Brexit: EU Free Trade Agreements

Lord Purvis of Tweed Excerpts

Thursday 24th January 2019 Lords Chamber

[Baroness Fairhead]

My Lords, I thank the noble Lord for the question. The Government have been clear. We are aiming to have a deal and an implementation period. On that basis we are confident of the continuity. My honourable friend Minister Hollingbery said in another place that he was confident that most of those 40 agreements would be continued.

[Lord Purvis of Tweed (LD)]

My Lords, they can be continued only if they are ratified both by this Parliament and the third-country parliament. Revelations from the Government yesterday in Committee on the Trade Bill highlight the fact that, even if we have an agreement and even if the EU asks those countries to treat the UK as a continuing member of the EU for the purposes of trade treaties, the Government do not currently know whether or not they will. That leaves a very large question mark—even if we leave with an agreement. If we leave without an agreement on WTO terms, we know through the objections already lodged in Geneva to our goods and now our services schedules that we are likely to leave without any certified schedules under WTO rules, adding even more instability and uncertainty. We know already the consequence of leaving on WTO rules. From day one it would be a tripling of the tariff rates to our trading partners. But we now know that leaving with an agreement also has major uncertainty. Will the Government now, as a matter of urgency, update their impact assessment, already published, to take into consideration these new facts? Will they honour the clear vote of this House to have an urgent update and a policy statement on how the Government intend to take forward their future trading relationships? This House voted for it: when will the Government honour that commitment?

[Baroness Fairhead]

To clarify, I said in the debate that it was for those third countries to determine what their processes are. Some are not public knowledge. I did not say that we did not know. With regard to the WTO rules, it is true that we have submitted our schedules and they have not been certified. However, countries can operate on an uncertified schedule. The EU currently operates on an uncertified schedule. In terms of more information about the process, I said in the debate that I would reflect on the clear desire from this House for more information. I have taken that back to my department.

Trade Bill

Lord Purvis of Tweed Excerpts

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

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

My Lords, it is welcome to move from the group of amendments that caused maximum divergence to the group of amendments after dinner where there is maximum convergence. I think we all side with the way that the noble Lord, Lord Stevenson, led this debate by pointing to the immense benefits in achieving sustainable development goal 1, the eradication of extreme poverty by 2030. We are not going to do that by aid—aid is around £1.5 billion a year. It requires significant trade flows and therefore this is crucial.

I will make some very brief general remarks. Around £20 billion of goods a year are shipped to the UK from developing countries, accounting for around one-third of our clothing, one quarter of our coffee and other everyday goods such as cocoa, bananas and roses. This trade also creates jobs, helping people to work their way out of poverty. Consequently, I am pleased to confirm to the Committee that this has already been legislated for in the Taxation (Cross-border Trade) Act. My noble friend Lord Lansley might still have been on vacation when on 4 September I took that Bill through this House. Although the debate on it was brief, it was very good. I shall come back to that point later.

The trade White Paper confirmed the Government’s intention to provide, as a minimum, the same level of import duty reductions to all current beneficiaries of the EU’s GSP scheme as we leave the EU. I am also pleased to assure the Committee that Section 10 of the Taxation (Cross-border Trade) Act enshrines in UK law the obligation to provide duty-free and quota-free trade access for least developed countries. The Government will lay secondary legislation to set out these details of the scheme before we leave the EU if needed by March 2019, or at the end of the implementation period. In the future, we will look to improve the UK’s trade preference scheme by making it even more generous, simpler to attain and capable of working better for the poorest people around the world. Alongside this, our aid spending will continue to provide support and expert advice to help break down barriers to trade and to promote investment so that developing countries can take better advantage of these arrangements.

As the noble Lord, Lord Stevenson, mentioned, I also have the privilege of being the Minister with responsibility for economic development in the Department for International Development. It may be of interest to my noble friends Lord Lansley and Lady Neville-Rolfe and the noble Lord, Lord Fox, that in that context I am undertaking a review of how we might approach the opportunities to look at more beneficial trade and tariff-reduction packages and economic partnership agreements in future as we leave the EU. I would be delighted to take this conversation into the Department for International Development, for those who are interested, to meet officials so that we can delve more into some of the great expertise and ideas that we have heard today.

[Lord Purvis of Tweed (LD)]

The Minister’s commitment is very welcome. We know that we can take him at his word on that because he is very open and a very responsive Minister who is respected across the House. I will follow up a point made by the noble Lord, Lord Lansley. With regard to the 49 countries under the EU Everything But Arms policy and, according to the OBR, the 27 other low-income countries that the EU has defined, if on exit we are going to replicate the EU system we would also have to replicate the rules of origin system that comes with GSP+. GSP+ has distinct EU rules of origin requirements for those countries that are part of it. Is the Government’s intention to replicate the rules of origin criteria that the EU currently operates for them?

[Lord Bates]

I am grateful for the noble Lord’s question. His precise point is that we are aiming to replicate what currently exists, so we would take across the current applicable rules of origin into what we would be laying in secondary legislation before we leave the European Union. Once we have left—without a deal or, we hope, after an implementation period—we could devise our own scheme during that implementation period and be aware of the EU’s thinking. I know from serving on the Foreign Affairs Council that it has done some tremendous development work, particular with the post-Cotonou negotiations, as to how we fit. The current plan is that what is presently the case will initially also be the case for these countries.

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

My Lords, first, I reassure your Lordships that the powers in the Bill will not be used to implement investment protection provisions, because such provisions in trade agreements do not require domestic legislation. I am grateful to the noble Lord, Lord Stevenson, for his explanation of the rationale behind Amendment 29, in his name. However, it would mean that no future free trade agreement could be signed or ratified unless any claims brought by foreign investors against the UK were heard by UK courts or tribunals.

The amendment overlooks the fact that foreign investors already have significant rights to legal redress in the UK—for example, through domestic law and normal procedures such as judicial reviews or commercial arbitration. As I think noble Lords would agree, UK courts are regarded internationally as reliable and independent. The amendment would preclude the possibility of disputes being resolved through ad hoc international arbitration tribunals, which is the internationally and currently accepted means of investor-state dispute settlements—ISDSs—in any future free trade agreement. So requiring investment disputes to be heard by UK courts or tribunals in all instances could undermine a framework that has successfully supported UK investors in many countries worldwide for, as the noble Lord said, a long time. In fact it has done so for the past 40 years.

The ISDS system does not allow other countries’ courts to have jurisdiction over matters that UK courts could determine themselves. Instead, it is independent of both states’ legal systems. It is important for foreign investors to have an independent means of redress, as they may be more susceptible to certain risks such as discrimination, as the noble Lord, Lord Stevenson, said. ISDSs allow claims to be brought for potential breaches of obligations of the type that the noble Baroness referred to—expropriation and discriminatory practice, et cetera.

The UK expects other countries to treat British businesses operating abroad as we treat investors in the UK. Although I do not believe that this was intended, it is likely that if this amendment were adopted, any future partners would insist on reciprocal provisions, meaning that any disputes brought by UK investors against a host state might also be required to be heard in that host nation’s courts.

I turn to Amendment 56, tabled by the noble Baroness, Lady Kramer. Accepting this amendment would mean that for any future trade agreements to be signed and ratified, they would have to contain an agreement on the parties pursuing a multilateral investment tribunal system and an appellate mechanism for the settlement of investor-state disputes. Before I go on, there is an issue with the WTO appellate court; I think that the members of the WTO are trying to resolve it. It is not directly relevant to the ISDS as it is a different system, so in the interests of time I will stick to ISDS.

Not all trade agreements cover investor protection and dispute settlements. We therefore do not think it appropriate to require all trade agreements to include a commitment to pursue a multilateral investment tribunal system. In fact, to introduce such a requirement might hinder the development of our trade policy. As I mentioned, ISDSs have provided UK investors overseas with a means of redress which is independent of and outside the host state’s national courts. The UK has over 90 bilateral investment treaties which include these provisions.

The noble Baroness, Lady Kramer, is absolutely right that reform of ISDS is under scrutiny. It has taken centre stage in recent years, frankly, with many international fora taking a keen interest. The UK supports the reform agendas which, as she said, focus on ensuring: fair, efficient and cost-effective outcomes of claims; high ethical standards for arbitrators; and increased transparency of hearings. We in the UK have supported the EU’s mandate to open negotiations to establish a multilateral investment court, or MIC, which would be a permanent body created to hear investment disputes. The CETA with Canada is currently the only EU FTA containing that investment court system. We are working with our Canadian partners on its provisions as part of the broader work on trade agreement continuity. This includes the question of our future approach to investor-state dispute settlements.

[Lord Purvis of Tweed]

The Minister mentioned Canada and it was interesting to hear that. May I seek clarification? I raised this issue on Monday in Committee with regard to Singapore. As a consequence of the court of justice judgment in May 2017, the Singapore agreement was made into two: a stand-alone free-trade agreement and a separate investment protection agreement. These draft trade and investment agreements were signed on 19 October last year. What is our position in the UK on seeking to roll them over? I think the Government have stated clearly that they will roll over the free trade agreement. Do they intend to roll over the investment protection agreement also, which is quite distinct?

[Baroness Fairhead]

My understanding is that it does not require any further domestic legislation. I will write to the noble Lord if that is in error, but I understand that it is already in domestic legislation. If that is incorrect, I will write to him and put a letter on file in the Library.

Trade Bill

Lord Purvis of Tweed Excerpts

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

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I support Amendment 16, which is a crucial amendment to debate within the Trade Bill. The general principle of state aid rules, which is that the Government do not go around doling out money to big business in ways that are unfair or anti-competitive, is a good one. At the same time, there are concerns about state aid rules being used as a vehicle for predatory capitalism to dismantle the state and override democratic control of quite important parts of our economy. This is particularly important for Greens, because Greens are not as concerned with the electoral cycle as with the future of humanity and this planet. If we are going to listen to the IPCC report, which says we have 12 years before we have to face dramatic climate emergencies, then we need to transform our economy and make it fit for the future.

And that is the role of this House. The other place deals very much with the day-to-day—what happens on Monday or Thursday mornings. We here have a responsibility to the future. A green new deal is one of the answers. It would create 1 million well-paying climate jobs and set us on a sustainable footing for future generations. It would require active fiscal and monetary measures that would favour more sustainable production and consumption over more ecologically destructive options. Sometimes the state would have to pick winners and losers—that would be part of it—particularly in relation to natural monopolies such as railways and the energy system. Even the Government are recognising that the market is failing on some of these important issues, and that state intervention is required. Much of this could be called state aid, depending on what definition is used.

For these reasons, it is absolutely essential that our hands are not tied in any way which might interfere with our ability to tackle the climate emergency that we are facing, as well as all the other big issues facing our economy.

[Lord Purvis of Tweed (LD)]

My Lords, I seek some clarifications when the Minister responds, broadly in response to the constructive contribution from the noble Lord, Lord Lansley. With the withdrawal Bill, there was much debate in Committee and this House regarding how existing EU law will be migrated into UK law. There were 12 competences the UK Government believed were reserved and would therefore be fully within the competence of the UK Government, but that the devolved Administrations believed were either devolved or had a direct impact on devolved powers.

State aid was one of those areas where there was no agreement. That means that if there continues to be no agreement, then the amendment in the name of the noble Lord, Lord Stevenson, is absolutely critical. It means that for regulations brought for the continuity agreements, there needs to be far more enhanced consultation with Administrations that believe this is touching on their direct competences. If there has been agreement, then perhaps the amendment is less necessary for the continuity agreements; but as we come to further amendments, this sets the tone for what will be necessary for future agreements. When the Minister responds to this group, I hope he will be able to provide clarification on where the discussions are, regarding whether there is agreement on where state aid lies within this area of competences.

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

My Lords, I join others in thanking the noble Lord, Lord Stevenson, for moving this amendment. In response to my noble friends Lord Trenchard and Lord Lansley, I think that the noble Lord intended this as a probing amendment, as he said, to give the Government the opportunity to put some issues on the record. It has been very timely, not least because under the EU withdrawal Act, mentioned by the noble Lord, Lord Purvis, on Monday we laid the regulations on state aid before the House. That 77-page document will now make its way through the rigorous scrutiny of the Joint Committee on Statutory Instruments and then the Secondary Legislation Scrutiny Committee. Then, of course, it will be subject—because it is by the affirmative procedure—to scrutiny later in this House. For that reason some of the specific issues referred to by my noble friend Lord Lansley and the noble Lords, Lord Purvis and Lord Lea, might be usefully dealt with in that area.

Clause 2 is not about making changes to existing agreements, and the regulations cannot be used for future free trade agreements, as my noble friend Lord Lansley rightly identified. In answer to the noble Lord, Lord Stevenson, we also need to recall that the Competition and Markets Authority has been given this responsibility domestically, across the UK jurisdiction. When it comes to free trade agreements and the EU, the Trade Remedies Authority would undertake that responsibility.

To provide further reassurance that we do not expect to need to use these powers to set up a domestic state aid regime, I can inform the Committee that we have laid the instrument I referred to. This instrument, the State Aid (EU Exit) Regulations 2019, will be made under the European Union (Withdrawal) Act 2018 and establish a domestic state aid regime that will work for the whole of the UK at the point that this is required. No doubt Noble Lords will be offered an opportunity to scrutinise this in detail.

Subsection (2) of the proposed new clause requires the Government to consult relevant stakeholders prior to laying implementing regulations under Clause 2 which make provision on state aid. We have been clear that proportional consultation is of the utmost importance to us. We have engaged with a large number of stakeholders through our programme of trade continuity. The Government will always consult stakeholders as appropriate, so to set out specific provisions concerning consultation on state aid is not needed at this stage. The Bill already requires the Government to lay reports before Parliament in which we will provide detail of any real-world changes to free trade agreements. These will be laid before the agreement is ratified or regulations are laid under the Clause 2 power in relation to that agreement, whichever comes first.

Any significant differences in agreements that are relevant to state aid would be identified in these reports and Parliament would then be in a position to take an informed decision in relation to the making of the regulations or the conduct of the ratification process. I say again that we do not expect to need to make regulations under this power in order to implement state aid commitments in existing free trade agreements.

I turn to some of the specific points that were raised. My noble friend Lady McIntosh raised the horserace betting levy and the tripartite agreement. This is something we will come to in Amendment 48 in a later group, so perhaps I can leave it to the lead Minister, my noble friend Lady Fairhead, to respond, but the relevant provisions of the horserace betting levy were notified to the Commission and approved by the Commission under state aid rules. I confirm that the TRA—the Trade Remedies Authority—will not be responsible for state aid prioritisations in FTAs. It will be a matter for individual free trade agreements to establish a dispute mechanism.

[Lord Bates]

That is correct. I am grateful to the noble Lord for setting that out. My noble friend Lord Trenchard mentioned the Government’s commitment to the state aid system. That point is contained in Command Paper 9593, The Future Relationship between the United Kingdom and the European Union, which says in section 1.6.1:

“The UK has long been a proponent of a rigorous state aid system—this is good for taxpayers and consumers, and ensures an efficient allocation of resources”.


Moreover, the political declaration which accompanies the withdrawal agreement points out in section XIV, paragraph 79:

“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards”.


That will all be fleshed out as the future economic agreement is worked on. Again, I thank the noble Lord for the opportunity to clarify some points on the record.

[Lord Purvis of Tweed]

Will the Minister clarify that since the Sewel convention continues to apply, the UK would not legislate ordinarily on devolved matters if the Government have brought forward this regulation? Last year, during the withdrawal Bill process, the devolved Administrations believed that this touched on their competences with state aid. Has there been agreement with the devolved Administrations that this is a fully reserved issue?

[Lord Bates]

Perhaps I could write to the noble Lord on that to make sure that I get that absolutely correct. I will write to him. Does the noble Lord want to come back on that?

[Lord Purvis of Tweed]

I wonder if the Minister is able to write before we get to the next grouping because this is going to be relevant. Whenever the Minister can provide clarification, it will be welcome to the Committee.

[Lord Bates]

I have a sneaking feeling that some clarification may be coming via my noble friend Lord Younger by the time we reach the next grouping. I am sure the noble Lord will have an opportunity to respond to that. Failing that, I will be very happy to write before Report. I thank the noble Lord and ask him to consider withdrawing his amendment at this stage.

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[Lord Purvis of Tweed]

My Lords, I am grateful to the noble Lord, Lord Stevenson, for outlining the amendments so clearly. I want to add something in only a couple of areas. In doing so, I welcome the fact that the noble and learned Lord, Lord Mackay of Clashfern, is in his place. He and other colleagues will recall discussing—in debates on the withdrawal Bill—translating EU retained law into domestic law in a number of areas that either impinge on or link directly to what are currently devolved competences. At that stage, the Government made a number of concessions and changed their position so that the presumption was to devolve powers—and that was welcome.

