Trade Bill

Lord Purvis of Tweed Excerpts

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

[Lord McNicol of West Kilbride (Lab)]

My Lords, Amendment 31 is a short amendment but an important one. This is my first Bill and first amendment from the Opposition Front Benches in your Lordships’ House, so please forgive any mistakes from the outset.

Nowhere, as far as I can see, are rules of origin mentioned or dealt with in the Bill. This is worrying for a number of reasons. Most importantly, rules of origin will have a huge impact on the UK’s efforts to replicate our current EU trade agreements with other countries. Rules of origin are about how we define where a product or products really come from, and what “Made in Britain” actually means. It is important to the Bill because, if we are to take the Government at their word, this is just a Bill to allow the rollover of existing trade agreements—agreements that we currently have because of our membership of the EU and customs union. Without changes, rules of origin locally should be expressed in exactly the same way as they currently are. My concern is that they will not be. Post Brexit the EU will no longer be classified as “local”. The UK will be the new “local”. So a new definition will need to be written into these rollover trade deals, where “local”—which until leaving the EU meant inside the whole of the EU—will now mean not just the UK but the UK and the rest of the EU.

The issue of rules of origin is inextricably linked with our membership of the customs union. The big advantage now of being inside the customs union is that no tariffs or taxes are placed on imports or exports of goods traded between member states. Fulfilling the country-of-origin principle ensures that products can enjoy zero tariffs as part of free trade deals if they meet the requirement: conversely, if they do not, they will not. To give a practical example, trade deals in the car industry usually require about 55% of the components of a car to be considered as local. But most cars made in the UK have just 40% of UK-only content. If we then look at the fact that many of the subcontractors source many of their parts from abroad, a UK-made car could be less than 30% made in the UK. This is improved and passes a 55% threshold due to the fact that other manufactured parts of the car come from EU countries, currently classified as local. I ask the Minister: when we leave, how will this be addressed in each of the possible exit scenarios, as this is pertinent to the rollover of existing trade agreements? I also ask the Minister to clarify, if amendments need to be made to the text of existing trade agreements, how parliamentary scrutiny of those changes will be handled. I beg to move.

[Lord Purvis of Tweed (LD)]

My Lords, I congratulate the noble Lord on moving his first amendment to a Bill. It does not get any easier—I do not wish to offer any false reassurance—but I happily concur with his remarks in moving the amendment. I have little to add except to reinforce the point that, for the UK in particular, the majority of our imports from our biggest market and an even larger majority of our exports are intermediary. They include components that are from a number of different countries and not from here.

This issue was raised briefly with the Minister on the cross-border taxation Bill. It is the complexity not just of the components but what is necessary to ensure that many UK exported goods and our imported consumer goods have a seamless transaction process. It is less about the tariffs applied and much more about the regulatory aspects and checks that will be necessary, which I shall turn to in a moment. Therefore, for our key sectors—the noble Lord mentioned automotive, but for wider engineering and overall production and for our exporters— this issue is critical.

I will cite one example from HMRC’s advice to businesses that is close to my heart, living in an area that has a rich tradition of manufacturing in textiles. It shows some of the complexity when rules of origin have to be applied. Each business has in effect to do its own certification. The advice states:

“For example, yarn spun from non-originating man-made fibres in France”,


would not be considered as originating within the EU for preferential purposes when considering whether rules of origin apply.

“However, cloth woven from that yarn in the UK would be an EU originating product, just as if the weaving had been done in France or Germany”.


That is one tiny example of where, if we do not have a customs union with our biggest market, we will have difficulty with rules of origin with our largest market and then, as we move to trade with other countries outside the customs union, we will have difficulty in deciding which are applicable for other preferential or other trade policies.

That is part of the complexity that leads to Amendment 51 in my name, which is in the view of these Benches necessary to align with our biggest market in order for us to exploit trade with other markets. We need to triangulate as little as possible, which seems to be what the Government seek. The best way to do that is through these arrangements. I understand that there is tacit agreement from the Government on this point, because the announcement last week of an in-principle agreement with Israel to roll over our agreement means that it seems that the United Kingdom is in principle considering what is in effect a rules of origin regime with the EU, the EEA, Switzerland, the Faroe Islands, Morocco, Tunisia, Egypt, Jordan, Israel, Montenegro, Bosnia-Herzegovina, Serbia and Turkey—all countries that have in effect a rules of origin regime.

It would be helpful if the Minister could clarify the Government’s intention for rules of origin in the existing rollover agreements and how they consider the future. However, even if we operated under such a regime, necessary checks and certification still have to be done electronically; each exporting company has to apply its four-digit tariff heading and carry out its own checks on whether rules of origin are being complied with. If we are to have a separate anti-dumping and corrective measures system—which, incidentally, the Government promised us for consideration before the final stages of the Bill—and if we are to have a preferential rules of origin system for developing countries, we will have to have some form of check system to ensure that those countries comply with it. It is one thing to say that we will have an electronic system for our closest trading partner—but how will we know that it is not being abused by other countries that wish to circumvent it?

Up to the Lords stage, the Government said that the language as set out in these amendments would necessarily tie their hands and weaken their negotiating flexibility by having them take all necessary steps—but this is no longer the Government’s position because we see that language in Clause 6. This is now government language, where it relates it to the European medicines regulatory network. The Government seemingly do not intend to bring forward any amendments to delete that from the legislation, so if they do not then that is the government language. That means that the Government should not have any problem with accepting this language.

Secondly, the Government said, prior to yesterday, that it would be inappropriate for Parliament to set a mandate for how the Government should take forward negotiations. That is clearly no longer the case because, as the Secretary of State for Exiting the European Union and the Prime Minister herself have said, Parliament has set the Government a mandate with regards to the Northern Ireland protocol. So there is no barrier to the Government accepting the language of these amendments. As to the necessity of them, it is very clear that this is what most of the industrial sectors of this country are seeking.

