Trade Bill

Lord Lansley Excerpts

Committee stage
Thursday 15th October 2020 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

I am delighted to follow the noble Lord, Lord Wigley. I fell foul of the procedures myself today—I think I am still a new girl, navigating my way through these extraordinary times, but I pay tribute to the facilities we have and we are grateful to have the hybrid system that is working so well.

I shall speak to Amendments 81 and 83 and later amendments. For the record, I perhaps misled my noble friend the Minister in my question at Question Time, but I have the highest possible regard for members of the Trade and Agriculture Commission—they have proven their independence and their value to date. My noble friend said that they take no money for their role, so we are particularly grateful for their public service contribution. My noble friend will be under no illusion, however: I would like the commission to be independent and to have its own resources, its own staff and its own offices, and I shall continue my little campaign in that regard.

On appointments made under Amendment 81, can my noble friend put my mind at rest? What does the Governance Code for Public Appointments say about non-disclosure agreements? I am sure they do not sit comfortably within the present arrangements.

On Amendment 83 and the trade advisory groups, I noticed in the previous group that we had 17 expert trade advisory groups in July with, I think, 250 representatives. In August, we had fewer representatives and only 11 trade advisory groups. I would like to clarify, if I may, what the current composition is. Do they include, for example, anybody—a British national, ideally—who has first-hand experience of negotiating trade through the EU Commission, which would obviously be hugely beneficial at this time, as we set out negotiations on our own? To what extent is industry involved, either through the CBI or otherwise? I understand that the CBI was represented in the earlier trade advisory groups and it is extremely important, if the CBI is not represented, that we have some kind of business representation.

Can my noble friend also put my mind rest that services, both professional—such as legal services—and financial, have bodies that are represented through the trade advisory groups? If that is the case, could he please explain which they are?

I was delighted to sign Amendments 106, 107 and 108. I support the sentiments behind them and I consider them, at this stage, probing amendments, but it is extremely important that the Trade Remedies Authority also represents those categories. In Amendment 106, under proposed new sub-paragraphs (a), (b), (c) and (d) I would add (e) and (f) to include representatives of business, professional and financial services as well, because services are so important to our future trading potential.

On Amendment 108, I repeat my earlier remarks and endorse the provision that a person should hold office

“for a fixed period of five years”,

which would, I think, increase the potential for independence. A fixed term would give Trade Remedies Authority members greater security of tenure and therefore reinforce their independence and impartiality. A commitment was given by my right honourable friend the Minister, Greg Hands, in Committee in the House of Commons, that people are appointed on merit following fair and open competition, in keeping with the Governance Code on Public Appointments. The code itself states that there is a strong presumption that no individual should serve more than two terms or serve in any post for more than 10 years, other than in exceptional circumstances. I therefore hope that my noble friend will see fit to put this in the Bill through this amendment.

[Lord Lansley (Con)]

My Lords, I am glad to follow my noble friend. My amendment in this group is Amendment 113, which I shall come to at the end, where it is listed. However, there are two other areas that I shall briefly touch on.

First, Amendment 81, and those linked to it, cover appointments to the Board of Trade, or indeed to the trade advisory groups. I have a disinclination, I have to say, for statute or, indeed, the Select Committees of either House to be reaching into government departments and telling Secretaries of State who they should have to advise them. Amendment 81 probably misses the point, in that there are, as I understand it, very few appointments to the Board of Trade as such; most of the appointments being discussed are appointments of advisers to the board rather than members of the board itself. However, that is neither here nor there from my point of view. If Ministers are able to give the Committee assurances about the balance they will bring, I would be perfectly happy that they are getting balanced advice—that is terribly important.

Secondly, on Amendment 107, the noble Lord, Lord Stevenson, and my noble friend Lady McIntosh are venturing back into the territory I ventured into on Tuesday. I said that there should be a pre-appointment hearing of the International Trade Select Committee of the other place for the appointment of the chair. I await a letter from my noble friend the Minister explaining why I am wrong. I may well be wrong, but the point was well made by the noble Lord, Lord Rooker: we are dealing here not with the appointment of those who advise the Secretary of State in his own department but an independent body. That independent body is accountable to Parliament, and Parliament should have a say, although not a determining say, in who is appointed to chair it.

I am not proposing, as Amendment 107 does, that these appointments of non-executive members of the Trade Remedies Authority should be subject to consent—that goes further than I would—but the appointment of the TRA chair is important. It has impact and, if not wide public importance, very wide business importance. It is something that should be clearly commented on by Parliament. That does not mean that Ministers cannot go ahead and appoint whom they wish. Indeed, even where there is a pre-appointment confirmatory hearing in other cases, Ministers, when I last looked, on nine occasions made recommendations to which Select Committees objected, and on six of those occasions, Ministers went ahead anyway. It would not prevent Ministers doing what they want to do, but it would give them Parliament’s view, so I am rather sympathetic to that amendment.