Therefore, the sticking points, to some extent, were issues in what the Government termed the “framework agreements” with the devolved Administrations, where there had been no agreement with the devolved Administrations on what was in the reserved or devolved competences basket. In the previous group, state aid was one such major issue. Of the 157 areas, there was no issue with 49 of them; in 82 of them, the Government and the devolved Administrations agreed that the common framework would be needed; 24 areas required further discussion; and in 12 areas, the UK Government believed that the competences were reserved but the devolved Administrations believed them to be devolved. That is relevant to discussions about how the regulations for the continuity agreements will take place and will give an indicator for the future, as the noble Lord, Lord Stevenson, said. I seek further clarification on the other areas.

These issues are not esoteric. The 12 areas are: equal design and energy labelling, which is an important part of trade agreements now, as we discussed in Committee on Monday; product safety and standards relating to explosive atmospheres; elements of the network and information security directive; environmental quality in the timber trade, which is of considerable significance to the Scottish economy; data sharing; food geographical indications and protected food names, which are core parts of trading relationships; medical devices; migrant access to benefits; data protection; radioactive source notifications; state aid, as mentioned; and vehicle standards, including the various types of approvals and directives for roads.

Those 12 areas are part of existing trade agreements and will be key elements of future trade agreements, but in 2018 no agreement was reached with the devolved Administrations on them. It would be helpful if the Minister could update us on whether agreement has been reached on them, so that our concerns can be allayed, or whether discussions are continuing on them. This is important for both continuity and the future, because—as the International Trade Committee in the Commons has discussed and as the Scottish and Welsh Governments have published—there are proposals for how future trading arrangements would need to be put in place.

One of the options—as the Scottish Government have called for and as the UK Trade Policy Transparency and Scrutiny report called for—was a joint ministerial committee or intergovernmental trade committee to complement the advisory committee that the Government have established. The Commons committee made a very constructive set of proposals that it would be a mechanism through the devolved Administrations as part of the consultation process. There would be a formal advisory role through the mandate process and another formal advisory role throughout negotiations. No doubt there will be further discussions about any dispute resolution mechanisms and whether such measures have to be approved by the devolved legislatures in addition to consultation with the Administrations.

The noble and learned Lord, Lord Mackay, put forward very constructive suggestions about how intergovernmental relations could operate. These are both necessary for the continuity agreements and vital for any future agreements. I am grateful that the noble Lord, Lord Stevenson, highlighted this area, and I hope that the Government will be able to give clarification on where we are with the understanding of where these competences lie and the role of the necessary consultation.

[Lord Hain (Lab)]

My Lords, in speaking in support of both these amendments, in a way I am dealing with the points I raised with the noble Baroness, Lady Fairhead, which she did not respond to—inadvertently, I am sure. Maybe both she and the noble Viscount, Lord Younger, could consider writing to me about this. As I described at the last sitting, it gives rise to concern that we will see an action replay of the power grab that Whitehall tried to pull on the devolved Administrations in the course of the withdrawal process. There was an attempt by Whitehall to repatriate to London those policy areas—for example, the environment and many others—that were devolved but held at a European level because of our membership of the European Union. That caused great aggravation with the devolved authorities, particularly—in the absence of Northern Ireland’s Government—with Wales and Scotland, which in the case of Scotland is festering on. An agreement was belatedly reached with Wales.

In this process, particularly when making regulations, we will potentially see these same issues arising. There is therefore a strong argument for the proposal put forward by my noble friend Lord Stevenson in Amendment 17 for the joint ministerial committee or some equivalent body to be given the overall supervising authority here. Having been a member of the JMC at various times in government, I was never very impressed with it. It was a bit of a talking shop. Since 2010, under the coalition Government and now, I hear from successive First Ministers of Wales and individual Ministers for Wales, with whom I am in direct and regular contact, that nothing has changed.

Yet the issues over Brexit are even more serious and of even more constitutional and policy importance than prior to this whole sorry horror show unfolding. The Government need to consider putting in place, preferably in this Bill and in the form specified by these amendments or some equivalent form, procedures that are recognised and have to be abided by, before we run into the same kind of problems that arose earlier in this whole Brexit saga.

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[Viscount Younger of Leckie (Con)]

My Lords, the Committee will notice that we have another change of driver—or perhaps a navigator having temporary control of the wheel. If I read the noble Lords, Lord Stevenson and Lord Purvis, correctly, the intention behind the amendments is to ensure that the voices of the devolved Governments are heard in relation to trade agreements. That is something that the UK Government entirely support. Indeed, the Department for International Trade is in discussion with the devolved Administrations on their role in future trade agreements.

To give a little more information to the noble Lord, Lord Purvis, the UK Government are committed to working closely with the devolved Administrations to deliver a future trade policy that works for the whole of the UK. But it is important that we do this within the context of the current constitutional make-up of the UK, while acknowledging that international trade policy is a reserved matter. To go further, we are currently having detailed discussions with the devolved Administrations at official level on their role in future trade arrangements, with the aim of agreeing new working arrangements before EU exit. In fact, we are continuing this engagement later this week.

I am happy to provide assurance to the House that our clear intention is that there will be a formal and regular intergovernmental ministerial forum to consider future trade agreements. The devolved Administrations already participate in other ministerial forums, such as those for EU negotiations. Frequency and any terms of reference are subject to further discussions and agreement with the devolved Administrations. However, we expect the forum to include our Minister for Trade Policy and his or her counterparts in the devolved Administrations.

The noble Lord, Lord Purvis, asked some questions on this point. The UK Government view securing an agreement with all the devolved Administrations as the best possible scenario, and it is the one that we will continue to work towards. We are committed to securing LCMs for the Trade Bill and have worked closely with the devolved Administrations to understand and respond to their concerns. As a result, we have made amendments to the Bill that answer many of those concerns.

The requirement for Ministers of devolved Administrations to seek the consent of the UK Government when making regulations that come into effect before exit day, or that relate to quota arrangements, has changed to a requirement to consult, of which I suspect the noble Lord will be aware. We will continue to respect the devolution settlements as they relate to trade agreement continuity and future FTAs. We will not normally legislate in areas of devolved competence without the consent of the devolved Administrations, and certainly not without first consulting them.

The amendment, however, would apply to existing trade agreements only and is, in this context, not proportionate. Clause 2 will be used only to ensure the continuity of existing trade agreements that are already in force. It will not be used for future trade agreements. Therefore, Amendment 17 would add risk to the swift and timely rollover of existing trade agreements. Given that these agreements are or will be already in force and that the purpose is to ensure continuity, the amendment is, at best, disproportionate and could mean that we were unable to deliver crucial continuity for businesses and consumers throughout the United Kingdom. For that reason, the Government cannot support Amendment 17. I hope that I have provided sufficient assurances on our intentions for engagement with the devolved Administrations in trade agreements.

[Lord Purvis of Tweed]

On the first point, it is very helpful to hear about discussions taking place through ministerial forums. This would be, I think, outwith the memorandum of understanding process in the joint ministerial committees, which have now been well established for 20 years as the intergovernmental framework between the devolved Administrations and the UK Government. I am sure the Minister is always very careful and specific with his language: I heard him say “forum” but I did not hear him say “joint ministerial committee” or “intergovernmental committee”. A little more information about that would be helpful.

[Viscount Younger of Leckie]

I can help the noble Lord. I was very careful to use the word “forum”—but perhaps I should have used “fora”, which of course is the plural. The reason for that is that the process is designed to mirror what has worked with the EU up to now. We want to replicate the terms that are used for EU negotiations by not calling it a joint ministerial committee. But I understand the intention behind the noble Lord, Lord Stevenson, using that term.

[Viscount Younger of Leckie]

We may be dealing with semantics here, but I will certainly write to the noble Lord, Lord Stevenson, and the noble Lord, Lord Purvis. My understanding is that there is a reason, but it is not a particularly big reason, which is that the difference between a joint ministerial committee—the expression that the noble Lord, Lord Stevenson, has just used—and a forum is that for a forum the devolved Administrations are seeking and are getting more regular and frequent conversations with us in the UK Government. I think a letter should clarify that.

[Lord Purvis of Tweed]

I am grateful that the Minister will be providing a letter. As the Commons committee and others have said, such a forum, which will include other groups, including representatives from the Administrations, should not be seen as an alternative to the mechanism of joint ministerial intergovernmental committees, which, as the noble Lord, Lord Stevenson, said, are more about the discussions that take place about legislative competences. As the noble and learned Lord, Lord Mackay of Clashfern, indicated, this is important now. The Minister said it is important that the continuity agreements are done swiftly. These continuity agreements may be in place for three years at the least, but they can be extended time and again. The agreements currently in place with the EU are permanent agreements, therefore we would be bringing into UK legislation what could well become permanent agreements. It is therefore important that if there are outstanding issues about where those competences lie, they are cleared through some form of intergovernmental process. If those points could be addressed in the Minister’s letter, I would be most grateful.

[Viscount Younger of Leckie]

I will certainly address the extra points that the noble Lord has made. The point I want to emphasise to the Committee today is that this forum is being regarded as particularly serious in the times that we are in. I have mentioned some names to be included as part of that forum, but this is work in progress.

On Amendment 76, the UK Government recognise the important role each devolved Administration will play in the implementation of the Trade Bill. The Government are also committed to ensuring that withdrawal from the EU is a successful and smooth process for the whole of the UK. The use of concurrent powers is in keeping with existing devolution arrangements. It allows for regulations to be made once for the whole of the UK where it makes practical sense to do so. The intention behind this is legislative efficiency.

The noble Lord, Lord Purvis of Tweed, asked about the implications for the Trade Bill of the freezing power in the EU withdrawal Act. We have been clear that the regulations to freeze competence to preserve our existing frameworks are not a mechanism for avoiding seeking legislative consent when creating our future frameworks. Without wishing to labour the point, I reiterate my earlier commitment that the UK Government will not normally use these powers to amend legislation in devolved areas without the consent of the relevant devolved Administrations and certainly not without first consulting them.

I acknowledge the mini-debate started by the noble Lord, Lord Hain. In essence, he asked whether the concurrent powers amount to a power grab—I think that is the expression he used. Under the Trade Bill, every decision that the devolved Administrations can make before exit they will be able to make after exit. The augmentation powers in the Trade Bill will be held by both the UK Government and the devolved Administrations. This approach will provide greater flexibility in how transition agreements are implemented, manage legal risks where competence boundaries are unclear, and allow for a reduced volume of legislation. The noble Lord invited me to write, and if he is not satisfied with that answer, I will certainly follow up with a letter should he wish.

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Moved by

[Lord Purvis of Tweed]

18: After Clause 2, insert the following new Clause—
“Status of the United Kingdom
Before exit day, a Minister of the Crown must lay before Parliament a report specifying which countries and organisations must amend their own domestic legislation in order to ensure that the United Kingdom is treated by that country or organisation as if it were a member of the European Union for the purpose of free trade agreements or other international trade agreements during the period between 30 March 2019 and 31 December 2020.”

[Lord Purvis of Tweed]

My Lords, I will also speak to Amendment 19 in this group. At Second Reading of this Bill, the Minister, the noble Baroness, Lady Fairhead, said that this process was about transparency. Amendment 18, which is a probing amendment, and Amendment 19 seek some transparency in a rather opaque set of situations—I listened to the Secretary of State for International Trade this morning from Davos adding even more confusion to the current position on the continuity agreement discussions.

On Monday, I referenced the fact that, through our membership of the EU, the UK has a trading relationship in place with 35 countries; 47 are partly in place, and there are 22 pending country agreements. These represent 66% of UK trade. Some are extremely complex. Some have been split into trading arrangements and investor dispute mechanisms, and some are of critical importance to certain sectors of the British economy. It is incredibly important that, between now and 29 March, we have a much greater understanding not only about what they are and how they will be translated into British law but also about the relationships that we have with other countries.

One of the reasons that Dr Fox has given for why we have not been presented with the trade agreements to roll over into our legislation is the reluctance of other countries. He has given a number of reasons why they are reluctant, which I will come to later, but one of the areas that Amendment 18 seeks to clarify is our Government’s understanding of what our partner Governments need to do. On a visit last year to a country in north Africa, I met with its foreign affairs and trade representatives and MPs. A representative of the British Government who was present asked them explicitly whether they needed to change any of their domestic legislation purposes if they were then going to respond to what the EU was going to ask them to do, which was to consider the UK as a member of the EU for the purposes of international agreements during the implementation period—that is, on the basis that we have an agreement—and they were not able to answer. I suspected that this was now a routine set of requests from British government representatives of our partner countries.

My amendment asks for a report on what our understanding is of the domestic processes that those countries need to go through. If we know that, we are able to take Dr Fox’s statement at face value: they are simply not carrying the weight or working hard. Or, if we know that their own domestic processes are more complex than one may have thought, then we may have greater sympathy with the Government that this may be a more complex process than we had been led to believe.

In 2017 and 2018, we seemed to be living in a much easier world, because Dr Fox suggested at the Conservative Party conference, reportedly to cheers from activists, that it would be a breeze to get all the existing trade agreements in place before March. I remind colleagues that he said:

“believe me, we'll have up to 40 ready for one second after midnight in March 2019”.

He added:

“All these faint hearts saying we cannot do it—it’s absolute rubbish”.


That was endorsed on Twitter by the Minister’s predecessor, the noble Lord, Lord Price. When challenged on the basis that it might not be as easy as what Dr Fox had said, the noble Lord said on 24 October 2017, in response to someone saying that we would be out only on WTO rules:

“Ed we won’t only have WTO in event of no EU Trade deal. We will roll over the 60 odd other deals we are party to currently”.


Someone then responded that it would be difficult to do that. He then replied,

“All have agreed roll over”.


I just do not think that is correct. We now need absolute clarity because the clock is ticking.

When we debated this four months ago at Second Reading, I specifically asked the noble Lord, Lord Callanan, if the position of Dr Fox and the Government—that at the second after midnight next March they will all be ready—still stood. He replied:

“The Government’s position is exactly what the Secretary of State for International Trade said”.—[Official Report, 11/9/18; col. 2201.]


We need to know what the domestic processes are in those other countries and we need to know now very clearly, through a report, where we currently stand. That report should give the number, type, scope and extent of those agreements.

The agreements that we currently have in place are a mixture: free trade agreements; deep and comprehensive free trade agreements; economic partnership agreements; association agreements; stabilisation and association agreements; customs union arrangements—with Turkey and Andorra, which we will be discussing later on; interim economic partnerships; stepping-stone agreements; and modernisation agreements. We are also in the process, although they are not yet inked, of investor dispute mechanism agreements.

We have heard nothing at all from the Government about how we intend to roll over these different—in some respects, significantly different—types of agreements, and the consequences that that could potentially have on UK law. Dr Fox, in a slight moment of reality, said to the Commons committee that a simple rollover may not be as easy as previously stated. That is the only time—that I could find—where there was a degree of reality from the Government.

As I have said previously, the clock is now ticking. The Government still hold the position—if the noble Lord, Lord Callanan, is to be believed—that we are to transfer all of these agreements into UK law. They have not deviated from that position; indeed, Dr Fox did not even deviate from it this morning when he was asked, which is the latest information. So this report under Amendment 19 is necessary.

Because of the complexity of these arrangements and because some of them are very large—the totality represents 66% of UK trade—it is necessary, in subsection (2)(d) of the proposed new clause, for us to specify the consequences for the United Kingdom. In failing to replicate the terms of the existing agreements, it is necessary that we have a report which indicates the impact on the UK economy. Subsection (2)(a)(i) to (iii) in Amendment 19 means that there will be a much greater degree of clarity on what our partners need to do.

Finally, why is this even more important? At a lunchtime meeting that I had with colleagues in the House with a delegation from the Canadian Parliament, the Prime Minister’s trade envoy to Canada had a very interesting row with another Conservative MP. As a Liberal Democrat, the only good thing I could do was be an observer. The trade envoy said that one of the opportunities of rolling over the CETA agreement was to change it. That was immediately slapped down by the other Conservative MP who said, “No, we just need to get this through”. Our very close Canadian colleagues were bamboozled by this. They were also bamboozled when I asked them the same question that I am asking the Minister: what is necessary for Canada to implement this into their domestic legislation? So far, the Canadian Government have not indicated to their parliament that this is in the pipeline or that this is to be ready. Therefore, all I am asking is for the Government to tell us.

Now is the time for clarity—absolute clarity—not only for Parliament but also for businesses that rely on this trading relationship. I remind the Minister of the resolution of this House on Monday: that if this clarity is not provided then this Bill will not proceed.