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[Lord Lilley (Con)]

My Lords, I congratulate the Minister on introducing this debate and focusing on rules of origin, which is the main complexity that will arise with trading goods. I suggest that this should not be exaggerated. It is the big difference between free trade areas and customs unions but I note that the Swiss, who have a free trade agreement with the EU—not a customs union—do not seem to be too upset about that. They do not seem to be calling for a customs union. They seem to be coping with all the problems that noble Lords have told this House are insurmountable; the Norwegians likewise.

The Canadians have a free trade agreement with America but are not calling for a customs union. Even our Canadian Governor of the Bank of England, when he returns to Canada and joins in the political process there, is not going to call for Canada to have a customs union with the United States to overcome all these supposedly insurmountable difficulties. They are not insurmountable and they are going to get somewhat simpler.

The EU is bringing in the REX system for self-declaration of rules of origin—you will have to do the calculations but you will not have to buy a certificate; you will just declare the origin of the goods. Of course, you will have to get it right; as with any self-declaration, you will be open to investigation and checks if there is any reason to suppose you are cheating, but it will simplify the process greatly.

Can the Minister confirm that we will be able to join the pan-Euro-Med convention on rules of origin if we have a free trade agreement with any member of that convention—for example, Israel? I believe that when you belong to it you can begin to assess diagonally, as they say, the components of your goods when you export among them. If that is open to us, it will ease things as far as we are concerned for a large group of countries.

[Lord Purvis of Tweed]

It is less a point of the inability to trade with countries on WTO rules of origin principles—they have been established for many years and will continue, and the EU uses them with non-EU countries. The difference the noble Lord is alluding to is a mutual recognition of the rules of origin principles that we have agreed through the EU with, for example, Norway and Switzerland. This means that, as far as cumulation is concerned—and given that the majority of British imports and exports are cumulated products with our biggest market—the critical factor is the non-burden that comes with other checks that we would not have if we were a non-member of either a customs union or, indeed, a grouping that meant that all other regulations were aligned, as those countries have opted to do, and I think his position is that we should not do.

[Lord Lilley]

I am not sure that I said any of the things that I think the noble Lord is both telling me I said and that are not true. I suspect what he said is true but it is not what I said. Forgive me if I do not really respond to his point, which I do not fully understand.

My point was that there is the pan-Euro-Med convention which has the same rules of origin among all the countries. Cumulation is allowed between them. You can join the convention when you have a free trade agreement with one member of it—at least, that is what I am asking the Minister to confirm is the case and will be the case when we have a free trade agreement with Israel, to start with.

The noble Baroness, Lady Kramer, talked about the costs. I do not know if she is familiar with the study of the costs—which I think is the most recent and the most authoritative—carried out by the World Customs Organization. It searched through all the previous studies and found them to be deficient. The level of cost is actually much lower than had previously been thought. That must be true if the Swiss assessment of the total cost of their trade across the borders is correct, because they believe that it is only 0.1% of the value of their trade, including the cost of complying with rules of origin.

I advise the Committee as a whole to read that report. I am sorry that I cannot give the reference but I can give the reference to a document in which the reference is given—namely, a document that I myself wrote called Fact—NOT Friction. I urge noble Lords to read it, as they will find the appropriate reference.

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[The Minister of State, Department for International Trade (Baroness Fairhead) (Con)]

My Lords, before addressing the amendment directly, I too warmly welcome the noble Lord, Lord McNicol of West Kilbride, who is making his first contribution at the Dispatch Box today. I share the view of the noble Lord, Lord Purvis, that it probably will not get any easier, but I very much look forward to our debates.

I am grateful to the noble Lords, Lord McNicol and Lord Purvis, for tabling Amendment 31. As the noble Lord, Lord McNicol, said, it is a short amendment, but it covers an important area. I confirm that the Government share the objective of the amendment. We are committed to ensuring that the rules of origin used in our continuity agreements enable businesses to continue to operate, as much as possible, through their established value and supply chains. That is particularly important where integration with EU supply chains is significant.

I wish to reassure noble Lords about the concerns that may have prompted the amendment. As I have stated, there are technical issues in continuity agreements that cannot be simply cut and pasted. Rules of origin are among those. We are continuing to work with third countries to deal with the issues involved, with the objective of ensuring continuity for businesses and consumers when the UK leaves the EU.

The noble Baroness, Lady Kramer, asked about negotiations with partners without involving the EU. Just to clarify, the ROOs for each agreement are negotiated bilaterally between the parties. The sequence of such agreements is such that we need to negotiate bilaterally with partners before negotiations open with the EU. EU producers and exporters will benefit from EU content being treated as UK content in our continuity trade agreements, as their business arrangements will not be disrupted. I can confirm that the UK does not need to ask the EU for permission to do this.

Our approach includes using standard rules of origin mechanisms to remain as closely aligned with the status quo as we possibly can. Importantly, as Amendment 31 advocates, this approach includes seeking to ensure that UK and third-country exporters can continue to make use of EU content in their exports to one another. As my noble friend Lord Lansley correctly said, this is referred to as cumulation.

As with many other aspects of international relations, our partners understandably view our negotiations and discussions as sensitive, so we are unable to give precise details on progress at this time. Nevertheless I will reassure the Committee that discussions on rules of origin are progressing constructively. As my noble friend Lord Lilley pointed out, because there is mutual benefit there is a willingness to engage.

[Lord Purvis of Tweed]

The Minister is clear that it is the Government’s intention unilaterally to say to all third countries that components from the EU would be considered part of UK goods. What comes with that is certification, and showing the evidence from the European Union suppliers. Currently, the European Union has its set of certifying conditions as to where products originated. Is the Government’s position that we are unilaterally saying that those component parts should be considered as from the UK? Will we be using in perpetuity all the European certification and proof of origin processes?

[Baroness Fairhead]

Let me clarify for the noble Lord. As he will be aware, rules of origin determine the origin of goods. Regulations then implement those rules of origin in domestic legislation, under the Taxation (Cross-border Trade) Act 2018. The certification and verification of the ROOs of each good will be consistent with current practices under the EU’s trade agreements. Exporters will need to certify the origin of their goods, as they do currently.