Amendment 113 is not about appointments or the membership of the TRA; it refers to Clause 6, which gives the Trade Remedies Authority the power—indeed, the obligation—to give advice to the Secretary of State in a number of respects, and the Secretary of State can request such advice. The Trade Remedies Authority is an independent body; there is a statutory relationship with the Secretary of State and the Secretary of State may ask for advice. For example, and I make no apology for coming back to this, let us say that we are talking about the Airbus and Boeing dispute, and the Secretary of State has asked the Trade Remedies Authority for advice on the “trade remedy measures” adopted by the United States in relation to that dispute, as both sides have secured World Trade Organization consent to the imposition of additional duties. When the Secretary of State asks for that, it is something on which the Trade Remedies Authority should expose for accountability purposes that it has given advice when it comes to the annual report.

It is important, and the fact that its advice has been sought is also important. I do not expect the annual report to go into obsessive or spurious detail, but, when one makes an annual report for an independent body accountable to Parliament, it should tell us how and when this statutory provision has been deployed during the year.

[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

I call the noble Lord, Lord Judd. No? Let us go to the noble Baroness, Lady Bowles of Berkhamsted.

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Moved by

[Lord Lansley]

92: After Clause 10, insert the following new Clause—
“Preferential rates given unilaterally
(1) In section 32 of the Taxation (Cross-border Trade) Act 2018, subsection (3), at end insert—“(d) the first regulations under section 10 (preferential rates given unilaterally).”(2) In Schedule 3 to the Taxation (Cross-border Trade) Act 2018, Part 4, paragraph 2(1), at end insert—“(c) in the case of the list in Part 2 or 3, the government of that country has committed abuses of human rights of such a character and scale that, in the view of the Secretary of State, unilateral trade preferences should be withdrawn.””Member’s explanatory statement
This new Clause relates to the Scheme of Preferences as provided for in Section 10 and Schedule 3 of the Taxation (Cross-border Trade) Act 2018. The first sub-clause requires that the first regulations made to establish the scheme (to apply from IP Completion day) must be made by an affirmative process. The second sub-clause confers a specific power to remove a country from the list of those benefiting from unilateral trade preferences where the government of that country has committed human rights abuses.

[Lord Lansley (Con)]

My Lords, we come to the last group of amendments in Committee. It is my privilege to move Amendment 92. It may be last, but it is not least: it is of considerable importance to our future trade relationships. It concerns the provisions of the unilateral scheme of preferences, as it is referred to. It might be referred to as the generalised scheme of preferences to bring it into line with the naming of the scheme under the European Union. Noble Lords will recall that the Taxation (Cross-border Trade) Act 2018 made statutory provision for the granting of unilateral preferences to eligible developing countries and least developed countries.

The structure of the provision in that Act is such that it would enable us to replicate what has been until now, and will be until the end of this year, the European Union’s generalised scheme of preferences. We have been reminded during the debates that the European Union scheme consists essentially of a generalised scheme of preferences, which grants for a wide range of products the absence of tariffs or a reduction in tariffs; and a generalised scheme of preferences-plus, which, by virtue of adherence of these least developed countries, and sometimes, I think, low-income countries, to 27 international conventions, including those on labour rights, environmental protections, human rights and good governance provision, gives them access to essentially a zero-tariff arrangement. In addition to that, for the least developed countries, there is what is known as Everything But Arms, which is in fact everything but arms and ammunition—a zero-tariff commitment for all their products apart from arms and ammunition.

The European Union scheme that we are presently part of was reviewed in 2018. In the early part of this year, the European Commission undertook a consultation to which responses were received and it closed in June. I do not know that more has been said about the further revision of the European Union’s regulations, which I suspect would not come into effect until the end of 2023, when the current scheme expires. So, to an extent, although we might replicate the European Union’s generalised scheme of preferences to begin with, from the outset we will have our own scheme and diverge from that scheme. I have no problem with that; my point is about how we go about this process.

The Taxation (Cross-border Trade) Act says that Ministers may make regulations. Section 10 of that Act gives Ministers the power to make regulations for the purposes of the unilateral preferences. Section 32 determines which of those regulation-making powers is to be exercised by reference to the negative or affirmative procedure. In this instance, it is all by the negative procedure. The first part of Amendment 92 is to change that, but not to make all regulations relating to the unilateral scheme of preferences affirmative—there will be a lot of such potential regulations. It is one of those areas where, rightly, Ministers do not want to burden the House with a constant stream of regulations.