[Baroness Jones of Moulsecoomb]

My Lords, when I first came to your Lordships’ House just over five years ago, I found some of the procedures absolutely incomprehensible. It has taken me a little time to find my feet. Quite honestly, a lot of those procedures lack common sense.

I do not understand why it was ever necessary to draft Amendment 19, let alone for it to be moved. It is common sense: of course we need this sort of information. It is asking for such basic information which, in any sensible universe, would be published as a matter of course. This is transparency which helps all of our businesses and our economy. We are now only weeks away from Brexit day, and we are still completely in the dark about all these things. There are many supply chains which depend on this sort of information. They depend on our existing trade arrangements. Businesses do not have the slightest clue whether they will be able to continue on existing terms in just two months’ time.

I would have thought that, if the Government had everything lined up ready to roll over these trade deals—which I very much doubt—then Ministers would be telling us about it and about what a great job they have done. The Minister would do a great service to the Committee, and to the country, by giving us a full account of where the Government are in these negotiations. It should not have to be an amendment to the Bill—it is so basic—but if the Government will not tell us then we have to compel them.

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[Baroness Fairhead]

My Lords, I can confirm that that is why we want to have an agreement with an implementation period. That is why it is definitely the Government’s plan A, while a no-deal scenario will bring real challenges. I hope that your Lordships would not accuse me of saying that there are not complications or that we do not need to go through many agreements. As I said in this House at Second Reading, it would be extraordinarily challenging to get everything done by 29 March—and I do not resile from what I said.

The noble Baroness referred to the future tariff policy and what happens if we get to no deal at one second past midnight. We are working to develop an independent tariff policy, but no decision has yet been taken on what the applied tariff rates will be post an EU exit, notably also in the case of no deal. We are looking at a full spectrum of options and will consider carefully all the evidence available before making a final decision in the interests of British industry and consumers.

[Lord Purvis of Tweed]

I wish to have one final go on Amendment 18. It is predicated on what the Government are working to, which is to have an agreement. That agreement will come with a request from the European Union to those third countries to treat us as a continuing member of the international trading agreements. The Minister has told the Committee that the Government know of countries where that poses no difficulty but also of countries which have said they do have difficulties. This means that, even in the event of leaving with a deal, some of our trading arrangements will not be in place after exit because those countries cannot put them in place. Which countries have indicated to the Government that that poses no difficulty and they will treat us as a continuing member of the international treaty, as the EU has asked? Which countries have said that it poses difficulties, and which have said that they do not wish to make it public?

[Baroness Fairhead]

My Lords, if I may address the point made by the noble Lord, Lord Purvis, if we leave with a deal there is an implementation period until the end of 2020. There is much greater confidence, as I believe this House would accept and appreciate, about getting all the arrangements fully continued and rolled over within that time period.

There are two issues here. The first is the notification by the EU that the UK is to be treated as part of the EU during the implementation period. The second is what third countries need to do to enter into continuity agreements. The first is a matter of third countries accepting that they will treat us in that way; on the second, we are engaged in detailed discussions with individual third countries to try to help them ensure that they are in a position to enter into the agreements on time. I stress, as noble Lords have highlighted, the difficulty of the timing if there were no deal.

[Lord Purvis of Tweed]

I apologise, but can the Minister then confirm whether my understanding is wrong? I understand that they will be asked to consider us as being in an agreement during the implementation period—to carry on treating us as if we were a continuing member of that organisation—but the Minister has said that the Government do not know whether all countries will do that. So, even if there is an agreement with the EU and an implementation period, there may be countries where the international relationships that we will have will not be in effect after exit day because the third country will not be in a position to treat us as a continuing member. The Minister has said that to the House. So all we want to know is which countries they are, because it is very significant if, even in the context of leaving with an agreement, those relationships might not carry on.

[Baroness Fairhead]

My Lords, what I can say is that all the countries we have spoken to have agreed with the principle of continuity. Therefore, one could expect that if they agree with the principle of continuity, they would see that that was a key part of making sure that their businesses and UK businesses—their people and our people—are protected.

Amendments 19 and 97 both concern the publication of a trade agreement progress register, so I will take them together. As agreed in the other place, the Government have already committed to lay reports in Parliament to explain any changes made to continuity agreements. These reports are intended to aid Members of both Houses to understand our continuity agreements. It is critical—as the previous discussion has just highlighted—that we do not delay the ratification of the agreements and unintentionally create a cliff edge for our businesses through a process addition. There will simply not be time, particularly with no deal, to create a detailed progress register in advance of bringing the majority of provisions in the Trade Bill into effect. That would be the effect of Amendment 97. As I stressed, we want to keep Parliament informed. Although we are committed to transparency and clarity in what I have laid out regarding our process reports, we are also mindful that we need to deliver the programme to time, and this additional reporting requirement risks delaying it.

Our Clause 3 reports are proportionate and will provide Parliament the transparency it requires. I take fully the comments made by the noble Lord, Lord Purvis, about the number of agreements—FTAs, EPAs, MRAs and association agreements. I have also laid out to the Committee some of the more technical aspects that we will cover, such as what happens with tariff rate quotas and rules of origin. I believe we will discuss those later today. Extensive work has been undertaken to ensure the continuity of our agreements for more than two years. We are engaged with our international partners to deliver this in the event of no deal. We have been working to deliver successor bilateral agreements with third countries and treaty partners, which in the event of no deal we would seek to bring into force from exit day or as soon as possible thereafter. Progress has been encouraging. Ministers and officials are engaging regularly with those partner countries to support and complete the work. As I said in the previous discussion, all have supported the principle of rolling over, because it is in their mutual interest.

I reiterate that we are aiming not to have any significant changes. As such, we believe there is little benefit in having a report analysing our continued participation in the EU FTAs. The vast majority of the elements are already being implemented, and our businesses are already benefiting.

The amendment in the name of the noble Lord, Lord Purvis, would require us to provide detailed progress on private Government-to-Government discussions. To provide such updates would create a considerable handling risk with our partner countries. As the noble Lord will appreciate, there are commercial sensitivities, and regulations and procedures in third countries, and we would not be able to commit to providing those updates without first seeking the agreement of the relevant partner countries. Again, this could end only in slowing down the negotiations. We believe these amendments are inappropriate and I ask the noble Lord to withdraw Amendment 18.

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[Baroness Fairhead]

My Lords, on the 11.01 pm—or one minute past midnight—point, technical notices have already been sent out and no-deal planning has been ramped up, as the noble Lord will have seen in the Prime Minister’s announcement. Communications are planned for businesses and there are training programmes to make sure that the Civil Service and various departments are ready with information as required. Clearly, our primary focus is on achieving plan A and a deal, and therefore this is contingency planning, but that planning has been ramped up in the event—that we do not want—that there is no deal. I cannot say the exact moment that those notices will come out but I understand the noble Lord’s concern, and businesses’ concern, about what will happen in the following hour. Obviously, that will be taken into account.

As for third countries and where they are, I do not think I can add to what I said, which is that we are actively engaged and if there is a deal followed by an implementation period, we will be an awful lot more comfortable about the process.

[Lord Purvis of Tweed]

My Lords, I am grateful to the Minister and to noble Lords who have taken part. The Minister said that the Government will keep Parliament informed. Parliament has not been informed until now. We have no idea, because nothing has been presented to Parliament, about notification of the status of the potential agreements. We were not informed in advance about Switzerland, which is the only one so far; we have been asked simply to ratify it and to consider whether or not we accept what comes with it.

I tried to probe the Minister’s comments on Amendment 18. She told us that in discussions with third countries, if there is an agreement and the EU asks them to consider the UK as a continuing member of the European Union for the purposes of international treaties and trading agreements, the Government will not provide the information to Parliament on which countries that poses no difficulties for, which countries have indicated that that may require them to change domestic law, and which countries are refusing to make the discussions public.

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[Baroness Fairhead]

Again, when countries are in the middle of negotiations, blow-by-blow accounts or reporting stages are highly irregular. I hear and understand this House’s concerns and I will see what more information can be given.

With Switzerland, it will not just be a case of ratification, then all done. As we committed to, parliamentary reports will be laid before the House so that it can see whether any changes have been made and, if so, what their impact is. Today, it was announced that a free trade agreement has been reached in principle with Israel. I say this not because two out of 40 is the vast majority but because I want to provide reassurance that progress is being made. As noble Lords will be aware, the agreement with Switzerland is one of our most important FTAs with the EU—in fact, it is the most important.

I hear the concerns and challenges from noble Lords across the House. We have provided information and I cannot say that there has not been transparency; we have been reporting to the ITC and through ministerial Statements. I will seek to find out what further information can be provided before or during Report.

[Lord Purvis of Tweed]

One element that concerns us is when Ministers move seamlessly from saying that this is merely a technical exercise to roll over existing agreements to, in the next sentence, saying that they are engaged in confidential negotiations—but what are they negotiating? If this is simply a technical legal exercise to ensure the translation of legal competences into UK law, what are the Government negotiating? As soon as Ministers say that confidential negotiation is needed, that should trigger the existing, proper processes of transparency. As the Government said, these agreements are existing agreements with the European Union. They could not have been made without regular updates to democratically elected bodies. That is what we are asking for; it is a modest request.

The Government’s response is concerning and has not provided the degree of clarity sought, especially since the public justification for why these agreements have not been brought forward to Parliament by the Secretary of State is to blame other countries. If we get to the next stage of the Bill, much more information must be provided by the Government because this issue is significant for our trading relationships. Until that point, we on these Benches will reserve our position. At this stage, I beg leave to withdraw the amendment.

Amendment 18 withdrawn.

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[Baroness Fairhead]

My Lords, I begin by addressing Amendment 20, tabled by the noble Baroness, Lady Henig. The Government agreed in the other place to lay reports in Parliament to explain the changes made to continuity agreements in advance of any continuity agreement being ratified or in advance of the Clause 2 power being used. This amendment, which requires an independent body—albeit one with the stature the noble Baroness refers to—would place a considerable time constraint on the delivery of these reports, which would in turn have a really serious impact on our ability to bring those continuity agreements into force. The reporting requirement placed on the Government is intended to be an aid to Members of both Houses to understand the continuity agreements as the agreement text is also laid in Parliament for ratification.

The noble Baroness also raised the issue of standards and the potential to lower standards. We had a very long, detailed and comprehensive debate on standards on the first day in Committee on this Bill, and I want to reassure noble Lords again. EU standards come directly into UK law. We will remain party to international standards bodies under international law, as we are today. This Government have reiterated their commitment to high standards, which are both demanded by our consumers and the right policy for our country.

I turn to the idea of an independent report. Noble Lords with experience of trade matters will appreciate that these agreement texts are lengthy. The CETA text with Canada, including annexes, is about 1,600 pages long. The reality of the situation is that it is simply not feasible, in the time available, to generate independent reports before our agreement needs to be ratified. I again refer to what we have said: continuity is what businesses and our consumers are asking for. I appreciate the points that the noble Baroness, Lady Henig, makes. Our reports will provide relevant analysis on the impact of any changes made to those agreements. I hope these reports are helpful, both to the noble Baroness and to this House.

[Lord Purvis of Tweed]

I wonder if the Minister might just be able to clarify what may be my misreading of the legislation. The Minister said “any changes”. My reading of the legislation is that it is “any significant differences”. I wonder if the Minister might be able to say, because they are not the same.

[Baroness Fairhead]

My Lords, if the change is literally a cut and paste, I am not sure it would help your Lordships to have a report saying “‘EU’ changed to ‘UK’”. It would be changes seen to be of any significance. If there were any economic impact, that would be included in the report. The reports are designed not to take time in an exercise of proofing but to identify the significant changes and those of value for the House to be aware of. As the noble Lord correctly says, it does refer to “any significant differences” in “trade-related provisions”.

The continuity agreements will be subject to the procedure under the Constitutional Reform and Governance Act. This House will be able to use the contents of these reports to inform their engagement with that process.

I turn to Amendment 21, which requires the Government to provide updates to Parliament on the status of negotiations. I stress again that we do not expect significant changes. I have referred on many occasions to the technical changes on TRQs, rules of origin and other such changes that we will need to cover later. That, together with this very tight timetable—as I think we all agree—would mean that the level of reporting is unnecessary in relation to that programme.

The continuity programme is separate from our programme to develop a future trade policy. On that, there has been very active engagement with businesses and trade associations. We meet on a very regular basis because it is trade policy for them and therefore it is absolutely critical. For example, we launched four consultations on possible future trade agreements. The window for consultations has recently closed and we are currently considering stakeholders’ views, so there is active consultation both in person and through that. Any future trade agreements with new partners will follow a separate scrutiny procedure. It was set out in outline by the Secretary of State for International Trade on 16 July 2018, but I ask for the House’s indulgence because in group 19, later today, we will be discussing exactly the scrutiny of future trade agreements.

I understand that the Committee is keen to know what progress we are making on transitioning the continuity agreements. The noble Baroness, Lady Henig, referred to the ISDS update that was given by Europe. On the DIT website, we provide updates of the meetings that have taken place and of any working groups. I have a list here of all of the working groups and, where we can, we say what was discussed there. We are able to provide that level of transparency. I do not want to go back to the discussion that we just had about the private Government-to-Government discussions. I stand by the commitment that I made to the Committee on that last measure to say that I will look to see what further can be done. My understanding is that it could create a considerable handling risk for those countries.

I have listened with interest to the arguments and points raised by the noble Lord, Lord Stevenson, concerning Clause 3. As has been set out in great detail and discussed over the course of these debates, the Government are seeking to roll over the effects of the EU’s trade agreements as much as is practically possible. This is particularly important in relation to pre-ratification reporting requirements, as any potential delay could risk a cliff edge in those trading relationships. In supporting this process, we are producing reports which will explain any significant changes—as I said to the noble Lord, Lord Purvis—from the effects of our existing agreements to the new ones. We believe that this provides the transparency that Parliament has called for while also being proportionate. These reports will help Members of the House, businesses and the general public to better understand the impact of the programme.

I trust that the Committee will accept that this provides balance, but I repeat my commitment to see what further information we can give. Our amendment to produce these reports received support in the other place as a proportionate approach to providing transparency to Parliament. I hope that this reassures the Committee, and I ask the noble Baroness to withdraw her amendment. Additionally, I hope that noble Lords will agree that Clause 3 should stand part of the bill.

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[The Lord Bishop of Chester]

My Lords, it is always a pleasure to listen to the noble Lord, Lord Patten of Barnes, especially when religious imagery creeps into his speech with gospel truth and sacerdotal approaches. His opening remark reminded me of Trollope’s definition of hell: an eternity of listening to one’s own sermons. I do not know whether the noble Lord, Lord Patten of Barnes, has similar feelings about his speeches, but they are always wonderful to hear.

I wonder what this amendment really means. The noble Lord, Lord Patten of Barnes, said that happiness is a relative concept, but it seems to me that the term “customs union” can mean more than one thing. The very fact that the amendment refers not to “the customs union” but “a customs union” prompts me to ask what it means precisely. If one looks, as I just have, at the WTO website and how it defines a customs union, it is not a hard-and-fast term and allows for exceptions, up to a point, to be made in an agreement. It refers to “substantial agreement” on issues of trade.

When one comes to the political declaration, what is the real difference between the following aspiration in the political declaration and a customs union?

“The Parties will put in place ambitious customs arrangements, in pursuit of their overall objectives … making use of all available facilitative arrangements … ensure no tariffs, fees, charges or”,


so on in the trading arrangements. It seems to me that that is not far from describing what might be called a customs union. No doubt the devil will be in the detail as to precisely what is included or excluded, but it seems to me that the Government’s intentions, and the agreement’s intentions in the joint political declaration, are not far off what one might describe as a customs union.

[Lord Purvis of Tweed]

My Lords, I hope that the Government will listen to what the noble Lord, Lord Patten, said in his contribution. The difficulty is that, even those in Government who listen to such a sensible case, find themselves locked into a situation where even sensible ways of maintaining a relationship with the European Union outside the European Union have been defined by many as “not leaving”. So the scope for leaving the European Union has become narrower and narrower.

One of the slight advantages of the delay to this legislation and the opportunity to debate a customs union now is that many of the prior assertions have been utterly debunked. Many of the valid concerns raised about leaving the European Union and its customs union have now emerged in reality. The then proposed “max fac” solution has been laid bare as simply unworkable. The Chequers agreement would not pass any definition of a sensible way forward. The White Paper which was then published had major deficiencies, and we saw the result of the Commons vote on the agreement. So we are left with a number of differing perspectives on the future trading relationship and customs arrangements on which we will need to find some form of common ground.

