worked hard to build support for it in Parliament over many months. It was clear to the Prime Minister, having met parliamentarians from all parties, that a change to the backstop would be necessary to get the agreement through. The Prime Minister was clear that there are a number of ways to do that and that she will work with colleagues from all parties, and with the EU, to secure changes that command the support of Parliament. Although the Government will seek to secure legal changes to the backstop, their commitment to avoiding a hard border and maintaining the necessary conditions for north-south co-operation remains undiminished.

In a paper published earlier this month, the Government set out their commitments to Northern Ireland, including: a legal guarantee that the backstop could not be used to alter the scope of north/south co-operation; a role for a restored Northern Ireland Executive in UK-EU discussions, through the Joint Ministerial Committee, on matters concerning Northern Ireland; a commitment to seek the agreement of a restored Northern Ireland Assembly before new areas of EU law could be added to the protocol; and a legal guarantee that Northern Ireland businesses will continue to enjoy unfettered access to the entire UK market.

Let me be clear: the Government are committed to ensuring that any arrangements to avoid a hard border on the island of Ireland respect the devolution settlement in Northern Ireland. The UK recognises our unique relationship with Ireland. The UK-Ireland relationship should continue to operate through the well-established three-stranded approach set out in the Good Friday agreement. At this stage, I am unable to add to the remarks I have already put on the record, but I thank noble Lords for the opportunity to make them. I know that we will come back to this issue on Report, but in the meantime I hope that the noble Lord will feel able to withdraw his amendment.

[Lord Grantchester]

I am grateful to all noble Lords who have contributed to the debate. As the Minister said, this issue relates not only to the energy market but to crucial aspects of the UK border on the island of Ireland, as spoken to by my noble friend Lord Hain, whom I thank for his remarks.

Returning to the amendments on energy, I am sure that co-operation between industries from member states will continue on a practical basis, but against the challenges of modernisation with low-carbon energy, a clear commitment from the Government could settle the issue. Interconnectors are not the only relevant things here, as the internal energy market provides challenges to the Government on other aspects, such as continued participation in the EU emissions trading system. I note that the Minister was most careful with his words, which the Committee will study with interest. I beg leave to withdraw the amendment.

Amendment 35 withdrawn.

Trade Bill

Lord Grantchester Excerpts

Report: 1st sitting: House of Lords
Wednesday 6th March 2019 Lords Chamber

[Lord Stevenson of Balmacara]

I am grateful to the noble and learned Lord. I am getting inspiration in the form of a book from my noble friend.

[Lord Grantchester (Lab)]

My noble friend could retable the amendment. He should, really.

[Lord Stevenson of Balmacara]

In short, the advice is confused, but I am going to think about it.

The noble Lord, Lord Tugendhat, set a very high test for the response today. He wanted a detailed response that would assure him that the Government had in mind significant changes that would meet some of the questions raised. I think the view of the House is that the response was not up to that level; therefore, I wish to test the opinion of the House.