Trade Bill

Lord Whitty Excerpts

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

[Baroness McIntosh of Pickering]

I congratulate the noble Lord, Lord Grantchester—on what I think might be his birthday—on moving the amendment. I repeat my concerns relating to the earlier group of amendments, not just for the hill farmers of Wales but for the hill farmers of the north of England, including North Yorkshire, County Durham and Northumbria, and Scotland, as well as other parts of the United Kingdom. The noble Lord raised his concerns in an interesting way but I have to echo my noble friend Lady Byford’s concerns, which she so ably addressed. It would be helpful for the Minister to explain whether our understanding is correct and what the relationship is between this amendment and the earlier tariffs we discussed, and whether, if we were to introduce the zero-rate tariff, this would equally be of concern with this amendment.

[Lord Whitty (Lab)]

My Lords, I would like to put in a brief word here. The noble Baroness, Lady Byford, will recall that, towards the end of the time when she and I were crossing swords on agricultural policy, the issue of agricultural trade multilaterally fell down in the Doha round precisely on this issue of tariff-rate quotas. The amendment of my noble friend Lord Grantchester—who was also present on those occasions—is a probing amendment to see how we are going to deal with the situation for imports.

Our exports, to which the noble Baronesses, Lady Byford and Lady McIntosh, referred, are also vitally important, but we need to have a line from the Government in relation to the existing tariff quotas for European imports with a number of our trading partners. It is not necessarily in the interests of those trading partners to preserve what is de facto the UK share of imports from them to the whole of the EU. Some of them are fly enough to actually notice that their bargaining position in relation to the UK on its own might be slightly greater than their bargaining position in relation to the EU as a whole. It is therefore not entirely surprising that, in these existing potential rollover treaties, there might be some attempt to change the amount of imports that the tariff quota allows into the UK. That itself, of course, is potentially a danger to our domestic production in many of these areas. However, assuming that it will be an easy task simply to roll over all of these existing EU-wide treaties is one of the features of the Government’s complacency.

Of course, the issue becomes even more important when rather bigger agricultural producers might actually be approached by us, or approach us, for a free trade agreement down the line, when their interests will undoubtedly be to press for very high import quotas— from Brazil, America or Australia—in any potential free trade agreement that we are seeking to make primarily on behalf of our manufacturing and service sectors. It might well be something on which we need to put down a marker now.

The Government might have some difficulty with the wording of my noble friend’s amendment, but we need to know what their position is on this. Otherwise, we will be presented with a whole series of treaties that incorporate the existing division, which might not be to our benefit and, more importantly, will set a precedent for how we are going to deal with future treaties and agricultural trade within that context.

[Baroness Fairhead]

My Lords, I thank the noble Lords, Lord Grantchester and Lord Purvis, for tabling Amendments 34 and 54 and for giving this House the opportunity to discuss this important area. I entirely agree with the concerns that have been raised, particularly on areas such as agricultural products, affecting farmers and rural areas, which were addressed by the noble Lord, Lord Grantchester, and my noble friends Lady Byford and Lady McIntosh. I would like to take these two amendments together, because there is a fair amount of overlap in the questions that each amendment raises. I would also like to do so in some detail, because they cover a very technical area and I hope that my clarification will help—that is the aim of what I am trying to do.

We have tariff-rate quotas both in the existing EU FTAs that we are working to roll over and in our WTO schedules. A different approach is required for each, which I am happy to explain. In doing so, I will also address each amendment first as it refers to the EU FTAs and then as it relates to the WTO TRQs. I will first address TRQs in EU free trade agreements. The EU has been clear that it will not revise its free trade agreements with third countries as a result of the UK exiting the EU. This is because usage of those quotas tends to be low. The UK is therefore engaging directly with our trading partners to agree new TRQs to apply under the continuity agreements, and we are making good progress. We are agreeing TRQs for the same products at levels that protect existing trade flows. We will continue to report fully to Parliament on the TRQs agreed as part of our Clauses 3 and 5 reports on changes to the agreements. Amendment 34 would therefore be impossible to implement in respect of EU FTAs, as there is no division with the EU to refer back to.

On Amendment 54, as I mentioned, the Government have already committed to lay before Parliament for each transitional FTA a report that sets out any substantial changes to trade-related matters. These reports will include details of changes to the TRQs. Let me assure noble Lords that the reports will also include an indication of the impacts associated with the changes to the TRQs. However, we would not expect there to be substantial business impacts from changes to TRQs, as we are maintaining TRQs for the same products sized at a level which protects existing trade flows.

On the EU Council decision relating to the modification of TRQs, to which the noble Lord, Lord Purvis, referred, I am happy to write to the noble Lord on that point and I will put a letter in the Library.

I turn now to the TRQs found in our WTO schedules. Here, the Government have taken quite a number of steps, and in addressing these amendments I believe it would be of value to noble Lords if I walked through them. To prepare to leave the EU, the United Kingdom has had to establish its own schedules of goods and services at the WTO. In doing so, we have taken the approach that we should maintain our current obligations as far as possible. This was announced to both Houses through Written Ministerial Statements on 5 December 2016. While much of our goods schedule is directly replicable—for example, our bound tariff rates—some parts, such as tariff-rate quotas, are not. Quotas are not directly replicable because they are a quantity coming into the EU 28, as your Lordships will know, and if they were exactly replicated this would lead to an expansion of market access into both the EU and the UK. This is why the Government agreed a co-operative approach with the EU to apportion WTO tariff-rate quotas, based on historic trade flows. This was agreed in October 2017 and communicated publicly through a joint letter by the UK and EU ambassadors to the WTO.

The UK schedule was finalised in July 2018. We sent it to the WTO on 19 July, and once again both Houses were informed through Written Ministerial Statements. Our schedule then began its formal three-month certification period on 24 July. That period was completed on 24 October. While most WTO members agreed with our approach, as I and the Secretary of State for International Trade once again explained through Written Ministerial Statements laid on 25 October, some WTO members have argued that their market access has been reduced by our approach to TRQs. This is why we announced the Government’s intention to enter GATT Article XXVIII negotiations on TRQs at the WTO to establish whether the apportionment we have proposed is a fair representation of the UK’s current rights and obligations.

Between October and 21 December, when the Government formally launched the Article XXVIII process, work was completed to prepare the necessary trade data and the notification for our Article XXVIII process to begin. We are now in the first phase of this, a 90-day notification period that lasts until 21 March 2019, during which WTO members can examine our TRQ trade data and register an interest in negotiating with us. After this, the UK will examine those claims and determine with whom and on which commodities we will be negotiating under Article XXVIII.

I should also mention briefly the EU’s corresponding transition at the WTO. The EU has launched its own Article XXVIII process, as it, of course, apportioned the EU 28 TRQs with the United Kingdom. It formally started this on 22 July 2018. The reason it was able to do so before the UK is because it did not have to establish a new schedule of its own. Our process and that of the EU are legally distinct and are being pursued separately. However, they are linked in that they derive from the same initial obligation, and WTO partners will need to be convinced that their access to the EU 27 and UK markets will be no less favourable once both processes are complete. So our processes are separate but complementary.