[Lord Purvis of Tweed]

May I press that point a little further? Currently, a British exporter will require a movement certificate—EUR1, or EUR-MED if it applies to the pan-European Mediterranean cumulation that we have already discussed under this group of amendments —or a declaration of an invoice or commercial document, such as a packing list or consignment note. These are European Union certificates, which are recognised solely by the European Union. If we are no longer in the EU, how will our certificating process match the EU process, given that it would concern exactly the same component part?

[Baroness Fairhead]

I hoped and believed that I had addressed that question. The answer is yes: that certification would continue as it currently does. That is the information I have but if the situation is any different, I will write to the noble Lord.

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[Baroness Fairhead]

That is exactly why the Government are clear that the preference is for a deal. That is what we are trying to achieve, because it is in the best interests of the UK.

Amendment 31 also aims to tie Ministers’ hands and compromise their ability to reach agreements that are in the best interests of the UK. As the Committee will be aware, it is neither beneficial nor appropriate for this House to fetter the Government’s capability in that regard. Therefore, as it is already an objective of the Government to seek continuity through cumulation or any other technical process, it is neither necessary nor appropriate to place a legal obligation of this kind in the Bill.

[Lord Purvis of Tweed]

The Minister might be able to help me. Clause 6(1), as introduced into this House, states:

“It shall be the objective of an appropriate authority to take all necessary steps to implement an international trade agreement, which enables the UK to fully participate after exit day in the European medicines regulatory network partnership”.


Why does that not bind the Government’s hands and restrict their freedom, when the Minister says that exactly the same language used in this amendment seems to bind the hands of the Government? Either the Government will seek to change the language in Clause 6 or they should have no problem with the language in these amendments.

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[Lord Purvis of Tweed]

My Lords, I have great sympathy with Amendment 81 in the noble Lord’s name. It struck me, as a former Member of the Scottish Parliament, that one result of our leaving the European Union will be that we have, in effect, a single market within the United Kingdom, while, for the implementation of trade agreements, some elements of those agreements will be under the auspices of the devolved Administrations. Therefore, if it comes to compliance, the body that has entered into the agreement with the third country will be the United Kingdom if the United Kingdom Government are also a regulatory body to the devolved Administrations for areas for which they have executive and legislative competence. That is potentially an uncomfortable situation. There is merit, therefore, in considering how the United Kingdom might have, in effect, the equivalent of the European Commission. What will be the bodies that operate across the United Kingdom that will consider compliance with trade agreements? It sits uncomfortably if the UK Government are that body when it comes to the component parts of the UK that have both ministerial and legislative competence for those.

Turning to my Amendments 52 and 60, one of the issues concerning what the Government call continuity agreements, which they are seeking, is that they might not just be temporary rollover agreements: they might last a long time. They will be treaties in their own right which, by definition, will be permanent, but the regulations that come with them to translate them for ratification could well be permanent or, at the very least, operate for three-year terms, which could be indefinite if they are renewed. On the point that the noble Baroness, Lady Neville-Rolfe, made about a five-year period, the option I have put forward is that, in advance of Parliament being asked at the end of the initial three years about the impact on the United Kingdom, before decisions have been taken on whether they should be renewed or whether the Government might seek to go back and consider the contents of those agreements, that is the appropriate time for reporting to be carried out. Therefore, it is important at that stage, in advance of the end of the initial three-year period, that a review is carried out of the impact on the UK and specifically on the nations and regions. We know from both Governments’ data, information from the devolved Administrations and academic research that trade deals with countries that have a particular bias in certain sectors affect some parts of the United Kingdom more than others, whether car manufacturing in the north-east of England or food and drink in Scotland. Therefore it is very important to specifically mention the nations and regions.

It is also important, as suggested in subsection (2) of my proposed new clause in Amendment 52, that we have a means by which we can test what has been said repeatedly—that we could trade with those countries better if we were not part of the single market than if we had continued to be part of it.

Amendment 60 looks forward to any proposed future trading relationship between the UK and the EU and its impact on the British economy. I hope that the Government will be sympathetic to this amendment because it has already been agreed in principle to publish modelling of what the impacts on the British economy would be for some of these areas, even if—and this is the most charitable way of describing it—the Government had to be persuaded to publish this information rather than allowing MPs to enter a darkened room to study it in private. Now that this information is out in the public domain and the principle is there, economic modelling of the impact of our relationship with the EU, depending on the way forward and the options taken on that trading relationship that are to be negotiated, is very important. After last night’s vote in the House of Commons, it is even more important, given that whatever alternative arrangements are considered which have an impact on our future trading relationship, we will need to know what kind of impact they will have on the British economy and its different parts.

Regardless of that, it is necessary now for us to consider what architecture we put in place to consider the impact of our trading relationships with countries around the world on the different parts of the United Kingdom and then on the United Kingdom as a whole. It will be even more important given that the European Union has been and will continue to be our biggest trading partner, so that we do not repeat the process we have had over the last two years and try to reverse engineer what the likely impact will be. We are starting to establish some of that framework now, which is why Amendment 60 has been tabled. I hope that the Government will be sympathetic to it. If it is not accepted in this precise language, I hope that the Minister may be able to present in some form of language that there will be consideration of the architecture of how we look at the economic impact across the UK of the future relationship with our biggest trading partner.

[Baroness Thornton (Lab)]

My Lords, I will intervene on the Bill, which is not my normal territory, although I have 20 years’ experience of working on equalities issues in your Lordships’ House. I will speak in support of Amendment 32, in the name of my noble friend Lord Stevenson, which requires the Government to lay before Parliament a qualitative and quantitative assessment, after five years, of the impact of new international trade agreements on human rights standards and people with protected characteristics under domestic equality law, among other things. It also provides transparency on the impact of such agreements on fundamental rights. As far as I can tell, the UK Government are a party to all the bodies mentioned in this amendment, so this should not be an issue and there should be no question about it. I should like some assurance from the Minister that, over the next five years, we will comply with all these international treaties on human rights and equalities.