In previous discussions, we have heard from the Government that all these concerns can be set aside because of our positive relations with our trading partners—Dr Fox said that on the radio today. Canada has often been cited as a country which finds it very straightforward to have a positive trading relationship with one of our closest possible allies, especially as CETA has already been agreed by this Parliament. No doubt, there will be good will on both sides in these discussions. This is beyond question. We will trade with our close allies. However, Canada has prevented our schedules application at the WTO from progressing. It has lodged an objection. It is looking after the interests of Canadian farmers and industry—the United Kingdom would do exactly the same.

If we leave without any agreement, and if Canada, New Zealand and Australia do not withdraw their objections to our goods schedules at the WTO, then not only will we leave the European Union without an agreement, we will leave without any certified WTO schedules. We will not only be trading on WTO rules, but we will not have certified rules with which to trade with the rest of the WTO. The same has happened this past week over our services schedule—services are two-thirds of the UK economy—because Taiwan has lodged an objection. So the dawning reality must be that a change of course is necessary.

It is of no surprise to anyone that Liberal Democrat policy continues to be, as it always has been, to retain membership of “the customs union”. It is Labour policy currently to negotiate “a customs union” with “the customs union”, such as Andorra and Turkey have. It is the Government’s policy, or at least the Prime Minister’s though not necessarily the whole Cabinet’s—it is difficult to determine, between the Chancellor and Dr Fox, who speaks for trade now; it is significant that, at Davos, in one week, you have two Cabinet Ministers from one Government saying two different things at a critical time in our country’s history—that we negotiate a deep and comprehensive free trade agreement with a customs arrangement as part of it.

We propose that, ultimately, the people will have to decide on our preferred option. Under Labour, Article 50 would need to be revoked and a new negotiating mandate would have to be agreed at EU level, as the Prime Minister’s letter activating Article 50 is not competent—it states that withdrawal would be supplemented by a free trade agreement, not a customs union. The Commission’s negotiating mandate has not been on that basis. The Government’s position was defeated by the biggest majority in Commons history.

The Government’s position is predicated on making agreements with all other countries with which the EU has a trading relationship but without them knowing what our trading and customs arrangements will be. Reflecting on the previous debate in Committee, perhaps the biggest reason why those agreements will not be brought forward before exit day is the very sensible position that third countries are taking. They will not enter into agreements with us, even if we say they are simply a rollover, because these could well become permanent without them knowing what our relationship with the European Union is. Who can blame them? Perhaps Dr Fox can, but who really can blame them?

We know that the withdrawal agreement and the political declaration state that the future relationship will be based on the Northern Ireland backstop, which means that we would not deviate from the EU in our trading. It seems that the Prime Minister’s course of action now, in order to get an agreement through, is to remove the very thing that would offer reassurance to countries with which we have a third-party trading arrangement. The backstop would clearly break the “taking back control” mantra, so to some extent it is not surprising that many on the government side, in the Conservative Party, have said that this is actually not leaving the European Union at all. So it is hard to see how they move forward now.

Labour’s position is based on Turkey, where agriculture is excluded and where the country is obliged to use EU rules and abide by the European court’s interpretation of them. To some extent, this also means having the European court’s remit over our future relationship. Turkey’s agreement with the European Union explicitly excludes Turkey deviating from the EU’s internal regulations; it is bound by them. If negotiating “a customs union” with the European Union were to have any preferential terms over participation in decision-making, the European Union would then be bound to offer them to Turkey and Andorra, which it will not do. This is one of the difficulties about which we have to be open.

Labour’s position of being aligned with the single market but not part of it means that with the movement of goods comes the movement of capital, which also means some form of people movement. It has not said this so far, but I think we now have to be in a period of openness and honesty. This is clearly within the scope of the European Court of Justice—which Jeremy Corbyn has ruled out. Many people also say that this is not leaving the European Union. It does not remove the need for border checks. Some of the longest delays in border checks in Europe have happened between Turkey and Bulgaria—two countries which are part of a customs union. So, if we want British representation in a customs union, with British oversight and decision-making, and a seamless trading relationship with 49% of our trading partners and a further 17% of other countries with which we have trading relationships without tariffs, we have to retain membership of the customs union.

If the impossible government position is termed “not leaving”, and if Labour’s position is termed “not leaving”, then I think not leaving would be better done after the people have agreed it. Now the reality that we are embarking on is clear. For the first time in history, a country is seeking a trading arrangement with new barriers, additional regulations and enhanced restrictions. It is the first arrangement ever knowingly entered into that would reduce prosperity. This is the Government’s course of action outside the EU’s customs union.

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[Lord Lea of Crondall]

I have been listening to this brilliant speech, and I am just wondering whether I can believe my ears. We are talking about an amendment to a Trade Bill in the context that the Government are trying to put through a withdrawal agreement. Given the complexity of the question of “the customs union” and “a customs union”—there is an element of angels on the end of a pin—if we in Parliament are having difficulty in thinking through its various intricacies, how does he think it is going to be easier for the people to do so? Is that what he has just said?

[Lord Purvis of Tweed]

It is. Ultimately, I believe that the choice is going to be that we either stay in the customs union and the single market of the EU or we leave, either with no agreement at all, which I hope is ruled out in short order very quickly, or with some form of government agreement, which did not secure majority support in the other place, where one-third of those voting against it did not believe that it was leaving the EU at all. I think where the people will now be informed in the decision is as I started: many of the issues are now laid bare about the consequences of leaving.

I am very happy to be a co-signatory to this amendment. I am very pleased that we in this Chamber are debating what the consequences of the actions will be. We are also clear that we want to do the least damage to the British economy and to secure for the future all the relationships that we have at the moment without the extra burdens of regulatory addition.

My final point, which the OBR report in October made very clear, is that if we went down the Government’s course and left, then there would be at least five years of adjustment to a worse scenario for GDP, even on the basis of the agreement. I am seeking to avoid that. I hope there will be consensus, at least in the first instance, that a customs union is necessary. There is no doubt of our position on these Benches that the customs union is preferable to all of those. I hope that will ultimately be the future of our country, and I believe that that is up to the people, who ultimately will have to decide this.

[Lord Lansley]

My Lords, I do not want to go on at length about this issue, not least because I agree so wholeheartedly with what my noble friend Lord Patten of Barnes has already said. I am always loath to do it and I hope to make it a very rare event, but I voted for the amendment to the withdrawal Bill last April. To that extent, I think this House has made its view perfectly clear: it thinks, in the context of leaving the EU, that to retain membership of a customs union with the EU would substantially mitigate what would otherwise be the damaging economic effects of withdrawal.

I do not want to get into a debate about “the” customs union or “a” customs union but, on the face of it, if we are negotiating to leave but we are negotiating to have a customs union relationship with the EU, it behoves us to negotiate without necessarily subscribing to the customs union because the customs union is a product of the treaty. We would no longer be bound by the treaty, so we have the flexibility to think otherwise. That does not turn us into Turkey, because we might choose to do things quite differently. The EU has chosen not to have agriculture within the customs union with Turkey because it is in its own interests not to do so. We have very different interests and we might choose to pursue them differently. Indeed, as one can see from the structure of the backstop, we might choose to have an arrangement with the EU that was, as Ministers are fond of saying, a “bespoke arrangement” for the management of a customs union. And why not? If we could have such a thing under the backstop, surely we could have it without the backstop.

I do not want to go on at length. I hope that those in this House and beyond who are thinking next week about what is needed to make progress from the impasse that we appear to be in at present will read this short debate. While it exposes some of the difficulties in negotiating a future customs relationship with the EU, two things should become immediately apparent. First, many of the negative consequences of leaving the EU—most especially, leaving without a comprehensive agreement in place—will be dramatically mitigated by being in a customs union. When I talk to businesses, that is absolutely at the top of their wish list, and it is true for manufacturers as well. Secondly, I hope people will realise that this does not preclude us having a trade policy of our own. What are trade policies nowadays? They are generally called comprehensive economic partnership agreements because by and large they are not about tariffs; they are about broader relationships. Especially for the UK, given that we are predominantly a services economy, for the future those agreements should be about services. We should be negotiating trade agreements about services, the movement of capital and investment, and indeed we should have a negotiation with India that includes a discussion about the mobility of workers between India and other countries. That is happening in a very powerful way: the Indians are exporting skilled young people all over the world very successfully, and we should have that in mind as part of an economic partnership agreement with other major economies. If that is true and it also gets us out of having a hard border between the Republic of Ireland and Northern Ireland, but without creating a new border between Northern Ireland and Great Britain, why would we not want to do this? That is what everyone is trying to arrive at.

For the purposes of next week’s debate there are, therefore, essentially two questions. First: does offering to be party to a customs union with the European Union, as part of the future political declaration, enable us and the European Union to agree in a way that would—as they say in Brussels—have legal force? Would it enable us to put into the political declaration, and have agreed by the European Council, the kind of language and commitments that would allow it to be said that we will not enter into the backstop, if we go down that path in the future treaty? That is what it is all about: not going into the backstop in the first place. We need some reassurance that that will happen. That will automatically solve the essence of the problem associated with the backstop. If we do not have to go into it, we will have solved that issue. We will also have solved the question of unilateral withdrawal or otherwise. If we are in a customs union, we have a right to leave it. If we go into the backstop, we have no right to leave it—as it is currently constructed— and that is a very unhappy place for many who are against the withdrawal agreement at the moment.

The second question is: can we avoid the Turkey situation? It is a bit like when people talk about entering the Norway situation: we do not want to be in a position where we are simply rule-takers. With a customs union, at least we are not rule-takers on financial services and our service industry, but we are none the less rule-takers. We do not want to be in that position. Can we arrive at a customs union where we genuinely have a shared responsibility? I hope we can.

The trouble is, I entirely agree with my noble friend Lord Patten. Nearly a year ago, if only the Government had listened and put into the negotiation—at the time that led up to the White Paper and after it—a discussion about a customs union. Instead they put into the White Paper the suggestion that we could have a customs union, without calling it that, where the rules of origins are effectively waived so that anything that originates in the United Kingdom is treated as if it is European, and anything that originates in Europe is treated as if it is British. This, of course, is a nonsense; the European Union would never accept it. It would never accept that it would raise the money—

--- Later in debate ---

[Lord Purvis of Tweed]

The Government’s position, already stated, is that they intend the future customs arrangement to be based on those aspects of the Northern Ireland protocol which require agricultural and goods regulatory alignment with the European Union.

[Lord Bates]

We have been very clear about this; we want a deep and special facilitated trading arrangement with the European Union which allows all the benefits of free trade while allowing us to take advantage of the new opportunities which are emerging. According to the EU’s figures, 90% of growth over the next 10 to 15 years will be outside the EU—in India, China and the United States. That is what we need to tap into. That is what we need to be focusing on. We need to have the freedom to negotiate those independent trade agreements. If you go for a customs union, you are going to surrender that opportunity, and we are not prepared to do that. You would also surrender the right to shape the rules that you are going to have to implement.

--- Later in debate ---

[Lord Bates]

Because 17.4 million people decided that they wanted to leave, and that is what the Government are committed to doing. I want to be careful not to be flippant about the subject we are dealing with; it is very serious, and the positions have been well argued. Nor do I want to be disrespectful to people for whom I have huge admiration, such as my noble friends Lord Patten and Lord Lansley, and the noble Lords, Lord Hannay and Lord Kerr, whose expertise I respect. But the position of Her Majesty’s Government is very clear. We have a deal. We should take advantage of that deal. A customs union would have all the disadvantages with few of the benefits. That is the reason we do not accept the amendment.

[Lord Purvis of Tweed]

Before the Minister sits down, I wonder whether he could advance this clarity. The noble Baroness, Lady Neville-Rolfe, states that we have now agreed with Israel to roll over our existing trading relationship with Israel. Israel does not have a free trade agreement with the European Union, or with us now. It has an association agreement, which has been in force since 2000. That is part of the pan-Euro-Mediterranean cumulation on rules of origin. This means that if we are replicating our existing relationship with Israel, we are replicating the rules of origin relationship that Israel has with the European Union. It also has common rules of origin procedures with Turkey, so if the Government’s position is that we are simply rolling over all of our current trading relationships through an association agreement with Israel, it means that we are now going to be bound by common rules of origin procedures with the western Balkans, the Faroe Islands and Turkey in the pan-Euro arrangement.

I am not sure why the Faroe Islands is part of that, but the reality is—and this is the point I was trying to make in my contribution—that we have to be open. If you want complete independence of trading relationships in the way the world trades now, that is impossible, so the Government have to have some limitations on it. If it is replicating the Israeli agreement, it is replicating exactly the same rules of origin alignment that we currently have with Turkey, and Turkey is part of a customs union with the European Union. That is quite simple, too.

[Lord Bates]

The Committee will come to rules of origin shortly, but on that point, that is the reason why, in the agreement that we are proposing—the deal that is on the table—we propose that to ensure that trading goods between the UK and the EU remains frictionless in the UK, there will be no routing requirements for rules of origin on trading goods between the UK and the EU. What we are talking about with Israel is consistent with that.

Trade Bill

Lord Purvis of Tweed Excerpts

Monday 21st January 2019 Lords Chamber

Moved by

[Lord Purvis of Tweed]

8: Clause 2, page 2, line 37, at end insert—
“( ) Regulations under subsection (1) may make provision for the purpose of implementing an international trade agreement only if—(a) the provisions of that international trade agreement do not conflict with, and are consistent with—(i) the provisions of the Sustainable Development Goals adopted by the United Nations General Assembly on 25 September 2015,(ii) international human rights law and international humanitarian law,(iii) the United Kingdom’s obligations on workers’ rights and labour standards as established by, but not limited to, the commitments under the International Labour Organisation’s Declaration on Fundamental Rights at Work and its Follow-up Conventions, (iv) the United Kingdom’s environmental obligations in international law and as established by, but not limited to, the Paris Agreement adopted under the United Nations Framework Convention on Climate Change, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), and the Convention on Biological Diversity, including the Cartagena Protocol on Biosafety,(v) existing standards for food safety and quality as set and administered by the Department of Health, the Food Standards Agency and any other public authority specified in regulations made by the Secretary of State,(vi) the United Kingdom’s obligations as established by the Convention on the Elimination of All Forms of Discrimination Against Women and by the Convention on the Rights of the Child, and(vii) the sovereignty of Parliament, the legal authority of UK courts, the rule of law and the principle of equality before the law,(b) the provisions of that international trade agreement do not in any way restrict the ability to determine whether public services at a national or local level are delivered by public sector employees, and(c) the Secretary of State has laid before Parliament an assessment of the potential economic, social, human rights and environmental impacts of the international trade agreement on the contracting parties.”

[Lord Purvis of Tweed (LD)]

My Lords, I shall speak to Amendment 8 and the other amendments in this group. Amendment 8 relates to the continuity agreement, and Amendment 53, which is also tabled in my name, relates to future agreements. We return somewhat to an earlier debate where there is perhaps more complexity than the Government have alluded to until now about some of these agreements. I shall explain why this is important before I refer to the components of the amendments.

I shall use three examples of agreements which the Government so far have not said whether they wish to replicate in the continuity agreement: Singapore, Japan and Mexico. This is more complex than the Government have alluded to so far because a European Court of Justice judgment two years ago indicated that free trade agreements should not now include investment protection components. In relation to the Japan agreement, which this Parliament has approved and which will come into force on 1 February this year, as a result of that judgment separate negotiations are now being carried out on an investment protection agreement which Japan has not yet agreed. What is the UK’s intention in rolling forward the trade and investment components, or is it just the trade component? The Singapore agreement, which has been agreed and which would be one of the agreements that we wish to take forward, has, again, been separated out. The Mexico agreement has been agreed and is going through legal scrubbing.

Those three examples, which are significant to UK trade, highlight important aspects. They represent some of the best components of what modern deep and comprehensive trade agreements can include, but they also signify the difficulties that our Government have in wanting to make them continuity agreements, simply and straightforwardly rolling them on. That is why Amendment 8 on continuity agreements is important. It is important because it now sets the principles for agreements which have been signed in principle but which, through the process of seeking continuity, might include practical changes. We do not know yet, but they might. Although we know that it is the Government’s intention that they will not, we have yet to see them or any of the details. Therefore, it is appropriate that we would want to set some criteria for how they can be rolled forward, especially if we are to take forward what the European Union is now doing, which is separating out investor protection agreements from trading agreements. Of course, these amendments relate to trade agreements, but I want to stress the complexity to highlight the fact that the principles should be set down in statute.