However, as is the case for the global tariff, where Ministers put into that Act provisions whereby the first regulations made in relation to Section 32 would be subject to the affirmative procedure, this amendment would provide that the first regulations made for the unilateral scheme of preferences, our GSP, would also be subject to an affirmative procedure. I hope that those regulations will be made by the end of this year because we need them to be in place by then. If that is not the case, it would be immensely disappointing and could lead to considerable dislocation.

The second part of the amendment relates to the question of whether, when the Government make the regulations, Ministers have the power to disapply, suspend or withdraw the unilateral preferences when a country or territory is responsible for significant human rights abuses. This is not an idle point. On 12 August this year, the European Commission suspended GSP access for Cambodia, which will affect some 20% of its exports to the European Union, on the grounds of significant human rights abuses in that country. About three weeks ago, the European Parliament passed a resolution—not obligatory but a substantial expression of European opinion—suggesting that there should likewise be a withdrawal or suspension of preferences in relation to the Philippines by virtue of that country’s human rights abuses and lack of good governance. That was not responded to well by that country’s regime.

These are not idle points and potentially are issues on which we would have to make our own decisions. This Parliament has for decades not been used to taking decisions about such trade preferences and their relationship with developing countries. I am pleased that we will have that opportunity; it is one of the few effects of Brexit that would be positive, whereby we can positively influence developing countries through our trade preferences.

Interestingly, only today, the UK Trade Policy Observatory from the University of Sussex posted a blog stating that it was worried that the unilateral scheme of preferences will not compensate many developing countries for loss of their competitiveness in the United Kingdom market because our global tariff reduces tariffs on a most-favoured nation basis. That is part of a liberalising process and I do not object to our overall reduction in tariffs, which is not large in scale. However, it reduces the preferential margin for the unilateral scheme of preferences. Therefore, countries that benefit from our preferential scheme will see less competitive advantage as compared to many other countries that will be able to access our global tariff.

The TPO also said that difficulties are being experienced by low and low-to-middle income countries in relation to rules of origin, access to origination from those countries giving them access to the preferential scheme, certification and the like. This is one of those technical areas in which it will be important for us to make sure that the regulations are right in that respect, not least because there is a complex interrelationship between the free trade agreements that we are entering into and the origination of product from countries with unilateral preferences because they can use cumulation in relation to other countries and those countries with which we have a free trade agreement. Of course, we do not have free trade agreements with all the countries with which the European Union has such agreements. They might lose some of that potential for cumulation at the end of the year if we do not put all these provisions in place. Instanced in the TPO’s blog are Ghana and Kenya, which might thereby lose out. I shall not go down that path because I know that the noble Lord, Lord Chidgey, who was kind enough to co-sign the amendment, might want to talk about some of those effects in Africa, given his expertise. I am grateful to my co-signatories on the amendment.

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[Lord Grimstone of Boscobel (Con)]

My Lords, I thank my noble friend Lord Lansley for his interest in the UK trade preference scheme. The Government share his interest in using trade preferences to support trade and development, and I am happy to discuss the Government’s commitments in this area.

I reassure the Committee that the Government have made long-standing commitments, including to Parliament, to replicate the EU trade preference scheme. The UK trade preference scheme—UK GSP—will provide the same level of access as the current EU trade preference scheme by granting duty-free, quota-free access to the UK market to least developed countries and by granting tariff reductions to other developing countries. It will replicate the three levels of market access provided by the EU, including an enhanced level of market access for economically vulnerable countries that ratify and implement 27 international conventions.

As noble Lords will be aware, coronavirus has had a severe impact on trade for many developing countries. Providing certainty that we will continue their GSP access is an important way of supporting their economic recovery.

I can confirm that the first set of GSP regulations will be laid before the end of the year and that they will maintain continuity of market access. I listened carefully to the points made by my noble friend Lord Lansley and the noble Lord, Lord Purvis, but, as these regulations do not effect any significant changes compared with the EU’s generalised scheme of preferences, the Government consider it more appropriate, when parliamentary time is stretched, to keep these as negative procedures.

However, I say to noble Lords that, after we have ensured continuity of the EU trade preference scheme in the transition period, we are committed to improving the UK’s trade preference scheme further in due course. I can confirm that we want the UK’s unilateral preferences to be as effective and simple to access as possible, to best support economic development in poor countries and to support UK businesses and consumers to access competitively priced goods. I reassure the noble Lord, Lord Purvis, that we will make available the information in the autumn that we said we would make available.

I turn to the second part of amendment on human rights, and reassure noble Lords that the power in Section 10 of the Taxation (Cross-border Trade) Act allows for preferences to be varied, suspended or withdrawn and, by extension, allows the Government to address human rights violations of the type that this amendment seeks to address. I can assure the House that regulations to create the UK preference scheme will include provisions for the variation, suspension, or withdrawal of trade preferences where the beneficiary country engages in serious and systematic violations of human and labour rights. The noble Lord, Lord Chidgey, gave us some very powerful and chilling reasons why it is very important that we have these options. The Government will look at range of options in the event of human rights violations, and we shall balance the need to act decisively, where required, with the need to follow due process.