I agree with noble Lords who said that compliance with equalities has to be judged by an independent body—I certainly know that. It should not be judged by the Government themselves. I thank the Equality and Human Rights Commission for its briefing on this subject. Its concern is that we,

“retain the UK’s equality and human rights legal framework as we leave the EU”,

and we ensure that,

“the UK remains a global leader on equality and human rights”,

after we leave the European Union. That is consistent with the UK being an open and fair place to live and do business. Certainly, if the Government do not accept the length of this amendment, I hope that they will accept the spirit of it, and that that will be expressed at the next stage of the Bill.

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I therefore wait with interest to hear what the noble Viscount, Lord Younger, says in reply. I remind him again that without adequate and reasonably prompt positive reaction to the filling of this lacuna, this Bill is going nowhere. It is as simple as that. That is what this House voted for when we had the debate before the Bill was committed. I look forward to seeing some government amendments in the very near future. Although I support the amendment of the noble Lord, Lord Stevenson, he himself has said—very wisely, I thought—that he did not think it was necessarily the final word in wisdom and that every detail did not have to be as it was; this is something that the Government have to provide. I hope that the noble Viscount will tell us that that is what they are going to do. He might even tell us when they are going to do it. I hope he will also say that the coverage of it will be the coverage here—mandating and oversight by both Houses of Parliament.

[Lord Purvis of Tweed]

My Lords, I shall speak to Amendments 59 and 71 to 74. They are quite distinct. Amendment 59 most certainly does not meet the Hooper test of brevity but I can dispatch it fairly quickly—no doubt to the great relief of colleagues in the Committee—because it may be considered a continuity amendment. It replicates the need for a meaningful vote process for the future relationship with the EU as we go through the withdrawal agreement process. It need not be controversial but it provides for the necessity for Parliament to authorise the agreement. It provides for that to be in primary legislation and sets out the procedures should the Commons resolve against the agreement. If we leave, this will be necessary for our future trade agreement with the EU to avoid a repeat of the “running down the clock” situation. Therefore, it is right that we have this put in place now.

Amendments 71 to 74 are perhaps the core of that element and have formed part of the discussions so far about the role of Parliament going forward. In a moment I will come to a live case study of a continuity agreement to show that this is not just about the future policy but is relevant now. Fundamentally, the reason that Parliaments around the world—the elected bodies other than simply the Executives—are now involved at early stages of trade negotiations is that trade negotiations are now markedly different from how they were 30 or 40 years ago.

By definition, the European Union now enters into discussions on deep and comprehensive trade agreements. In the past, the agreements were primarily about tariff rates and little else, but now trade agreements take into consideration the impact on domestic law of environmental standards. The social, economic, environmental, gender, human rights, labour, development and regional impacts are all core components. If you look at the most recent trade negotiations that the European Union has carried out with British participation, whether it is with Singapore, Japan or Canada, they have included sections on the development and sustainability goals. There are now clear positions when it comes to human rights, labour development and the impact on local communities. These are core parts of the trade negotiations that we have embarked on, and that is why the United States, Australia and the European Union have a much wider role for their Parliaments throughout the process. The Government’s position is in stark contrast to that: we would simply use the existing treaty provisions, which are not only out of date but will prove ineffective.

The only other aspect of ratification of treaties under the Constitutional Reform Act concerns what Mr Hollingbery, the Trade Minister, said in oral evidence to the International Trade Committee. He said that, although he did not want Parliament to have binding votes on these agreements, there was one aspect where he thought that Parliament should have an overrule. He said:

“But I do believe that Parliament should be able to opine upon the outline approach”.


Parliament being able to opine on the outline approach of trade negotiations might be a slightly unfortunate turn of phrase but the Government have given some indication that they are willing to consider it. I think that on the previous group the Minister gave an indication of that kind, and I agree. We are looking forward to hearing the Government’s position on the amendments to the Bill and to them giving a clear steer.

In the spirit of assisting the Government, these amendments in my name, with back-up from many civil society organisations, suggest what I consider a quadruple lock of parliamentary involvement from the outset in considering the sustainability impact so that there is a degree of transparency for all the different aspects that I mentioned earlier—the social, economic, environmental, gender and human rights impacts and so on.

One reason why that is important to me is that when I co-chaired with the Nigerian Trade Minister a commission for an all-party group on trade and development in the Commonwealth, it became abundantly clear to me that, to be a force for good in the world, trade also now has to take into consideration all those components. The British trade approach could be an especially good force for good for development around the world. We know that until recent years trade agreements have not been proactive in the areas of gender, human rights or those parts of society that have not been economically empowered. We could see trade agreements not simply as protective measures or as things where we are fearful of giving away British negotiation positions; we could see them as potential forces for good.

The second element of Parliament being involved in setting a mandate by resolution is a proactive mechanism for that. It is why this is now established in the European Union and I believe it would be of great merit for our Parliament to be involved in it. The third component proposed in the amendments is transparency, involving Parliament and the people, whom ultimately we all represent, because they are likely to be a key part of these trade negotiations. We know from the previous examples how difficult some trade negotiations can be, and that is when we look at the impact on both our communities and those of the country with which we are signing up to an agreement. The final component is scrutiny before signing, which I believe to be of fundamental importance. That quadruple lock is important. In essence, it is simply a way of replicating British representation through the European Union.

We have elected representatives in the European Parliament who take part in the early stages of negotiations. There is a very helpful document called Negotiating EU Trade Agreements: Who Does What and How We Reach a Final Deal. It is very straightforward and simple. It shows that even in preparing the position that it will take, the Commission publishes its negotiating directives online and sends them to the Parliament. The Parliament is informed at the earliest stage of the process and even prior to that. After each negotiating round, reports are presented to both the Council and the European Parliament, as was the case in the latest round involving Australia. I tried looking on the British Government’s website to find out about our discussions that led to the mutual recognition agreement with Australia but there was nothing. That was in stark contrast to the position with the Commission.

The fourth stage is that, when the Commission plans to table negotiation proposals, it informs the European Parliament about them, and it then informs the European Parliament at every stage of the developments, keeping it updated. The Parliament is then able, through its Committee on International Trade, to pass resolutions on the progress of those processes. When the negotiators from the two sides come close to finalising the text, the Commission tells the Parliament. The Commission also informally sends the text to the Parliament. In finalising the process, the chief negotiators of both parties usually initial the text of the proposed agreement to mark the end of the negotiations and that text is sent to the Parliament. The 10th element of the process is that, after both sides sign, the Council examines the proposal for conclusions and sends the agreement to the Parliament for its consent. The 11th stage is consideration by the committee of what to recommend to the plenary, and consent or no consent is then given to the agreement. There are 12 parliamentary stages in the negotiating process.