In recent years, UK trade, through these agreements, has been transformed to take into consideration much wider aspects than just tariffs, and that is part of the reason that consideration of investment protection is a domestic requirement, whereas other trade is an exclusive competence of the EU. It is why the Japan agreement with the EU, for the first time, includes a specific commitment to the Paris accord. The Japan agreement sets the highest standards—which we are now told by the Prime Minister are to be guaranteed—for labour, safety, environmental and consumer protection, as well as data protection, and it fully safeguards public services and has a dedicated chapter on sustainable development. Curiously, that does not seem to be a concession from the Government today, whereas it would be included in one of the continuity agreements that the EU has already agreed. However, that is not surprising because, with the growth in the wider aspects of trade in our relationships, with many more non-tariff measures in international trade agreements, the impact on domestic legislation and on wider public services is much greater.

If you go on to the EU website, you will find that there have been significant discussions with Australia on trade and sustainable development, taking into consideration provisions on trade and labour, multilateral environmental agreements, climate change, biodiversity and forests, and civil society groups. These are now core elements of how the European Union negotiates trade agreements. How did I know that these were part of the discussions with Australia? I knew because this information is made public. Transparency at the European Union level is such that I was able to find all the elements of the last round of discussions with Australia that took place in November. However, I looked in vain to find any similar background material that led to the mutual recognition agreement that the UK has signed with Australia.

It may well be that mutual recognition over wine will be very necessary, come Brexit; we will probably be enjoying Australian wine a lot more. But the point of making sure that trade agreements meet ethical standards and have a clear set of benchmarks, with a requirement on Ministers to report that they are carrying out these discussions, is now of fundamental importance. It is important because the continuity agreements may not all ensure continuity. I would not be surprised; as we have heard, the Government are seeking “as much continuity as possible”, which could mean there are likely to be some changes.

--- Later in debate ---

We want to ensure that economic growth, development and environmental protection go hand in hand. I hope that that reassures the House and I therefore ask the noble Lord to withdraw his amendment.

[Lord Purvis of Tweed]

I am grateful to the Minister. She may have got the author of Amendment 53 slightly mixed up in her thorough summing up, but at this time in the evening, and speaking as one who is looking forward to sampling a wee dram of one of our country’s best exports at the highest standards, the Minister may be forgiven.

There is a paradox at the heart of this issue. I mentioned the complexity of some of the trade deals that the Government seek to take forward with Mexico, Singapore and Japan. They are either in force or agreed but components of them require further discussion. That means that it is relevant, as the noble Baroness, Lady Hooper, and others have said, to bear in mind that they will be considering the future when we have asked for them to be rolled over.

To prove the point, we need to look at the only example that the Government have so far published: Switzerland. The Swiss themselves, although the Government have not said so, said explicitly that this agreement could serve as the basis for future economic trade relations. Interestingly—perhaps unhelpfully for the Government—they frame it as part of their “mind the gap” strategy on the basis of what they term the disorderly manner in which the UK may leave the European Union. We can rely on the Swiss to be frank and honest.

The paradox also exists that the rolled-over agreements will be on the basis of the existing EU regulations that the Government have committed to putting into law, which we could follow in three-year tranches under the Bill, again and again, but the Government have said that the justification for leaving the European Union is to change the way that we operate our trade policy. There is no surprise that when we are asking countries to roll over the trade agreement, but telling them at the same time that we are likely to want this agreement in place for us to have the flexibility to negotiate trade agreements based on separate regulations, they have been slightly resistant.

My amendment, and others in the group—I appreciate all the contributions from all the Members who have spoken—is an attempt to establish some basic principles and ethics. This is exactly the right moment to do that. Since 2010, the European Union has insisted on having sustainable development chapters in trade agreements. That has been positive for the world. It has been consistent in the contributions of colleagues who have tabled amendments that our argument is not just about concern that the UK would reduce its standards. One reason why we want to operate to the best standards is that if we are opening our markets to other countries, we do so to countries who are increasing their standards across the piece in environmental and labour law, and so on. It is an overt ambition of the Vietnam agreement that we use that clout as an economic market. That addresses the point of the noble Lord, Lord Kerr, that we should move standards up.

Finally, I am still scratching my head about all the Minister’s comments about how unnecessary it is to have something in the Bill because the Government have given their assurances. When it comes to workers’ rights and the environment, the Government have said time and again that we need not worry, so why did the Prime Minister say just today that she would provide Parliament with a guarantee that we would not erode protections for workers’ rights and the environment? That is our concern: that the Government can give an assurance but when it comes to putting something in legislation they pull back until they have to.

[Lord Judd]

There is one other argument: whatever the good will, whatever the intention and whatever the commitment of current Ministers, unless it is in the Bill, it does not bind their successors.

[Lord Purvis of Tweed]

I am most grateful to the noble Lord. He has been a leader in this regard. He will remember when I had the privilege of supporting other Members in taking through the 0.7% development Act. It is only when commitments given at a political level are enshrined in law that we can be reassured. That is our ambition with these amendments. However, I accept what the Minister has said at this stage. I shall not press the amendments. We will come later in the Bill to disputes and the other aspects of trade referred to by the Minister. For the moment, and on the basis of what the Minister has said, I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Trade Bill

Lord Purvis of Tweed Excerpts

Committee: 1st sitting (Hansarad): House of Lords
Monday 21st January 2019 Lords Chamber

[Baroness Taylor of Bolton (Lab)]

My Lords, I do not want to follow the two previous speakers by talking about what happens, deal or no deal, but I will say a word about the difficulties facing the House on this Bill and on other legislation before us. My noble friend mentioned the Constitution Committee, which issued a report on the Trade Bill in October last year. We did so because we wanted to get ahead of the game by advising the House on our approach to that Bill, as we had done on the EU withdrawal Bill in a way that I think was constructive for the whole House and, ultimately, helpful to the Government because our constructive criticisms meant that the Bill was more fit for purpose when it left this House.

We did that early because we knew of the weight of legislation that would come before us. We have tried to get the Government to give us more information on what legislation we will face and asked to see some things in draft, which we would have been willing to see in confidence. The House will have to face other legislation. We are already seeing arguments about the number of SIs and the difficulty of giving them proper scrutiny in the time available. Time is running out. The Constitution Committee—and, I think, the House as a whole—wants to be helpful in making sure that any necessary legislation is actually fit for purpose and will do what is expected of it, but also so that we as parliamentarians can fulfil our role and responsibility to give proper scrutiny.

I ask the Chief Whip and the Leader of the House to reconsider their approach to giving information to the House about what our future work programme will be. It will be extremely difficult to consider as we should all the legislation that will be before us, whatever the outcome of discussions in another place. I have been a member of the usual channels, albeit in the other House. I know that there are indicative timetables on all occasions—maybe more than one in this instance. If the House is to function properly and fulfil all its obligations, it needs greater information to come through the usual channels about what our programme will be and what responsibilities we will face to get the necessary legislation fit for purpose, and to allow us to fulfil our responsibilities.

[Lord Purvis of Tweed (LD)]

My Lords, the House will have seen that there are a number of amendments in my name, as well as those of other colleagues, on the Marshalled List for this Bill. We are taking our role very seriously by approaching this Bill in a constructive manner and, where there are opportunities to try to strengthen its measures, to reflect, as the noble Baroness, Lady Smith, said, the complex, deep and comprehensive trading relationships we have with countries and to take into consideration new standards of quality in provision, and ethics and values in trading. The amendment to the Motion should also be seen in that light.

The United Kingdom has trading arrangements with 104 countries by virtue of our membership of the EU. Thirty-five countries have arrangements in place, 47 partly in place and there are 22 agreements pending. A further five are being updated and there are ongoing negotiations with a further 21. All told, this represents 66% of all United Kingdom trade. That has brought down the average tariff for anyone who trades with United Kingdom to 2%. If there is no deal and no agreements are in place to secure the continuity of the trading relationship, under most favoured nation status under WTO rules trading with the United Kingdom would immediately become 5.7% more expensive. Tariffs would go up almost threefold. That would be a direct consequence of this Parliament not having the ability to scrutinise these arrangements.

As the noble Baroness, Lady Smith, and others have said, the Bill will also set the parameters of future trading relationships, in particular our relationships with the least-developed nations around the world. The countries that trade with us that have most at stake are not necessarily those such as Japan or Korea, which have deep and comprehensive trading agreements —although we have heard nothing from the Government about whether they are even in a position to roll those over legally—but the least-developed nations, which rely almost entirely in some sectors on their trading with the United Kingdom and are now being left in limbo.

It was deeply insulting for Dr Fox to make his statement about countries not lifting the heavy burden to trade with us when we have asked them to do so. For us as a House to give due consideration to such an important measure, which has been slipped at the Government insistence time and again, it is necessary for us to say that the Government now need to bring clarity on how many agreements are ready to be brought forward. On the Government’s calendar, there are fewer than 30 sitting days. How on earth will we be able to afford proper, full scrutiny of nearly 100 international agreements, on which our economy is dependent?

[Lord Campbell of Pittenweem (LD)]

My Lords, I can be very brief. The circumstances we are discussing are entirely of the Government’s making. They may now reflect on the fact that they opposed the amendment proposed by the noble Duke, the Duke of Wellington, which would have given them more flexibility in this matter. It is a great pity that they did not anticipate the difficulties they now face, which are entirely against the interests of the British people.

--- Later in debate ---

[Lord Stevenson of Balmacara (Lab)]

My Lords, we intend to exercise a considerable amount of scrutiny on the issues in Committee, but—as hinted at by the Chief Whip in his elegant speech, in which he kindly named me—we will also raise other points not specifically relating to the original narrow focus of the Bill but fitting more closely into the debate we have just had. I make no apology for that, because it is important that we probe the Government on their longer-term intentions and receive some assurances about where the particularities of this Bill fit in relation to that.

In moving Amendment 1, I shall speak also to Amendments 2, 3 and 100. This first group relates to the provisions in Clause 1(1) to set out the arrangements under which the Government can sign up to, and through regulations make changes to, the Agreement on Government Procurement. The GPA is an agreement between the EU and currently 18 countries to open up their public procurement markets, operating under a WTO framework. The Government intend that the UK should remain part of this system, becoming an independent member, and the Bill provides delegated powers to facilitate this, should it be required.

We have a number of concerns at that, some of which, in Amendment 1, are largely connected with the question of consultation about this process. The GPA itself is not a particularly interesting or informative document, but it does attempt to do something that I think all Members of the House would regard as a very good process and something we should support. It attempts to level the playing field for those who bid for and get government procurement contracts. It therefore makes it fairer, as all those involved in the GPA are able to bid for and secure work for their workforces, to earn money and to make profits out of that. In a sense it is an economic growth scheme founded on work that has been going on for some time trying to identify why relatively small numbers of companies bid for contracts offered by government under this system. I am sure the Minister, when she comes to respond, will say the UK is at the forefront of trying to open up its procedures; I know previous Ministers have also been concerned that we should have an open playing field and an open market here, so anything that can do that must be good and we would support that.

However, it is important that it is done in a process that reflects the wishes of the people more generally. It is therefore a little unfortunate that the Bill does not spell out the need for consultation not just among those directly involved, particularly local authorities and those groups, but also the Scottish Parliament, the Welsh Assembly and the Northern Ireland Assembly, when it is resumed, which have a considerable amount of contract work going forward. So this is a widely spread requirement that the GPA will open up for broader discussion and debate and, I hope, greater access to it; it is reciprocal in the sense that it should also make it available to UK companies. Before we make regulations, we should encourage much more consultation to make sure that the regulations are appropriate and that the benefits and interests of those concerned are taken into account.

Amendments 2 and 3 are largely taken from comments made in the report referred to in earlier debate on the Select Committee on the Constitution in its report in October on the Trade Bill, which raised a few issues on how the regulations will be framed and brought forward. The starting point is that these regulations will be enacted with powers under the provisions modifying retained direct EU legislation, but the committee pointed out that there was some variation in the wording. I do not wish to quote the committee directly, but the conclusion is that the Government were recommended to include in the Trade Bill the definitions of retained direct principal EU legislation and retained direct minor EU legislation as used in the European Union (Withdrawal) Act 2018, and these make the substance of our Amendment 2.

Amendment 3 follows the comment made in the next part of the report that the Bill’s Explanatory Note states:

“Parliamentary approval for ratifying the UK’s membership of the GPA will be sought separately from the powers in the Bill itself and will be done in accordance with the procedures set out in the Constitutional Reform and Governance Act 2010”.


However, there is some doubt about exactly what the sequencing of that should be and which particular regulations and powers would relate to which. The suggestion therefore made in our Amendment 3 is to restrict the timing and quantum of regulation to a point in the system where previous approval has been received from Parliament under the CRaG Act.

The final amendment relates to what type of regulation should be required. The comment in the Constitution Committee’s report is that the regulations should be subject to the affirmative procedure and our Amendment 100 would put that in clear prose on the face of the Bill. The Bill itself may have been due to be amended by the Government when they came to respond to the Constitution Committee report, but so far I have not seen those amendments so we have aided them by tabling them and I commend them to the Committee. I beg to move.

[Lord Purvis of Tweed]

My Lords, I support these amendments and will speak to Amendment 100, which is in my name and that of the noble Lord, Lord McNicol. The Committee will be grateful to the noble Lord, Lord Stevenson, for tabling these amendments and allowing us the opportunity of looking in a little more detail at some of the consequences of the Government’s intention to, in effect, join an institution by virtue of leaving it. It is not automatically as straightforward as the Government may suggest. My understanding is that the approval in principle that has been made for the UK to join the GPA in its own right, separate from being a member of the European Union, has a number of riders attached to it that we will discuss when we come to Amendment 4A in my name. But on the strength of the amendments tabled by the noble Lord, one core element of consultation will now be important.

I took the opportunity to look at the schedules to the Canadian annexes relating to its membership of the GPA. It was interesting. One annexe specifies the 82 federal bodies; there are further annexes for each of the federal provinces with the organisations, bodies or elements of government that are included at a provincial level and the exceptions that they all bring to the GPA agreement. There is no automatic consistency across Canada because it is a federal system. In many respects, it is a model of what the United Kingdom’s could be when it comes to procurement policy and procurement agencies.

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[Baroness Fairhead]

I reassert that there is no power in the Bill to make any changes to those GPA schedules. We can come on to future policy, but this Bill is about continuity and making sure they are put in for the UK as an independent member. As the noble Lord will be aware, there are very explicit protections for our National Health Service. They exist as an exemption in our existing GPA; with the schedules being carried over, they will continue to exist as an exemption. We are very clear it is for the UK to look after the NHS and we intend to continue to do that.

[Lord Purvis of Tweed]

I am grateful for the Minister’s explanations. The WTO at the end of November—I think this relates to what the Minister is saying—stated:

“The UK reiterated that it intends to update its proposed GPA schedule of commitments within three months of their coming into effect”.


So in effect that is a continuity commitment—it has given a future commitment for activity. We are trying to find out when this will come into effect—assuming there is a withdrawal agreement, this will be after the implementation period—and by what mechanism the Government will consult on the changes that they are likely to bring in in the future. As the noble Lord, Lord Lansley, said, some of the most important aspects will be the extent of what is covered and what can be procured, rather than necessarily the names of the bodies. That is of critical importance to agencies in Wales and Scotland when it comes to what can be opened up as a market for some of them.

[Baroness Fairhead]

I reiterate to your Lordships that this Bill, and the powers we are requesting, do not allow changes in our schedules to the GPA. Any future changes will need to be brought forward, and that is the subject of a different discussion. Going back to exactly what this clause is about, this discussion is about the addition of any changes to make an accurate description of the central government entities—and that alone. It is only Annexe 1; it is none of the other elements of the annexe in terms of the lists.

--- Later in debate ---

[Lord Purvis of Tweed]

Have the Government therefore discussed and agreed under what parliamentary procedures they are likely to bring these forward?

[Baroness Fairhead]

Again, we are talking not about the future but about continuity. When we discuss these clauses, I would ideally like to focus on what we need for continuity. We have time allocated to discuss future changes in Committee; I think that that will be the right time to discuss them.

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[Lord Livingston of Parkhead (Con)]

I echo the comments from my noble friends Lord Lansley and Lady Hooper, that of course the Bill, and in particular this part of it, is not about changing policy or procedure but about continuity. I think they are raising points to consider in future trade negotiations. On Amendment 5, it is important to recognise the more important part about SMEs rather than just SME procurement policy. I know that the Minister has done a lot of work in promoting SME trade around the world; the UK’s policy has been moving towards supporting SMEs, not just in UK procurement but around the world, taking them to see other Governments and incorporating them within the supply chains. The UK has already taken a lot of steps over a number of years. Indeed, in one of the negotiations the EU and the UK had on trade, we tried to incorporate an SME chapter to have more focus on understanding, across any business, that SMEs are important. It is important here, and it keeps on appearing as an issue.