My noble friend Lord Lansley raised the question of Cambodia. The UK shares the EU’s concerns over the human rights situation in Cambodia, and continues to raise them with the Cambodian Government. However, the UK, rightly and properly, will take into account all the available evidence before taking a decision on whether to partially suspend Cambodia’s preferences at the end of the transition period.

The UK has a strong history of protecting these principles and promoting our values globally, and we will continue to do so. The Government do not shy away from issues of human rights, including during our discussions on trade. Moreover, the introduction of political considerations related to human rights does not fit with the purpose of the list of countries in Schedule 3 to the Act. This was intended to determine eligibility based on objective classifications by international bodies. The proper place to include these provisions is in the regulations that we will be introducing before the end of the year.

I undertake to write to noble Lords who raised detailed questions in the debate that I have not covered in this winding-up.

As this is the last amendment we are debating, I ask for the Committee’s indulgence to put on record my gratitude and appreciation to noble Lords, who have spoken with great passion, knowledge and experience during all the debates. I have personally found the expertise and constructive engagement I have had extremely valuable, and I thank noble Lords for their patience as I have begun to learn my trade as a Bill Minister. I thank the noble Lords, Lord Stevenson, Lord Grantchester, Lord Purvis and Lord Fox, the noble Baroness, Lady Kramer, and my noble friends Lord Lansley, Lady Neville-Rolfe and Lady Noakes. I think that noble Lords will also want to join me in paying tribute to my noble friend Lord Younger, whose support, guidance and good humour has been invaluable to me. On a personal level, I also thank the Bill team in my department for some tremendous work, and my private secretary, Donald Selmani, for spending long hours sitting in the Box.

The debates that we have had in Committee have allowed a detailed assessment of this Bill, as well as of wider trade issues. We now have some time in which to reflect on the views that we have heard—and, of course, I undertake to do that. I will use this time carefully and I look forward to engaging with Peers and debating the Bill further on Report.

On the amendments that we have been discussing, that just leaves me to say that I am grateful to my noble friend Lord Lansley for raising these important issues. I hope that I have been able to reassure him and other noble Lords, and that he will agree to withdraw his amendments.

[Lord Lansley (Con)]

My Lords, I am grateful to the Minister for his response to this debate. I am pleased that we have finished with an illustration, and I am grateful to the noble Lord, Lord Chidgey, in that regard, and to the noble Lord, Lord Purvis of Tweed, for giving powerful, relevant examples of how the trade preferences and the way we manage our trade in future can have substantial impacts in some of the poorest countries of the world.

It is rather important that we finish by recognising that, while we do our dry legal work here, there will be powerful, real-world consequences of the decisions that we take. It is precisely for that reason that I tabled this amendment—to illustrate that, as a Parliament, we want to get involved in the debate about how we can make our UK trade preference scheme more generous, more accessible and able to support sustainable development around the world more effectively. We may well start by replicating the EU scheme, and I think the EU would legitimately argue that its generalised scheme of preferences is a world leader, but that does not mean it is perfect. It is important for us to recognise that there may be ways we can further develop it, given our ability to deploy our development expertise around the world.

I also understand the Minister’s argument about the first regulations being essentially to replicate the EU scheme, so why should we take up our valuable time debating them? The noble Lord, Lord Purvis of Tweed, shared the point that our global tariff is not the same as the EU’s tariff. In so far as there are differences, it will have consequences for the least developed countries. Some of those consequences—for some products for some countries—might be really significant, and the noble Lord gave us examples of that. That is especially true if we do not have rollover agreements. It is bound to be true in that the EU has, for example, regional trade agreements that give rise to accumulation opportunities that we will not necessarily have in place early next year. So, easy as it is to say that we will simply replicate the EU scheme, I am afraid that there will be differences from the outset. I want to make sure that those differences are not negative and we find ways to deal with the potentially negative consequences for the neediest countries, but also go on, perhaps, to find new opportunities in the future.

I hope this is a debate that the Minister wants to have and that we will continue to have but, in view of everything he said, I do not want to press it now. As someone who has participated in all these Committee days—as my noble friend Lord Bates will recall, we did the same back in the early part of 2019—I think the Minister can rest assured that he has had an effective, capable and impressive first outing as a Minister working on a Bill. In response to his kind words to noble Lords, we have all very much appreciated the way that he, my noble friend Lord Younger of Leckie and officials have gone about the process of working with us. We look forward to that being continued on Report. I beg leave to withdraw Amendment 92.

Amendment 92 withdrawn.