We understand that the Government have made only two agreements so far. One is with Switzerland. The text from the Swiss party was immediately put online; the text from the British side came subsequently. But we should do a case study of the announcement last week of what our Government said was an agreement in principle to sign a free trade agreement with Israel, while the Israeli Minister, Eli Cohen, said that the text was “concluded” on 23 January. I asked the Library to find a copy of that agreement—but there is none. I understand from the Government that the text will be placed in the House alongside an explanatory memorandum and an associated parliamentary report in due course, once the agreement has received signature.

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[Viscount Waverley (CB)]

The noble Lord has drawn attention to the issue of scrutiny by the European Parliament. In listening to him, it occurs to me—he may wish to agree—that one of the difficulties is that the UK Parliament is so underresourced. Do we have the resources to carry out the type of scrutiny to which he draws attention?

[Lord Purvis of Tweed]

I believe we do. Not only are we resourced in Parliament, but we are resourced in this House. Our committees do a remarkable job in scrutinising both European legislation and secondary legislation. As we approach the Bill, many noble Lords stand ready to scrutinise proactively and constructively some of the proposals. But we cannot do that if our role is only at the last stage. Indeed, the Government would be much more effective in securing final agreements on such arrangements if Parliament were involved at the early stages. If that principle had been applied to the process of negotiating our withdrawal, we might now be in a different position.

[Lord Fox (LD)]

The noble Lord, Lord Lilley, before he had to hurry off, spoke of transparency as if it were a threat to negotiation. Speaking to another amendment earlier, the noble Baroness, Lady Neville-Rolfe, who has more contemporary experience than the noble Lord, spoke of her regrets about the TTIP negotiation, and the fact that the NHS brouhaha that blew up around it scuppered, or terminally injured, that negotiation. Transparency is not a prerequisite just because it is a good thing; in the modern world it is needed to get consent for such things to happen. In the world we live in today, such negotiations can be stopped—and if we think the TTIP negotiation was an example of that, we have not seen anything until we have seen a US treaty being negotiated. Transparency is not just a good thing; it is an enabler, which allows us to have such treaties.

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[Viscount Younger of Leckie]

As I said earlier, I have some more remarks to make about the process for future trade agreements. What I said about the Israeli agreement was that when a continuity agreement is finalised, it will be laid with an Explanatory Memorandum and report and will be under the affirmative procedure.

I will briefly touch on what we have already committed to in this area. My right honourable friend the Secretary of State for International Trade reiterated in an Oral Statement that Parliament should have a crucial role to play in future free trade agreements. The Government will ensure that parliamentarians are given the opportunity to consider the level of ambition of the Government’s approach to negotiations and the potential implications of any agreements. We will lay our outline approach to each negotiation before both Houses in order to facilitate that before we begin negotiations. During negotiations the Government will keep both Houses updated on progress, including providing analysis of appropriate points. Once an FTA has been negotiated, it will need to be implemented and then ratified. I remind the House that free trade agreements cannot of themselves change domestic law.

To implement a new trade agreement with a new partner, the Government will bring forward a bespoke piece of primary legislation for each new trade agreement that requires changes to legislation where there are no existing powers. Parliament will have the opportunity to scrutinise the new legislation in the normal way.

[Lord Purvis of Tweed]

I am grateful to the Minister for giving way; his contributions are helpful. This may be a technical point, because we have had an element of that statement from the Government at Second Reading. There could be a marked difference regarding a trade agreement that could have a big impact on our country, but which does not require any changes to primary legislation. If a trade agreement does not require any changes to primary legislation because that is still on the statute book, the Government are proposing that no measures be brought to Parliament to approve—only the primary legislation, if that does not currently exist. The case made by noble Lords is that a trade agreement in its own right needs to come forward for authorisation, regardless of whether it requires additional primary legislation. That is the point we need to get across.

[Viscount Younger of Leckie]

The noble Lord makes a good point. I reassure him that what is also very important is that the negotiation and scrutiny of these trade agreements has to allow for a certain flexibility. I will go on to say a little more about the process, because implicit in it is that treaties between different types of countries using different types of products can be extremely different, as the noble Lord will be aware, so flexibility is very important.

The legislation must be brought forward before ratification, as I was saying. The same will be true of our future relationship with the EU, which will surely require detailed implementing legislation. I hope this demonstrates that the Government are already committed to Parliament being able to shape and scrutinise future trade agreements. I listened carefully to what the noble Lord, Lord Purvis, said about current processes and steps in considering trade agreements. However, since July work has been taking place in both Houses to consider Parliament’s role in future free trade agreements. The Constitution Committee has an ongoing inquiry into the parliamentary scrutiny of treaties. The Joint Committee on Human Rights is inquiring into human rights protections in international agreements, and that touches on Parliament’s role. In the other place, the International Trade Committee published a report just after Christmas that makes a number of recommendations in this area.

To assist the noble Lord, Lord Hannay, the Government are listening carefully to these views and we are conducting our own work. We have little quarrel with his remarks and aspirations, and I hope there is agreement there. We recognise, not least following the resolution of this House on Monday, that more detail is needed on how we envisage Parliament—and particularly this House—being involved in the scrutiny of trade agreements. The question of how Parliament scrutinises future FTAs must be answered, with the benefit of close and considered dialogue between the Government and Members of Parliament. I have listened to the contributions of noble Lords today, and I assure the Committee and the noble Lord, Lord Hannay, that we will reflect on them seriously. I confirm again that we will bring forward our proposals with more detail before Report.

[Lord Purvis of Tweed]

That is very helpful. As the Minister knows, the devolved Administrations have also submitted evidence to the International Trade Committee in the Commons and are participating in the revision process. The devolved Administrations were mentioned specifically in the resolution of this House last Monday. I wonder if, in advance of the Government bringing forward any of their proposals, they could write to noble Lords or give a clear statement on how they envisage the devolved Administrations, and potentially the regions of England and the combined authorities, having an active role.