It is fine for us to talk, as noble Lords have, about things we would like to see in future trade agreements with future countries in future ways. However—I know that the Minister will make the point again—we are replicating where we already are. It is right and appropriate to set up signposts for the future, and on SMEs, I am sure that the Minister will say how as a Government we have done a lot, and how we expect to do a lot more and be incorporated, not just within trade agreements but in trade support, and what we do in areas such as trade fairs and in leading many trade delegations. Indeed, a number of noble Lords do a great deal around the world to support UK SME trade, along with the trade department.

[Lord Purvis of Tweed]

My Lords, the noble Lord, Lord Livingston, has great experience in this regard, and I take note. I am grateful to the noble Lord, Lord Lansley, who has opened the floodgates to talking about the future. Part of the discussion about continuity is that none of these discussions which have been taking place over the last 18 months—I am sure that the Minister will correct me if I am wrong—will have been taken in a vacuum of considering what the UK’s position going forward may well be. Those countries that we have the agreements with have not been approached like that. The noble Lord and other Members of this House will have met many Members of Parliament, government officials and Ministers who do not simply look at continuity but look at what may well be the ethos in which their relationship will begin. Therefore, the line to draw is not an easy one, although I respect the noble Lord and I have great respect for the remarks of the noble Baroness, Lady Hooper.

--- Later in debate ---

Moved by

[Lord Purvis of Tweed]

4A: Clause 1, page 2, line 13, at end insert—
“( ) This section may not come into force until a Minister of the Crown has laid before each House of Parliament a statement on the ways in which the UK’s membership of the 1994 GPA would be affected if the House of Commons does not pass a resolution approving a withdrawal agreement and a framework for the future relationship for the purposes of section 13(1)(b) of the European Union (Withdrawal) Act 2018.”

[Lord Purvis of Tweed]

My Lords, first, I apologise to the Committee that this amendment was tabled on Friday, so colleagues did not have much notice. In many respects it was as a result of the Minister being open and meeting opposition parties and the discussion we had. No doubt we will find out in due course how persuasive I was on my amendment in that private meeting.

The purpose of the amendment is to probe and to seek information. As I mentioned earlier in Committee, the statement by the WTO on 27 November was very clear that there was agreement in principle for the UK’s final market access offer to take part in the GPA after exiting the European Union. The noble Baroness, Lady Neville-Rolfe, mentioned that Australia has announced that ratification of its GPA accession is under way. I think this is the last group of amendments on the GPA, so before we leave it I hope the Minister might be able to expand a little on the point that she made in response earlier, which, if I took it right—she or Hansard can correct me—was that Parliament could decide whether countries could join. What procedure do the Government think Parliament will have to bind the Government in a position on other countries acceding to the WTO GPA once we become a full member? If I got that wrong, no doubt she will correct me; those in the Box can try to assist also.

The agreement was made on the basis of the UK and the EU agreeing a withdrawal agreement and would come into effect after the end of the implementation period. As I mentioned earlier, the UK committed to update its proposed GPA schedule of commitments within three months of it coming into effect. The GPA regular meeting to clarify all those points is scheduled for the end of February this year. My desire is to seek from the Government the latest position. The very significant defeat of the withdrawal agreement in the other place suggests that there has been dialogue with the WTO on the impact on the 27 November decision. I cannot see any situation where there would not have been dialogue between our office in Geneva and our colleagues. It would be inconceivable if there had not been any follow-up discussions since the defeat in the House of Commons, so what are the implications for the UK of not entering into a withdrawal agreement? If there has been more recent discussion since 27 November or the position at the WTO has changed, I would be happy to receive that clarification and reassurance from the Minister, but if there is no deal, what are the implications for our membership? Also, what are the timings of the updated proposals for any schedules? Do they continue to be at all relevant?

The amendment is meant to be helpful, to allow the Government to give the Committee an update on the current position and clarify what our relationship with the GPA would be on the basis of there being no deal. On that basis, I hope that the Minister will be able to clarify and I beg to move.

[Baroness Fairhead]

My Lords, Clause 1 allows for the implementation of the UK’s independent accession to the GPA in domestic procurement legislation. The power is simple and is limited in its scope. I thank the noble Lord, Lord Purvis of Tweed, for the amendment and I understand that he seeks, through Amendment 4A, to receive a statement from a Minister on the impact of a no-deal exit from the EU on the GPA. I hope that I can offer some reassurances to the Committee on the progress made towards the UK’s accession to the GPA as an independent member

On 27 November, the UK’s independent market access offer to the GPA was approved in principle by the WTO GPA committee. We are glad that our international partners supported the UK’s continued participation in the GPA as we leave the EU and we look forward to finalising the UK’s continued participation shortly. This was the culmination of a great deal of work from officials and my ministerial colleagues both in my department and across Whitehall. The UK is now nearing the end of its process of accession to the GPA, which will ensure our independent membership and continuity of participation.

Every effort is being made across all parties to find a solution for a withdrawal agreement, and agreed implementation will mean that the GPA will take a similar approach to other international agreements and continue our participation during this time under the EU schedules. We are committed to working to provide continuity across all our existing trade agreements. In the unlikely event that no withdrawal agreement can be agreed, the UK’s accession to the GPA will continue to progress as we leave the EU.

I hope that I have reassured the noble Lord, Lord Purvis of Tweed, that continuity of market access for UK businesses is very much the Government’s priority, and that he will feel able to withdraw his amendment.

[Lord Purvis of Tweed]

The Minister said that if there is no withdrawal agreement our accession will “continue to progress”. That means that we would not be a member. Is that correct?

[Baroness Fairhead]

Perhaps it would be helpful if I gave the process for GPA accession. Schedules are laid down and there is an agreement in principle, which has been achieved. Then an invitation is issued to join as an independent member. That is what we are waiting for. The CRaG process will then begin. Then the Foreign Secretary, subject to CRaG going through, will sign an instrument of accession and 30 days after that our accession will be effective.

[Lord Purvis of Tweed]

I am grateful to the Minister. For my simple understanding, if there is no agreement, what is our status with the GPA on 30 March?

[Baroness Fairhead]

We will have to progress and become as quickly as possible an independent member of the GPA. That process will need to progress.

[Lord Purvis of Tweed]

So it is clear that we would not be a party to it. We would just be in the process of trying to progress our application. I am grateful for that clarification—or do I have the wrong end of the stick?

[Baroness Fairhead]

The process will continue and it will be our aim to be an independent member by the time we leave. That is our aim.

[Lord Purvis of Tweed]

Well, no doubt that is the aim. I was not asking what the aim was, but what the reality would be on 30 March. If we are currently a member because we are in the European Union and we leave the European Union without any agreement, we are mid-process. Even if we have received the invitation to join, we would not be a member.

[Baroness Fairhead]

Once we are given an invitation to join, our Foreign Secretary puts down an offer of accession, which has to go through the CRaG process in the normal way to make sure that that can take effect.

[Lord Purvis of Tweed]

I will not detain the Committee much longer but, from my understanding, it is clear that we will not be party to that agreement on the day after we leave if there is no deal. We would be in the process of seeking to join, and Parliament would have to approve that—and it may well happen. But, given the fact that the agreement is based on the principle that within three months of taking effect schedules would be updated, I am not entirely sure that that would be done immediately. That is of concern. If there is no deal, we would not be party to this very considerable agreement.

It is very important, if not today, for the Minister to give more information to the Committee about the implications of that for the many businesses who currently operate under the legal protection of that procurement agreement. In particular, what would that mean for agencies that are currently in mid-procurement or have signed procurement agreements with businesses? What is their status if we leave and we are not a party to the agreement? There are those with much greater legal knowledge than I have, but it is not reassuring in contract law to be outwith an international agreement despite the Government’s intention or aim to join it. That is simply not appropriate. If the Minister wishes to come back on that, I would be happy.

[Baroness Fairhead]

Plan A is to have a withdrawal agreement. There is then an implementation period and after that there is obviously more time to be able to effect this. In the very unlikely event of there being no deal—and the noble Lord will be aware of what is happening in the other place and the activity there—the Government are still confident that this will be in place and that we can become an independent member of the GPA by the time we leave. That is our intention and there is confidence that that can be achieved.

[Lord Purvis of Tweed]

We have to put that into the category of all of the other aims that Dr Liam Fox has had with regard to the other agreements we will come to later in Committee. I am grateful to the Minister, but she did not refer to what procedures Parliament would have to veto the accession of other countries once we were out—but perhaps she would wish to write to me and other members of the Committee on that.

[Baroness Fairhead]

I apologise. I should have addressed that question. The Government have to approve the accession of new members to the GPA. The accession member will be reviewed by the ITC, and Parliament has the right to scrutinise the implementing legislation.

[Lord Purvis of Tweed]

I am grateful for that clarification. I need to refer to Hansard, however, because I thought the Minister said that Parliament could decide. But this is a probing amendment and we now have more information. It has perhaps raised more questions in my mind than answered them, but on the basis of that, I beg leave to withdraw the amendment.

Amendment 4A withdrawn.

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[Lord Stevenson of Balmacara]

My Lords, this group of amendments plays back themes that we have already discussed in the first and second groups, so I will not spend much time on them.

Amendment 6 suggests that additional consultation with relevant stakeholders would make it easier to understand what the process is in the clause. Amendment 7 tries to pick up the point which was made in a number of committees of your Lordships’ House and was raised in the other place when this issue was discussed. It replaces “appropriate” in line 16 on page 2 with “necessary”, because it implies that it is not a judgment on a passive basis of what may be considered appropriate, which may be a variable, and it has a particular purpose. I hope the Minister will respond to that.

Amendment 11 again came from the Constitution Committee’s comment, although it has not been picked up elsewhere, that it would be helpful to insert a refining phrase into the documentation related to whether legislation that is retained EU law might be better defined. We touched on this already. There was a concession that, although it was not thought to be strictly necessary in an earlier phase, it was appropriate that that phrasing could be adopted. I wonder whether that will also be the case here. I look forward to hearing the debate. I beg to move.

[Lord Purvis of Tweed]

My Lords, I support these amendments. They make eminent sense. I shall speak also to Amendment 101 in this group which, in essence, suggests that in moving forward on these agreements the CRaG process is not the most appropriate; and that there is a better way forward by ensuring a more appropriate role for Parliament, and for Parliament to have greater knowledge of why an agreement should be approved. In many respects, this is now becoming fairly standard procedure in other countries, where the Government give much greater information to Parliament about why agreements should be ratified and where each House of Parliament has a greater role on the basis of scrutiny by committees. I am convinced that when it comes to complex, deep and comprehensive agreements, the CRaG process will be shown not to be the appropriate route, and we will need to decide another. This Bill is a very good basis from which to start on a more transparent and open process.

As I mentioned earlier in the debate on whether the House resolve itself into Committee, our agreements amount to 60% of UK trade and are therefore highly significant. The complexity of trade agreements now—they go far beyond simply a discussion of tariffs and the financial element, and have wider impacts on domestic policy, as the noble Lord, Lord Kerr, mentioned—means they require a different form of engagement with Parliament. It starts with information and with greater understanding of the consequences of these agreements. It will no longer be acceptable that agreements such as these can be made under traditional prerogative power for Parliament simply to approve without there being a more meaningful process. That is the intent behind the amendment. It is meant in a positive manner. I believe it is framed in a better way than CRaG, and I hope it will gain support.

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[Baroness Fairhead]

It was necessary for the noble Lord to ask about the word “absolutely”, but I object to being asked to calm down. I was trying to give your Lordships the clear advice that we have had because I thought that that was the advice and information they were seeking.

Given that any use of this Clause 2 power will already be subject to the affirmative resolution procedure, and given that we will lay the reports and our continuity free trade agreements will again be ratified by Parliament, Parliament will be fully appraised of the Government’s actions. I hope your Lordships will accept that that means that it will in fact already be fairly difficult for the Government to use the Clause 2 power without Parliament’s consent in one way or another.

I turn to Amendment 11. Clause 2 helps to facilitate a smooth transition by helping to implement the non-tariff obligations of continuity trade agreements. We realise that there are concerns about this power, so we have sought to constrain it as much as possible, and this has a number of parts. First, the power can be used to amend only UK primary legislation that is retained EU law and not any other UK legislation. Secondly, it is valid for only three years, and its lifetime can be extended only with agreement from both Houses of Parliament. We would seek to extend the powers only if it were considered necessary to ensure that our continuity agreements remained operable over time. Thirdly, the use of the power is subject to the affirmative resolution. Fourthly, the power will be used only in relation to continuity trade agreements, as we have made clear in the Explanatory Notes. Fifthly, to provide additional transparency for our programme as a whole, Clause 3 commits, in statute, the Government to providing reports on all continuity trade agreements, explaining our approach to delivering continuity in each case. In addition, I should make it clear to the Committee that regulations made under the Trade Bill will already comply with Section 7 of the European Union (Withdrawal) Act, so this part of the amendment is unnecessary.

On Amendment 101, tabled by the noble Lord, Lord Purvis of Tweed, I assure the Committee that our existing trade agreements have already been examined by Parliament as part of its regular scrutiny of EU business. Ratified free trade agreements have already been through the normal parliamentary scrutiny process for treaty ratification. Our continuity agreements will also go through the CRaG process. The noble Lord raised some concerns about that but it gives parliamentarians an opportunity to challenge them in the established manner. Any regulations made under the Clause 2 power will be introduced under the affirmative resolution, which will provide an opportunity for lengthy examination if we need to make a change to the law.

[Lord Purvis of Tweed]

No doubt this will be a point that we hear about again. That is obviously the case in relation to the existing agreements but those agreements have been through a democratic process in the European Parliament with British representation. British parliamentarians in the European Parliament were involved in setting the mandate and involved in the committees that scrutinised them in detail in advance of, and during, the negotiation process. The Government are proposing that, even starting with these continuity agreements, there will be no role at all and they are signalling that that is a satisfactory way forward. I do not think that it is satisfactory to have a process in the future involving less scrutiny of trade agreements than British MEPs have been involved in and for which this Parliament has subsequently been part of the ratification process.

[Baroness Fairhead]

It is important to separate the two. Essentially we are trying to replicate the existing trade agreements, which have already been subject to all the elements of scrutiny to which the noble Lord refers. However, the Bill does not cover future trade agreements, and we will have an opportunity to discuss the appropriate parliamentary scrutiny procedure for those. I have already said on the Floor of the House that I am happy to take all views. The ITC has made its suggestions and the Constitution Committee is looking at treaties. As the noble Baroness, Lady Young of Old Scone, mentioned earlier, their recommendations will be taken into account and we will come back with proposals. This is about replicating the effects of the existing continuity agreements from which our businesses already benefit.

--- Later in debate ---

[Lord Purvis of Tweed]

I am grateful for the Minister’s indulgence. I was also referring to existing agreements. For example, the only one so far that the Government have announced, with Switzerland, has accompanying it a free movement of people agreement, with Chapter 4 and Article 23 guaranteeing the right of movement of Swiss nationals for three months a year without any visa checks and so on. We would have no such ability. The proposal is at odds with the immigration White Paper—it is at odds with what the Government are saying. It raises questions about whether this simply is a straightforward replication. Under the free movement of people agreement, other elements have been discontinued in the existing arrangements and some elements are being continued. It is simply not good enough for the Government to state that these continuity agreements are a like-for-like cut and paste job, which is what the Government used to say. We now know that they are complex. We now know, for example—this was the case even with the Swiss agreement before December—that there are potential issues affecting other domestic law on immigration and migration which we would have no ability to scrutinise properly and separately if we used the CRaG process.

[Baroness Fairhead]

I simply say to the noble Lord that we are trying to ensure as much continuity as we possibly can. I hope that I did not say that these agreements would be easy; I said that some technical issues would need to be resolved. That is why the Government have committed to lay before the House detailed reports that talk about the changes and the impact of those changes. Both Houses of Parliament will have the ability to review them and they will be subject to the affirmative procedure. I do not stand before the Committee saying that this is all easy. It is complicated, but the Government have committed to laying these reports, with all the detail, before both Houses so that they have a chance to review the agreements.

Trade Bill

Lord Purvis of Tweed Excerpts

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

[Baroness Kramer]

This is not a scare story. I think the Government will be able to confirm the description that I have just given. I will make one, more general comment but I do not want to go on because of time. Different countries have different patterns of production and trade. Over the past 40 years the UK has integrated into a supply chain, just as the Northern Ireland economy has integrated across those borders. I cannot speak about the Swiss because I do not know that economy in detail. It requires detailed knowledge of the specific economies. We are part of a crochet, deeply embedded into it, just as many of the supply-chain countries are, with constant trading across borders within the EU.