[Viscount Younger of Leckie]

I thank the noble Lord for that. It does indeed take us back to the debate we had last week, and I hope he remembers that I gave certain reassurances on that point. What I can say—without having the details in front of me—is that, as he knows, there is ongoing dialogue with the devolved Administrations to ensure that they are kept fully in touch with what we are doing. That will be the general tenor of the ongoing discussions as we look forward to FTAs.

I would like to pick up on some of the remarks made by the noble Lord, Lord Bilimoria, in the last debate as they are relevant to this point. He asked how our approach differs from the role of the European Parliament in EU trade negotiations. He may well know this but I shall spell it out: the European Parliament’s role operates in relation to EU trade policy. We are offering scrutiny for the UK Parliament at every stage of the process in a way that is appropriate and proportionate to the UK constitutional context. In the UK, the power to make treaties is a power held by government, but the context of the negotiations will be different. The European Commission negotiates free trade agreements representing the interests of the 28 member states. It is given the mandate to do so by the Council, and final agreements are approved by the European Parliament and the Council before they can come into force. UK-only free trade agreements will be negotiated by the elected Government in the best interests of the UK. The Ministers responsible for the negotiations are directly accountable to Parliament.

[Viscount Younger of Leckie]

I said at the beginning that this is likely to be a wide-ranging debate; my noble friend’s remarks will indeed be fed into the processes being considered at the moment.

I would like to address a question raised by the noble Lord, Lord Stevenson, who asked what access parliamentarians would have to negotiating texts. We take seriously our commitment to keeping Parliament apprised of the Government’s negotiating intentions. That is for the purposes not just of transmitting information but of inviting scrutiny and allowing Parliament and its committees to take informed views. While we support Parliament’s important scrutiny role, Ministers have a specific responsibility, which Parliament has endorsed, not to release information that could undermine our negotiating position. On transparency more generally, I reiterate our commitment to a transparent approach. We are developing proposals for the release of updates on negotiations; we will bring these forward shortly.

Let me say more about the consultation process, an issue raised by the noble Lord, Lord Stevenson. The amendments also seek to ensure wide consultation on FTAs, which is a good idea; indeed, that is the approach the Government are taking. We conducted one of the largest consultation exercises ever undertaken for the new FTAs we are considering with partners without an existing FTA with the EU—the US, New Zealand and Australia—and for our potential accession to CPTPP. This included a 14-week public consultation open to all businesses, individuals and other organisations in the UK and abroad, and 12 outreach events throughout the UK, including in each of the devolved nations. We have also conducted ongoing engagement with stakeholders on trade policy, including “town hall” style briefings, roundtables with different groups of stakeholders, regular stakeholder briefings and webinars designed to engage with smaller and regional stakeholders.

I would also like to touch on impact assessments. I do not propose to address—

[Lord Purvis of Tweed]

I am grateful to the Minister for giving way; he is being very tolerant. He may recall that I mentioned on Second Reading that I took part in one of those consultations, posing—if that is the correct word—as a Scottish business and taking part in the Government’s consultation on the prospective trade agreement with the United States. I mentioned then and repeat now that in that consultation, I was presented with no information about what the parameters of any trade arrangements with the United States were likely to be. In effect, I was being asked questions the parameters of which I did not know. That is not meaningful consultation. Can the Government reflect on the consultation process they have carried out? I do not believe it was sufficiently meaningful.

[Viscount Younger of Leckie]

I am listening to the noble Lord. I do not know the details of that negotiation, but I will take that back and reflect on it. There may have been some very good reasons why the information was not forthcoming, but I will reflect on that and write to the noble Lord with some information.

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[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.

--- Later in debate ---

My noble friend Lady Byford raised the issue of whether we could improve on them in the future. Our main focus in this phase is on continuity, ensuring that there is as much certainty for farmers and businesses as possible—that is our first aim. The future is another issue, but our primary focus now is continuity.

[Lord Purvis of Tweed]

The Minister has been exceptionally helpful and very clear, but I hope she will be able to address one question. If we leave without an agreement with the EU and this process of negotiation is under way, what will bind us to have the same position as the EU when it comes to what is being queried: namely, the methodology of the division of the timeframe and the statistics? It seems that if we leave without an agreement, there is no mechanism whereby we can consistently have the same position as the EU. At the moment, we have the same interest because of the agreement signed, but that is not a binding agreement that we have with the EU going forward. What, then, would link us to ensure that we have the same position? If that is not in place, a third country, quite rightly, would have doubts as to whether the EU position would be the same as that of the UK, and vice versa.

[Baroness Fairhead]

My understanding—again, I will write to the noble Lord if this is not the case—is that the apportionment approach that was being used is utterly within WTO provisions and normal practice. The WTO laws will dictate how that process works and, therefore, as I said, the EU is pursuing its own Article XXVIII and we are pursuing ours; they are separate legally but obviously complementary. On the noble Lord’s specific question about what else oversees that, I think it is more the WTO, but if that is incorrect, I will write to him.

[Lord Purvis of Tweed]

I am grateful for that, and the Minister is helpful. That leads on to my next point, which is that the countries themselves have said that other concessions could compensate for the loss of market access. Negotiations are therefore, by definition, discussions about whether the UK and the EU continue to hold to their agreement or whether other compensation concessions could be offered. My question applies similarly to that. At the moment, we have a united position with the European Union. If we leave without an agreement, nothing is in place to ensure that concessions that could be offered to compensate for the loss of market access will be united between the UK and the EU. That raises questions about whether, when it comes to the discussions with third countries, they will seek different concessions from the UK. That opens up the whole issue that we are fearful about: will we offer different concessions to other countries which would potentially have a negative impact on our own industry?

[Baroness Fairhead]

I said that I will write to the noble Lord. I tried to address that in my first answer, and this is an inevitable follow-on question from that, should my answer not have been correct. However, they are two separate legal processes.

--- Later in debate ---

[Lord Purvis of Tweed]

I am not speaking on behalf of my noble friend Lord Teverson, the absolute expert on these Benches on these issues, but simply to ask a number of questions in support of those raised by the noble Lord, Lord Grantchester. He rightly points out that one of the core relationships that currently exists between Britain and Northern Ireland, and the United Kingdom and the Republic of Ireland, is energy. It is something that has perhaps not had the same profile or publicity as border checks, but it is very significant to consumers on both sides of the Irish Sea. It is of interest to me, as someone who represented a Scottish Borders constituency, that Northern Ireland’s security of electricity supply depends on the supply of natural gas from Moffat, which is just outside my former constituency and supplies 100% of its gas requirements. After the UK’s exit from the EU, Northern Ireland will continue to source 100% of its gas from Great Britain. As a consequence, the integration of the energy market for the Republic of Ireland and Northern Ireland now depends on an integrated single electricity market. The interconnectedness of energy is something that political agreements will have great difficulty disentangling. The request for clarity on the current position is very important. It is even more important given that there is now a real prospect of leaving the European Union with no agreement. The Government have said in their position paper on Northern Ireland and Ireland that,

“the new framework relevant to the energy market in Northern Ireland and Ireland should … facilitate the continuation of a single electricity market covering Northern Ireland and Ireland”.

But how this is to be done separate from the European Union raises significant questions. I hope the Minister is able to respond to this.

The evidence provided by Minister Richard Harrington to the Lords committee is interesting. He said:

“Whether we are in the EU or not in the EU, it is in the interests of both Northern Ireland and the Republic of Ireland to continue a shared electricity system  …  We are held up in sorting this out only by the progress of the general talks in Europe”.


The question mark over where we currently are with these general talks in Europe means that it is urgent that we have clarity on the current position on securing agreement on a shared electricity system. The real question in leaving without an agreement with the EU is whether that raises issues with regard to maintaining the single internal energy market.

The final point on which I ask for clarification from the Minister is that it is not just the operation of the market on a regulatory basis that is of importance. The market operates primarily because of the free movement of people and professionals and the regulatory systems that surround it. We also know that when it comes to the operation of the market there is the jurisdiction of the European Court of Justice. What is the Government’s position on the jurisdiction of the legal supervision of how such integrated electricity markets will operate?

Free movement of people and clarity on jurisdiction are core elements of why we believe that moving from the European single market will cause real damage. The integrated single electricity market is a case study in itself in how it operates effectively at the moment and why question marks over its future need to be addressed. Clarity, as sought by the amendment, is necessary. I hope we can secure it from the Minister’s response.

[Lord Hain (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Purvis, who made some important points about the energy market, especially on the island of Ireland.

Amendment 46 is consistent with the provision of the EU withdrawal Act after a near-identical amendment passed by your Lordships’ House was accepted by the Government last summer. The central purpose of the UK’s, Ireland’s and the EU’s shared objective of avoiding a hard border is to protect the hard-won peace and reconciliation. That peace process was begun by the Good Friday agreement of 1998 but is still just that: a process—which is now, I think, sadly in reverse. Although it would be wrong to overstate the link between that and recent dissident IRA activity, specifically the car bomb in Derry/Londonderry, it does demonstrate the willingness of paramilitaries to exploit the current Brexit uncertainty and devolved government limbo to undermine the fragile peace, as the noble Lord, Lord Empey, said last week in this House.

The border is often described as the Irish border. It is not just that: is the UK’s land border with Ireland and the EU. Therefore, it is our responsibility as much as it is Ireland’s and the EU’s. Some 110 million person crossings take place over the border every year. Northern Ireland, with a population of 1.8 million, exports £3.4 billion over the border. It is by far its biggest export destination outside the UK and the first export destination for new and growing enterprises. At least 5,000 Northern Ireland companies, and probably many more, trade with their neighbours over the border. Tens of thousands of people live on one side and work on the other. Supply chains operate across the border without impediment. For instance, each year, more than 400,000 lambs and 750 million litres of milk are exported from Northern Ireland to Ireland for processing; 4.6 million heavy goods vehicles and light vans cross the border every year, along with 22 million cars. These crossings take place all along a 300-mile border with 300 crossing points.

A little-noticed document published on 7 December by the Department for Exiting the European Union lists no less than 157 different areas of cross-border work and co-operation on the island of Ireland, many of which have been facilitated by Ireland and the UK’s common membership of the EU. Almost every one of those areas concerns people’s everyday lives, and almost all are linked to the European Union and Ireland’s and the UK’s common membership of it since 1973.

Life has become pretty normal for most people in Northern Ireland over the past 20 years or so. Like anyone else in the UK, people there go to jobs near to them or in the next town. They go to doctors, chemists and hospitals near to them. They buy local fresh food. They use trains, buses and roads to get around.

The difference is that for many in Northern Ireland, the next town can be in a different jurisdiction. If we get Brexit wrong, it will cause serious inconvenience and cost. But for British and Irish citizens living in Northern Ireland, getting Brexit wrong will bring immediate and harsh consequences; many aspects of normal life will be much harder or even impossible. People live on one side of the border and work on the other. Because of EU rules that the UK helped to make, cancer care and ambulance services are run jointly across that border. You can get a prescription on one side and medicines on the other because of more EU rules that we share. Cheaper energy and more choice across the island of Ireland again exist thanks to those common EU rules. Cross-border work and co-operation on the island of Ireland, facilitated by EU laws, covers livestock movement on farms straddling the border, food safety, tourism, schools, colleges, farming, fighting crime, tackling environmental pollution, water quality and supply, waste management, GPs, blood transfusions, bus services, train services, gas supply, electricity supply and so on.

All those things add up to making life feel normal after, just 20 years ago, the Good Friday agreement all but finished the violence and murder which killed thousands of people, including many in Britain. The border being invisible today is a big part of that peace process and we must not let Northern Ireland go backwards by putting up any new barriers.