Even under the Chequers proposal, rules of origin certificates are required on every good. I have talked before about the small company that sells party supplies across Europe. It would be £30 every time they sent out a shipment of cups, £30 for the plates, £30 for the paper napkins, £30 for the tablecloths—you can go on with those kinds of numbers and you quickly realise why for many companies this is a totally destructive additional cost, which changes the game completely. I ask the Minister: can we please have some comprehensive answers? Can we have the impact assessment of what this will do to our businesses as they are today—not the fictitious new businesses that may develop in the next 20 years which will abandon the kind of trade that I have described and specialise in something different, perhaps more along a Swiss pattern, but the real businesses that exist today, in which people have invested and by which people are employed?

[Lord Purvis of Tweed (LD)]

My noble friend may be interested to learn, on the Swiss example, that the regulations associated with all agricultural, tradeable and industrial goods are fully aligned with the European Union, and Switzerland is part of the Schengen agreement, so for the movement of people and those agricultural and trade goods there are no necessary checks.

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[Lord Purvis of Tweed]

My Lords, with all the travails afflicting Italy, they should be relieved that they can rely on the sunny optimism of the noble Lord, Lord True, to see them through in the future. I am perhaps in the same pickle as the noble Lord, Lord Browne of Ladyton, who could not find any common cause with his previous speaker, the noble Lord, Lord Hamilton. I shall take a trick out of his book and find something positive to say by congratulating the noble Baroness, Lady Meyer, on a wonderful maiden speech. I see she is back in her place.

It seemed easier a year ago, when Liam Fox suggested at the Conservative Party conference—reportedly to cheers from activists—that it would be a breeze to get all the existing EU trade agreements in place before Brexit in March. He said,

“believe me, we will have up to 40 ready for one second after midnight in March 2019”.

The Trade Secretary added:

“All these faint hearts saying we cannot do it—it’s absolute rubbish”.


I have never considered the noble Lord, Lord Tugendhat, to be a faint heart, but the term he used was “miraculous”. I think that that is more accurate. Perhaps Dr Fox, on the Marr programme 10 days ago, showed himself a little faint-hearted. When asked if he stood by what he said then, he replied:

“That remains our aim. Of course a lot of countries are waiting to see exactly what that relationship will be with the European Union”.


Well, they are not the only ones. However, the noble Lord, Lord Callanan, seemed to be back on track for the second-after-midnight position during Questions today.

As the noble Lord, Lord Browne, and others have said in this debate, we are expecting the Minister, in her summing up, to clarify how many countries have confirmed, in writing, to the UK Government that there is agreement in principle to ratify agreements before March 2019, and on what terms. If they have not, what are they asking of us? This information should be with the Government. If it is not, it is extremely alarming. If it is, the Government need to tell the House and the best opportunity would be for the Minister to do so when she sums up.

Time is nearly up. Businesses cannot wait any longer. I told the House before the Recess that our pharmaceutical industry was starting to stockpile because there was no clarity on what customs arrangements would be. As the industry has said, it is estimated to take 10 years for the technological side of any new customs arrangements to be in place and operational. The Government have rolled over and rubbed out one of their previous red lines, of being distinct and separate from the European Medicines Agency, thereby ultimately now accepting the jurisdiction of the European Court of Justice by taking its rules and having no say in the making of them. Irrationally, they cannot see the case for other regulatory bodies critical to UK trade. As the noble Lord, Lord Whitty, asked, why is this the case? What is the Government’s position as to why they are not in this Bill?

The trade association EURIS, which represents thousands of British businesses and £148 billion of UK trade, together with the independent UK Trade Policy Observatory, has published a survey just today, showing that 83% of British industrial product manufacturers support continued regulatory alignment in order to remain competitive in a global market. Respondents overwhelmingly say that they see no benefit in moving away from the EU regulatory system for industrial and manufactured products. The report states:

“UK companies told the survey that their supply chains have already been disrupted by post-referendum currency changes and that EU27 companies have started to select non-UK suppliers amidst the ongoing uncertainty of post-Brexit arrangements”.


It added:

“It is not a choice of exporting to Europe or the rest of the world. If we become less competitive in the EU we will be less competitive in other international markets. The UK Government’s target to develop stronger trading relationships with other non-EU countries is a positive move, but this can only be achieved if we maintain a strong alignment with EU regulations and supply chains”.


That is an industry response to the position of the noble Lord, Lord Lilley, who is not in his place for the winding-up speeches. Perhaps, as he did this afternoon, he has nipped out to be in Committee Room 9 to share a desk with Boris Johnson, if the BBC reporting is accurate. It is telling that one of the first to speak up for the Government left this debate to be with Jacob Rees-Mogg and Boris Johnson, when they said this afternoon that the Chequers position, which the Minister supports, is now worse than the status quo of staying in the European Union. I wonder what the Minister’s response to that will be.

The Bill is all about disruption, or the futile attempts to prevent or minimise it. The UK has a trading relationship or is in discussion for one, over and above WTO base rules, with 143 countries. In addition to the single market with the EU 27, we have an FTA with 36 countries, with a further 46 where the agreement is provisionally applied. Agreements with eight countries are pending ratification, and five are being updated. With a further 21 countries, negotiations are ongoing or paused, and we have had a role in all those discussions.

This cannot possibly, by any stretch of the imagination, be called a cut-and-paste job simply to put it into UK law. For the noble Lord, Lord Lilley, to indicate that that would be a straightforward process is a flight of fantasy. The agreements in place are also indefinite. I hope that the Minister will be able to answer this, too. Are we asking them to ratify an indefinite deal but also telling them that it will last for only three years unless we renew it? Can she confirm that she has stated that to all of our partners? What of those likely to mature into force after next March but during the implementation period?

It is now incumbent on the Government to publish what they have told each of those countries and let Parliament know. If we rollover those deals and then deviate from them—because we will be part of a common rulebook, as is the Government’s position, but from which the Government say we will be able to deviate—we will, by definition, deviate from all the agreements that we will have rolled over because we are adopting the existing EPA or FTA components. Parliament cannot possibly approve any of those agreements with confidence when we do not know what our customs or non-tariff regulations will be.

I take just one example: food and plant health imports from South Africa, where the Government say that we are having constructive discussions. If we are part of a common rulebook, importing a vegetable product from South Africa requires 13 sets of regulations out of 43, from warehousing to labelling and exports. All are under the jurisdiction of the CJEU, which will define whether they are being met. A third country will go to that court if it thinks that we are not satisfying those criteria. I hope that the Government can be clear on the relationship between their position on a common rulebook and their view on rolling over the agreements.

Some of the EPAs which we have said we shall be rolling over include ongoing discussions on services. Are we also committed to run a parallel process on those services, because they are currently part of the discussion that the EU is having on them? The SADC EPA agreement includes a joint council and proposals for structures and a framework. What is the Government’s position on rollover agreements and joint framework arrangements to discuss them?

A government statement recently promoted the rollover for the South African customs union agreement, representing 0.7% of all UK trade—less than one-quarter of what we export to Belgium. No. 10 spun that as the first new trade agreement that is now going to be in place for after Brexit. However, the SACU Ministers said that they welcomed the UK’s intention to avoid disruption for its trading partners as it withdraws from the European Union. If you study the fine print, it states that we are committed to having the agreement in place in the event of no deal. It is not even necessarily going to be in place if there is an agreement on the withdrawal.

This leads on to why Parliament needs to have an enhanced position in the scrutiny of it. Under the existing EU arrangements, a mandate would have been sought and secured by the Commission from the Council to enter any of these discussions and then published for Parliament to see. A public scoping exercise would have been carried out and published and Parliament would have been able to see that too. This Bill and the Government’s proposals, not just for the rollover agreements but also for other trade agreements, will afford this Parliament fewer opportunities to provide scrutiny than the European Parliament currently does to the Commission and the Council.

In her opening remarks, the Minister said that the Bill was about transparency and heralded consultation. As preparation for this debate, I was enthused to go on to the DIT website and complete the consultation for the United States. I filled it in as an individual business from Scotland, potentially concerned about the impact there may be for Scottish farmers on beef products et cetera. I was asked my age and ethnicity and where I lived; that was all fine. The first question was:

“What concerns, if any, do you have about a free trade agreement (or related trade talks) with the United States, and why?”


I filled in a simple response. It then asked:

“Which of these areas of a free trade agreement best describe the concerns that you have outlined above?”


I clicked: “Products. Standards, regulation and certification”, because of the concerns, mentioned by other noble Lords, about animal products, environmental regulations, health and safety et cetera. In order to provide feedback, as the Minister said, I was expecting to see what the current discussions were, what the terms were, and what was being outlined with America. What turned out to be the final question then came up, asking:

“Is there anything else that you would want to say about the UK’s future trade relationship with the United States?”


That was it. I do not think that that is sufficient consultation with the public, so I am submitting my comments in Hansard instead.

Why does this matter? It matters because one of the key elements of the discussions with the United States and with Europe is the equivalence of how we see and interpret these regulations. They are core to any of the discussions. Do we consider equivalence with the European Union, as the White Paper has said, or see equivalence in the United States’ regulations, as it has asked us to do? As the noble Baronesses, Lady McIntosh and Lady Jones, said, we will not be able to do both.

On issues concerning devolution, there needs to be much greater clarity—in paragraph 3 of Schedule 1 and paragraph 9 of Schedule 2—on devolved Ministers having to consult Ministers of the Crown. What happens if Ministers of the Crown disagree? When there are joint actions with devolved Administrations, UK Ministers cannot act alone without the approval of devolved Ministers. What if they refuse? We need to know more about the Government’s intentions for the operation of a UK single market. You cannot separate that from any of the trade agreements either.

The noble Baroness, Lady Neville-Rolfe, may have built up her hopes about Liam Fox stating that we can rely on passing this Bill because any future trade agreements will require primary legislation, so Parliament will have a much greater voice. I will quote from what Dr Fox actually told the House of Commons. He said that the Government would,

“bring forward a bespoke piece of primary legislation when required for each new future trade agreement that requires changes to legislation and where there are no existing powers”.—[Official Report, Commons, 16/7/18; col. 42.]

Therefore, by implication, if a new trade agreement does not need changes to legislation, or if those changes can be made using existing powers, Parliament is bypassed. That is simply not acceptable. This is why the International Chamber of Commerce told a meeting that I chaired last week that the Government are proposing a 19th-century approach for approving trade agreements in a 21st-century trading environment. That is why the Bill will have to be scrutinised and, most likely, amended in Committee.

A trade policy for the 21st century for a truly global Britain would be based on zero tariffs to our largest and nearest trading partners and be an open market to those who share our high values; based on combined regulations where we have a say in how they are made and shape them for the economic and new trade challenges and opportunities of the future, such as e-commerce and technology; and based on principles of openness and fairness, especially for the least-developed countries that we trade with. This was at the heart of the commission that I chaired with the Nigerian Trade Minister for the All-Party Group on Trade Out of Poverty. A truly global Britain would use that group of trade partners to help us negotiate free trade with partners further afield, with no trading cost to our businesses, to take advantage of the growth potential of non-EU countries. Therefore, a truly global Britain would see that the Bill necessarily has to be changed in order ultimately for us to meet those kinds of “Global Britain” requirements—which is to continue to be part of the European Union customs union and, if necessary, to give the British people the option of the right to make the decision that we remain a truly global Britain in a customs union based upon open principles, transparency and accountability. That is sorely lacking in what is currently offered.

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[Baroness Fairhead]

We are working with the devolved Administrations and stakeholders to ensure that this future scheme takes account of the interests of all producers from the regions of the UK. Finally, in relation to the rest of the world, we are ensuring that the continuity agreements that we transition will fully protect UK GIs.

I turn now to the points made by noble Lords about scrutiny of the use of the GPA. The noble Lords, Lord Hain and Lord Grantchester, said that there is no ability to scrutinise the GPA. I disagree, but let me clarify that. The power in Clause 1 enables changes to be made to domestic procurement regulations in order to reflect the UK’s independent membership rather than membership through the EU, but in order to exercise this power, our accession will first have to be accepted by Parliament through the CRaG procedure. That is why the power is subject to the negative procedure—because Parliament will have had the opportunity to scrutinise the GPA before the powers in Clause 1 are exercised. The schedules to that have already been shared with the ITC and we would expect CRaG by the end of 2018 or early 2019. In order for the UK to accede quickly to the GPA after ratification, this Bill is necessary to avoid any loss of legally guaranteed market access for UK businesses.

My noble friends Lord Hamilton of Epsom and Lord Risby asked about the GPA and whether we must accede or lose our access. The truth is that we must accede or we will lose our access, so to provide continuity for UK businesses, we are already working on a timeline which sees the UK accede to the GPA as an independent member in time for EU exit, regardless of whether we have a deal.

I turn to readiness and the question of no deal, which was raised by many noble Lords, including the noble Lords, Lord Butler of Brockwell, Lord Taverne and Lord Purvis of Tweed. I have to confirm that it is absolutely not the Government’s plan to leave without a deal. Our plan A is to secure an agreement with the implementation period. We are confident of securing continuity for our existing trade agreements and indeed securing agreements to the implementation period under the draft withdrawal agreement. A number of noble Lords talked about resources. What I can say in response to my noble friends Lady Hooper, Lord Horam and Lord Astor of Hever is that the Department for International Trade is already recruiting staff to support the trade negotiations. We have recruited approximately 600 staff, who have made significant progress. I hope that that and the fact that we are closely focused on this issue meets the appeal of noble Lords to get on with it.

However, we need to continue to prepare for a range of potential scenarios if we do not reach such an agreement with the EU. In so doing, we will seek to bring into force the bilateral agreements with partner countries from day one. The powers in this Bill are an essential element in that process. We are actively engaged with partner countries. As one noble Lord mentioned, my honourable friend George Hollingbery, the Minister for Trade Policy, has said that it is clearly a challenge. There is no doubt that the timing is very tight but it is still our aim to maintain the effect of those agreements even if there is no deal on 29 March 2019.

[Lord Purvis of Tweed]

I am grateful to the Minister for giving way. The noble Lord, Lord Callanan, told the Chamber in response to my Question to him earlier today that it was still the Government’s position that they will all be in place one second after midnight on 29 March 2019, as the Secretary of State Dr Fox has already said. The Minister has said that this is a challenging timetable but that it is still the Government’s aim. Will she inform the House how many countries have currently stated to the Government in writing that they are willing to accede to that timetable? There will be a long gap between the Second Reading and the Committee stage of this Bill; in fact, we do not know when the Committee stage is going to be taken. Given that, between now and then will she also commit to providing written information in the Library on whether any of those commitments are provided to the Government between now and the Committee stage?

G7 Summit and Future Trade Relations

Lord Purvis of Tweed Excerpts

Thursday 21st June 2018 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, we are indebted to the noble Baroness, Lady McIntosh, for bringing this Topical Question to the Chamber to elicit the Government’s position so fresh after the very worrying G7 summit in Quebec. We are grateful to her. I will address some of my points to the very pertinent issues she mentioned. I know that it is a gentle convention in the House that the Front-Bench speakers reflect on contributions made by the Back Benches. I can do that very briefly by saying that I agreed almost entirely with the contribution from the noble Lord, Lord Whitty.

The point that the noble Baroness, Lady McIntosh, mentioned that is probably the most troubling of all is that we see trends in global trade and global growth that are a worry. In a recent meeting, representatives of the World Bank were very clear that they are concerned that what has been happening over the past decade—a global growth trend that was uniform across the planet—is now under threat. We start to see this particularly with what is likely to be a looming trade war, where leaders’ pride and nation states’ interests collide. That will mean that many citizens and consumers will be worse off. I represented a constituency that is still living with the impact of a trade war in the 1990s with high tariffs on the textile industry. Trade wars impact people’s livelihoods and their futures. They are not to be taken lightly.

The Minister will know that for a number of months I have been concerned about the WTO’s capacity to address some of these issues. I was at the WTO ministerial conference in Buenos Aires in December. It failed to agree a communiqué as the US delegation left early. I was not entirely surprised, therefore, with the US’s approach in Quebec. I had the benefit of being in Washington last week, which I will return to a little later. It was fascinating meeting the Canadian ambassador, discussing with the US trade envoy’s office to Europe the very pertinent issues that the noble Baroness, Lady McIntosh, raised.

I also agreed with the noble Baroness in raising issues relating not just to tariffs. In many respects, the debate about non-tariff measures is as important as that about tariffs. While such measures serve highly legitimate policy goals such as protection of human health, animal and plant life and the environment, they make it more difficult for SMEs and small farmers in smaller nations and least-developed countries to compete effectively in the international markets.

According to the WTO, there has been a phenomenal increase in the number of rules and regulations affecting international trade. While most favoured-nation tariffs have declined from an average of 5% to 6% to below 3% to 4% between 1995 and 2015, the number of non-tariff measures rose from more than 1,500 in the mid-2000s to more than 2,500 in 2015. It was the UK’s desire in the 1980s to avoid what was known to be the trend of growth in non-tariff measures and to reduce the cost and burden on business and exporters that led us to support a single trading market in goods and services. No doubt we will return to Brexit in other debates in the House.

It is a simple fact that smaller nations and least-developed countries lack the financial and technical resources to develop effective policies, regulations and institutions to address non-tariff measures such as technical barriers to trade and vital sanitary measures. UNCTAD and other bodies are doing sterling work to raise issues regarding the burdens on least-developed countries. Those who lose out in trade wars between large nations are not just consumers in those nations; there is a considerable impact also on smaller trading nations especially on a regional basis. In many respects, they are the collateral damage of such trade wars. It is therefore no surprise that there is considerable concern among members of networks established for the very purpose of reducing trade barriers, such as Mercosur, the Pacific Alliance, within the Maghreb, SADC and ASEAN, all of which are focused on reducing non-trade measures, reducing time and cost of border crossings, reducing customs costs and aligning and then harmonising regulations. There is deep concern across all those networks that the WTO is in many respects hampered by the position of the United States and not assisted by the strategic position of China, with its alternative approach that we are starting to see in the Shanghai Cooperation Organisation.

The UK Government must have a clear position. We would have needed a clear position regardless of Brexit but, with it, the Government need to be clearer than ever. As we embark on the first trade negotiations in history to create trading barriers rather than reduce them, the Government need to be even clearer.

This might have been an easier situation to manage had it not been for the latest position of the United States. There is no doubt that the White House has a transactional, nation-state-first trade policy that is not likely to change in the foreseeable future. If we add to this the very clear position of our non-EU trading partners that they will need to know what arrangements the UK enters into with the EU before they agree positions with us, we see that this is not a conducive trading environment in which to be entering a new, third-country relationship with the biggest single trading bloc.

The position of the US was made clear to me on my visit there last week. As the noble Lord, Lord Whitty, said, it cannot be denied that there is no universal support for free trade anywhere within the United States and certainly within Congress. It is perhaps possible to re-engage in the TTIP discussions; it is perhaps possible to rescue from the embers the NAFTA relationship within the United States; and some form of relationship with the new progressive trade partnership being formed within Asia and the Pacific may well be possible, but it cannot be guaranteed—nor can we base our future trading relationship with the US on those assumptions. It cannot necessarily be taken for granted that the US Congress would be satisfied with a UK FTA. I met delegations in both the Senate and the House. Both Republicans and Democrats made it clear that they would not support a free trade agreement. They would support trading relations and look at areas where barriers could be reduced, but what they would ask for would be broadly unpalatable to us. It would be helpful to get a clear understanding of the latest position of our trading and investment working group with respect to the United States.

I met a Congressman who addressed the point mentioned by the noble Lord, Lord Whitty: the dichotomy of where we are. Republican Congressman Joe Wilson from South Carolina has a massive Trump-supporting base in his district, but he also represents a BMW factory that employs 10,000 people there. Any X range of BMW that you see on the streets of London is made in his district in the United States. He understands how interrelated are global supply chains in trade, but the White House has a position which is absolutely contrary to it. That is likely to be a contradictory position that we see going forward.

We know that the policy of the White House, with Ambassador Lighthizer and adviser Navarro, is for disruption, uncertainty and unpredictability, but we need to address the fact that it is not directed towards adversaries only; it is directed also towards allies and trading partners. That it is the President’s clear position to offend, insult and undermine a key ally to the United Kingdom in the Canadian Prime Minister should be a clear warning signal. Ultimately, it means that when we consider our approach to trade post Brexit—if it happens—we will need to address much more deeply the type of trading relationships that we have and not just what goods and services are included in them.

This Parliament will need a much clearer position on setting a government mandate, to enhance scrutiny arrangements and to have deeper means of ratification than those currently provided by the Government. I thank the noble Baroness, Lady McIntosh, for bringing these issues to the House. I know that they will set the cloth against which we look at our trade policies in a post-Brexit world. I look forward to hearing what the Minister has to say in response.

--- Later in debate ---

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

My Lords, I, too, thank my noble friend Lady McIntosh of Pickering for her Question. I thank her and other noble Lords for their rich and probing challenges. The noble Lords, Lord Whitty, Lord Stevenson and Lord Purvis, raised the challenges of the multilateral trading system, and I think we can all see that those challenges are there. As we said, the G7 was one of the most tense of recent years. My right honourable friend the Prime Minister made it clear that the discussions were difficult. But we also have to see that these meetings provide opportunities for close allies to discuss many things apart from trade, such as empowering women, security and sustainability, in particular of the ocean environment. It should be recognised that they have that purpose as well.

However, the debate today is on trade and that is where I will focus. I shall touch on the summit at the beginning. The agreed communiqué had two parts. The first was, indeed, about the importance of a rules-based international trading system and the continued fight against protectionism. The second strand was a trilateral discussion between the US, the EU and Japan, talking about level playing fields, industrial subsidies, inadequate protection of IP and non-market oriented policies. As noble Lords have highlighted, the communiqué was later dismissed by the President of the United States, but let me be very clear that the commitment of the UK to the contents of the communiqué and to the other non-US members of the G7 remains unchanged. Furthermore, there is a determination to work constructively with all parties, including the US, on that trilateral dialogue between the US, the EU and Japan.

As the noble Baroness, Lady McIntosh, pointed out, the summit took place against the backdrop of the US decision to raise tariffs on steel. We are allies—close allies—but where we disagree, we will say so. We disagree with these tariffs. We have made clear, and continue to make clear to the US Government at the highest levels, the importance of UK steel products to US businesses and defence projects. We will continue to work with the EU and the US Administration to try to achieve a permanent exemption because, as the closest allies, we think we should be permanently and fully exempt.

That said, we have proceeded with our complaint at the WTO. The noble Baroness asked for some information about the timing of that and where we were. On 1 June, through the Commission, we launched the case at the WTO. These typically last around two to three years. However, we are able to impose countermeasures relatively immediately. Those countermeasures were announced on 18 May and can be applied 30 days after that. We can also conduct studies and investigations, one of which is under way on steel, to look at whether any safeguarding is needed to protect our industry. That is what we are doing.

We have been very clear that we do not want a tit-for-tat escalation. The important thing here is to focus on the global overproduction of steel, and a multilateral approach is the right way to do it. The noble Lord, Lord Purvis, spoke of his concern about a trade war. It is a real concern and we need to work multilaterally to find a solution. Free trade matters. I take the point made by the noble Lord, Lord Purvis, about his visit to the US. Free trade is challenged at the moment in the US and elsewhere but we should look at what it has achieved: 1 billion people taken out of poverty. In the 1990s per capita income in developing countries grew three times faster if they opened their borders. In the developed world, the OECD found that a 10 percentage point increase in trade exposure led to a 4% rise in income per capita. It is good for consumers and good for choice.

In addition, multilateral systems allow us to bring down the cost of trade. I take the point made by the noble Lord, Lord Whitty, about some stalling in multilateral capability in the WTO but there is progress; for example, the recent entry into force of the Trade Facilitation Agreement. Once fully implemented, it will improve global trade by £70 billion. Yes, it has stalled in many areas. The noble Lord, Lord Stevenson, also made the point that the CPTPP was signed recently. That was 11 disparate countries. So there is progress.

The challenge for us is that we need to have free trade and a multilateral system that works for all. There has been a sense that it works on a broad basis but the costs and impact are local and immediate. That requires a much more sophisticated, joined- up reaction, both domestically and internationally. Domestically, we are making sure that the industrial strategy focuses on bringing skills and people so that we have skilled jobs all around the country, bringing a future for the young people of this country. We are linking that up with the export strategy that is coming down the track. We are trying to look at regional development as well.

The noble Lord, Lord Stevenson, mentioned the importance of trade for development. I am absolutely clear that trade helps not just prosperity but security and sustainability. I hope the noble Lord will be pleased to hear that the DIT has recently taken responsibility in government for leading the Prosperity Fund, aimed at development but with trade as one of its focal points.

Concern was expressed about leaving the EU. I will touch on some of the general numbers on our export performance that the noble Baroness, Lady McIntosh, gave. I think she gave the monthly numbers. I tend to look at the annual numbers because there can be volatility. On an annualised basis, exports grew by 7% and the deficit reduced. Historically we have seen a reduction in the amount of exports to the EU. We are likely to see non-EU trade growing faster over the long term because that is where faster growth is expected. As we leave the EU, we are clear that we need to grow and build a strong and ambitious relationship with our EU allies as well as countries outside the EU.

The noble Baroness, Lady McIntosh, raised rules of origin. Clearly, those are part of the negotiations. I agree they have a particular effect on food and drink. It is too early to say exactly what those will be. It is part of the technical way that we will have to adjust some of the agreements that we have with third countries, but we recognise that this is an issue that needs to be given serious attention and that is what we are doing.

A number of noble Lords raised concerns about the WTO and how it is working. We know it is not perfect but we believe the best way to manage it is from within. That is why I am happy to say that my right honourable friend the Secretary of State is in Geneva today with the WTO, meeting ambassadors there, including our ambassador to the WTO, making the case for free trade and a multilateralism that works for all.

As we exit the EU, our primary focus is on continuity, to make sure that there is no cliff edge for our businesses and the businesses of the EU. We are also working in parallel with the other parties that we are party to agreements with because of our membership with the EU. We fully understand the importance of EPAs with developing countries, which the noble Lord, Lord Purvis, talked about. I agree that non-tariff barriers are as much of an impediment as tariff barriers to their coming up and developing. That is clearly going to be a part of what we are making sure that we follow over.

When it comes to the TRA and the dispute resolution mechanism that we will have, we believe in free trade but we need to make sure that we have the powers to protect our consumers and our businesses. That is why we are working to set up the TRA—Trade Remedies Authority—before we leave the EU to ensure that we can continue to provide a safety net. We have taken a number of steps already, including a ministerial direction on 29 March 2018 to begin critical spend on the establishment of it prior to Royal Assent on the Trade Bill. We have begun recruitment, including of the chair and specialist roles. On 10 May 2018 we announced the location: Reading. Our aim is that the TRA will have a full suite of remedies at its disposal.

A number of noble Lords talked about the relationship with the US. Clearly, the US’s approach to free trade has raised some concerns. We have a commitment from the highest level to enter into preparatory discussions with us. Noble Lords will be aware that we cannot negotiate but we have a trade and investment working group. It has met three times already, focusing on SMEs and science and technology. We also have an official-led financial regulatory working group. We will be proceeding on that and there is active progression of that preparation.

[Lord Purvis of Tweed]

We are grateful for the Minister’s very clear response to the debate. While I was in Washington last week it was apparent that there is some lack of transparency over what issues are discussed and the scope of the working group’s discussions. Will the Government lay in the Library some more information about the meetings, their scope and the meetings that are planned for this trade working group?

[Baroness Fairhead]

I believe we give what we can. We obviously have to agree it with the US, but I will look into it and see what we can do in that context.

Environmental, human and labour standards do not have to come at the expense of future trade agreements, and we will be looking at all options in future trade agreements. The noble Lord, Lord Stevenson, made some very clear points about human rights. It is a very complicated area and I think I would prefer to write to him.

This is a challenging time for the multilateral trading system. However, we will continue to be a strong believer in the multilateral system in championing the needs of developing countries, and a strong voice that wants the lives of citizens all around our country and in the world to be strengthened so that we have a more prosperous, secure and sustainable world.

UK-US Trade: Iran Sanctions

Lord Purvis of Tweed Excerpts

Wednesday 16th May 2018 Lords Chamber

[Baroness Fairhead]

We are actively providing advice through our team on the ground in Iran and through our sector and other teams in DIT. We are trying to make sure that any business that is non-sanctioned is able to flow. We would say that all businesses have to take into account the commercial, legal and financing risks in any transaction, and clearly these sanctions make that difficult. We are trying to work with the US. The noble Lord is right that there was persistent lobbying but the sanctions were still imposed. That is why we are working with our EU colleagues and directly with both the US and the EU to try to protect our businesses and encourage the US to allow us to maintain our economic ties, because we think that they are important.

[Lord Purvis of Tweed (LD)]

My Lords, the Government have lauded the US-UK Trade and Investment Working Group for the progress that has been made in the relationship. Can the Minister confirm that this issue in particular has been raised at the trade working group, because it would be utterly unacceptable for UK businesses to lose US market access for carrying out perfectly legal trading relationships under an international agreement to which the UK as a sovereign entity has signed up? Can she further confirm that the arrangements being put in place potentially to shield banking transactions, which are critical to the City of London, will carry on post Brexit next March?

[Baroness Fairhead]

The conversations we have had with our US colleagues have been very significant. I would say that we do have a deep and strong relationship with the Americans, but when we disagree with them, we say so. There has not been a meeting of the US-UK Trade and Investment Working Group since the sanctions were imposed, so there has been no opportunity for discussion through that group. However, we are making representations through my right honourable friends the Prime Minister, the Foreign Secretary and the Chancellor and we are ensuring that those points are being heard. On banking, post Brexit, we are clearly trying to ensure that we have as fluid a border as possible, so we are trying to make sure that our financial services industry, which is critical to the economy and the country, is protected as much as possible.

Secretary of State for International Trade: Visits

Lord Purvis of Tweed Excerpts

Monday 30th April 2018 Lords Chamber

[Baroness Fairhead]

New Zealand is indeed one of the countries that we hope to have an early free trade agreement with. It is one of the nations with which we have trade and investment working groups. We have 14 of those and 21 countries are participating. It is clear that they are engaging with us. We are working with them very actively and they are looking to work with us on areas and sectors. The noble Lord shakes his head but I know that these trade and investment working groups are having an effect and people are starting to focus on specific areas where we will be able to start negotiating. As the noble Lord knows, we are unable to negotiate any future free trade agreements while we remain a member of the EU.

[Lord Purvis of Tweed (LD)]

My Lords, last month’s official data from the EU showed that UK exports to non-EU countries fell by 8% over the last year; to the EU they grew by 6%. The Government’s position to turn this around is that there will be trade deals with non-EU countries that we are not currently part of in the EU in operation immediately after the Brexit period. However, her predecessor said in an interview with the Guardian on Friday that,

“it will take three to five years. It won’t happen overnight and in the interim companies might think twice about investing and consumers might decide they want to be more cautious”.


Is the noble Lord, Lord Price, right?

[Baroness Fairhead]

Exports grew overall by more than 10% last year so there has been growth. Regarding how long it will take a free trade agreement to come into effect, we will be able to negotiate future free trade agreements from March next year as part of the implementation period. We will be able to negotiate, sign and ratify without implementing. There are a whole range of free trade agreements that can take anything from a year to multiple years. There are also many other types of cooperation that we are looking at, as noble Lords will be aware, such as joint trade reviews, economic partnerships and mutual recognition agreements. There are a whole series of trade arrangements we can have with other countries and we are looking at those. Our drive will be what is in the best interest overall of the UK and UK business.

Worldwide Free Trade

Lord Purvis of Tweed Excerpts

Monday 16th April 2018 Lords Chamber

[Baroness Fairhead]

Let me take that in two parts. On the relationship with the EU, it will clearly remain a very important trading partner for us. We need to make sure that we have as frictionless an environment with the EU as we possibly can. We believe that the freedom to be able to make free trade agreements with other countries will allow us to have the trading agreements in the future that can boost our trade further. Regarding those qualitative assessments that we made as part of the impact assessment, we looked at one report from Head and Mayer which had looked at 159 academic reports about the benefits of FTAs. All I can say is that from that information, while it depends on the scale, the relationship and the supply side, the median increase is around 32% from a free trade agreement.

[Lord Purvis of Tweed (LD)]

My Lords, the official international trade in goods statistics, which were published on Friday, show that in the year to February there was a growth of 1.7% in the EU’s trade with the rest of the world. Worryingly, those same statistics show a decline of 8% in UK trade with the rest of the world. As we embark on the first trade agreement in history with the EU 27 which will make trade harder rather than easier, if this House votes for the UK to remain part of the customs union with the EU—which, incidentally, saw a growth in our exports of 6% over the same period—we will be acting in the national economic and strategic interests of our country.

[Baroness Fairhead]

If we look at the exports total for the UK last year, it increased by over 11%. We therefore have seen export growth. We believe that the EU has to remain an ongoing and really important trading partner. We are working with trade and investment working groups across a number of countries—14 working groups involving 21 countries—in which we are exploring where we can improve trade further. As I said earlier, the CHOGM this week is particularly important because, in many ways, the Commonwealth is an area where we have underinvested in trading relationships. This is a great opportunity for all members of the Commonwealth to change that.