It is those very low-level, ordinary aspects of daily life that are the real signs of the precious achievement of the peace process. Although I strongly reject the Prime Minister’s deal, I cannot and will not join those attacking what is known as the Irish backstop. Any Brexit deal of any kind must include this insurance policy or backstop. It is an insurance policy: a rainy-day back-up plan in the event that a new UK-EU trade deal is not ready by the end of 2020—or beyond. It is a sensible policy to be used only if needed—and everyone hopes it will not be—to ensure that the border between Northern Ireland and Ireland remains open and invisible.

It is not just that Ireland and the EU will not accept it any other way; nor should we in the UK. Whatever happens with Brexit, it is vital we protect what we have achieved together in Northern Ireland in the past 20 to 30 years and avoid any hardening of the border in any way. I call on our fellow politicians to stop playing politics with Northern Ireland, as so tragically happened in the House of Commons yesterday, and insist on an insurance policy regarding the border. We should also demand an end to attacks on the Irish Government, who, in insisting on the backstop, are merely fulfilling their obligations under the Good Friday agreement, as we in the UK should also be doing.

The UK and Irish Governments, along with the EU, were right to prioritise the Irish border in the Brexit negotiations. Your Lordships’ House has rightly focused on it too, not least because the blunt truth is that maintaining an open border always was the Achilles heel of a hard or no-deal Brexit.

Experts argue that there are four key ingredients for successful border management: first, trust and co-operation between authorities and agencies on both sides; secondly, the harmonisation of these agencies’ approaches; thirdly, the application of common standards to minimise the need for checks and controls in the first place; and, fourthly, the use of technology to improve efficiency. Those arguing that technology can solve all the Irish border Brexit problems are plain wrong. It may help, but whether a border is frictionless depends on the rules being applied to movement across it being the same either side—it is the rules themselves, not so much the means used to facilitate enforcement of those rules. Yet Brexiteers seem unwilling to acknowledge that leaving means a growing divergence of the rules on either side of the border. Their conundrum is that divergence is something they favour to build their free-trade, deregulated, low-tax nirvana— fantasy, I think—otherwise, they argue, what is the point of Brexiting?

The UK and Ireland have their common—I stress, common—obligations under the Good Friday agreement to ensure peace, stability and progress. The agreement contains two approaches to this that directly affect the border: intensification of British-Irish and north-south co-operation, and de-securitisation. De-securitisation meant not only the removal of security installations but the British Government’s commitment to bringing about measures appropriate to and compatible with a normal, peaceful society. The last remnants of the militarised border were removed only 12 years ago.

It is simply no good politicians or commentators saying, “Nobody wants a hard border so there won’t be one”. There will be if we do not stop it, because if we Brexit without a deal or without a backstop, both Ireland and the EU will have responsibilities to ensure protection of the single market and customs union. The UK will have its own responsibilities, including meeting World Trade Organization requirements, which in turn mean a hard border.

--- Later in debate ---

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I need to manage noble Lords’ expectations as to what I am going to be able to say. The noble Lord, Lord Hain, has given a polemic based on his deeply held views on the situation in Northern Ireland, born of great experience and service. I do not think I will be able to persuade him on this issue and Amendment 46, so he will doubtless come back to it on Report. I will, however, put some important points on the record regarding where, as of today, Her Majesty’s Government stand on these crucial issues.

The noble Lord, Lord Grantchester, talked about the internal energy market. Again, I have to be careful: I am not able to give him an answer at this stage, beyond that set out in the political declaration. I know he has read that carefully, along with the explanatory note; section XI deals with energy co-operation.

Let me first put some comments on the record about the nature of the internal energy market, and then I will turn to the single energy market and north-south co-operation, addressed by the noble Lord, Lord Purvis. The Government continue to support the development of energy interconnectors—which bring benefits to countries at both ends of the cables, including improved security of supply and the lowering of prices for businesses and consumers—and support efforts to decarbonise. That is why we set out in the political declaration that both the UK and the EU should co-operate to support the delivery of cost-efficient, clean and secure supplies of energy and gas, and to ensure as far as possible that efficient trading over our interconnectors continues. Our aim is to secure the best possible future arrangements for trade in energy, and which achieve the objectives set out in the declaration, to which I referred.

On the effect of the shared wholesale market, the all-Ireland single electricity market provides significant benefits to consumers and the economy in both Northern Ireland and Ireland, as the noble Lords, Lord Purvis and Lord Hain, alluded to. It is also an example of north-south co-operation on the island of Ireland. The Government are firmly committed to facilitating the continuation of a single electricity market in any EU exit scenario. The agreement reached on the single electricity market annexe, as part of the Northern Ireland and Ireland Protocol to the withdrawal agreement, should ensure that the SEM is maintained. We also expect to reach an agreement with the EU on a future economic partnership that will maintain the SEM without engaging the backstop. As set out in a technical note on electricity trading, published in October 2018, which the noble Lord, Lord Purvis, referred to, we will take all possible measures to maintain the SEM in the event that we are unable to reach an agreement. Even in this scenario, which I stress—

[Lord Purvis of Tweed]

Perhaps I might add some clarification. The Minister has just said that not all of the Northern Ireland protocol is now up for renegotiation—as the Commons have voted for—only part of it. He said that the energy component of it is going to carry on. So which parts of the backstop are being renegotiated and which parts are not?

[Lord Bates]

I have been on the Front Bench long enough to see a curveball lumbering down the crease. If the noble Lord will forgive me for not taking a swing at it, at such a delicate time, I do that in all seriousness because I want to get the wording precisely right in relation to this. The noble Lord has heard the remarks that I made in relation to the annexe to the Northern Ireland protocol, and that is the position. If we have more to say, I will certainly say that ahead of Report, but even in the worst scenario—

[Lord Purvis of Tweed]

I did not intend to bowl a curveball or even a googly—or anything. It was a genuine point. The Government’s position now is that they are seeking to renegotiate the whole protocol, commonly known as the backstop. If that is not the case, Parliament needs to know, because we understand that the Government are now seeking a renegotiation of part of the agreement. We know that the European Commission has said that this is not up for renegotiation. If the Government are telling the Committee that only part of it is being renegotiated, that is really significant, because at the moment we understand that the whole element is being renegotiated.

[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.