Duties of Customs

Peter Dowd Excerpts

Ways and Means resolution: House of Commons
Monday 20th November 2017 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

At last, we have the Ways and Means motion before the House. The enigmatic—some might say pretty puzzling—part of it all is that it does not have much to say practically about taxation, cross-borders or trade. That is somewhat perplexing given that the title of the Bill is the Taxation (Cross-border Trade) Bill. The only word in the title that in any way reflects this subject is the word “Bill”.

I wait with bated breath for the customs Bill, which I trust will have—hope springs eternal—more substance to it. Perhaps we will see more of the same powers to alter primary legislation going into Ministers’ back pockets. However, if this Ways and Means motion is the warm-up act to the customs Bill, I imagine that it will be just as disappointing, vague, opaque and abstruse.

I exhort the Minister to have a look at the representations of the Chartered Institute of Taxation. I am sure that he will read those observations will alacrity, as I do. In the institute’s response to the Government’s White Paper, “Customs Bill: legislating for the UK’s future customs, VAT and excise regimes”, it made a number of observations that are worth highlighting. For example, paragraph 1.3 states:

“The paper gives rise to an unusually complex mix of legal and technical issues within equally complex political constraints. It is not our remit to enter into debate about the political constraints, but a lack of clarity around the political constraints makes the technical analysis somewhat more difficult.”

That is a fair reflection, in very measured tones, of what the rest of us think, which is that the cack-handed manner in which the Government have approached the negotiations with the EU has left the important detail that is necessary to ensure the deal that the Prime Minister ostensibly wants—namely, streamlined customs arrangements—to the vacillations of the Government in general and the Brexit Secretary in particular. That is very worrying.

It is worrying in that the Government continue to be dragged screaming and shouting to this Chamber on any issue that they feel uncomfortable debating. When they do discuss it, they try to curtail the debate. The Chartered Institute of Taxation also has something to say on that in paragraphs 5.4 and 5.5 of its response to the White Paper, which state:

“We acknowledge the predicament of needing to begin the legislative process before knowing the outcome of negotiations. However, we have concerns around the limited level of scrutiny that this law-making process allows, given the political uncertainty, the potential for large-scale changes and tight timescales… The Bill will, we understand, have the powers to amend primary legislation using secondary legislation; raising similar concerns around delegated powers as with the EU Withdrawal Bill.”

The Government are even dragging their feet on the production of the 58 impact assessments, some two weeks after this House demanded them. The Opposition recognise the need for the Government to begin preparations for an independent customs and tariff regime, as that is both logical and necessary. However, it does not mean giving the Government a blank cheque to concentrate power in the hands of the Executive. The upcoming Taxation (Cross-border Trade) Bill will outline the powers of a new trade remedies authority, the creation of which is outlined in the Government’s Trade Bill.

Let me be clear: although Labour supports the creation of a truly independent trade remedies authority to help to protect UK industry and advise the Government on how best to tackle the dumping of state-subsidised cheap goods on the UK market, we do not want to see an authority compiled of the International Trade Secretary’s cronies, who are tasked with advising him on how best to dismantle key sectors of the UK economy. Instead, we want a trade remedies authority that reports directly to Parliament, rather than to the Department for International Trade. It should have representatives from the trade union movement, British business and each of the devolved Administrations. We will not allow this House to be sidestepped or side-lined by a Government consumed by chaos.

Whether with the Henry VIII powers in the European Union (Withdrawal) Bill or the delegated powers set out in the Trade Bill, this Government have shown an unhealthy obsession for cementing power in the hands of the Executive and shying away from any parliamentary scrutiny.

[Ian Murray (Edinburgh South) (Lab)]

It seems that the mantra of “taking back control” that we saw during the EU referendum campaign essentially means taking back control to Ministers, not to this democratically-elected Parliament.

[Peter Dowd]

My hon. Friend hits the nail on the head. That has been the line that this Government have taken. Power stops at Westminster and it does not go beyond. It is, quite frankly, a sham.

The Government cannot even bring themselves to include in this Ways and Means motion any reference whatever to parliamentary scrutiny; they do not like that. At every opportunity, even if the Government have contempt for this House, we will ensure that they will be forced to explain why they are so frightened of parliamentary scrutiny. At every corner, they will be required to explain in the cold light of day why they seem so reluctant to send Ministers to the Dispatch Box to explain the Government’s rationale.

Now, the Government, in their faux generosity, will claim that they have set aside eight days to debate the withdrawal Bill and other days to discuss Brexit. However, in the withdrawal Bill, they are institutionalising an accretion of powers to the Executive that is quite unheard of in the modern history of this country. [Interruption.] Ministers are huffing and puffing, but that is the reality: the accretion of power to Ministers is absolutely disgraceful.

We have to go back to the second world war to see powers of this magnitude and extent reserved to the Government, and those were dismantled as soon after the war as practical. At least our forebears had good reason in that situation, in so far as there was a national Government—a true coalition—united against one of the most odious regimes. The methods being used to sideline Parliament are quite shocking. History will treat this Government with the contempt they deserve for their feculent attempts to disenfranchise this House.

[Mel Stride]

I have patiently listened to what the hon. Gentleman has had to say. He has referred to the powers in the European Union (Withdrawal) Bill and to the operation, setting-up and independence or otherwise of the TRA. Neither of those items is actually included in this Bill, so what is it in this Bill that he wants to make a point about?

[Peter Dowd]

The right hon. Gentleman misses the point. This is part of the whole pattern and process by which this Government accrue and accrue powers. Government Members do not seem to grasp that concept, but the fact is that the Government continue to pull powers to themselves and do not devolve them to any of the other nations.

[Anna Soubry]

I think the hon. Gentleman is really struggling on this. It makes eminent sense that the Government should have the powers to deal with all eventualities. Perhaps he could help this place by explaining the Labour party’s current policy on the customs union. Is the Labour party in favour of us remaining in the customs union de facto as we go into transition, or is it against that? Is it in favour of our staying in the customs union by way of a final deal, which I think is an eminently good idea?

[Peter Dowd]

I will tell the right hon. Lady what we are in favour of: parliamentary scrutiny. It was John Bright who reportedly coined the phrase “the Mother of Parliaments”, which is completely alien to Conservative Members and, obviously, to the right hon. Lady. I suspect that he, along with many other Radical and Conservative parliamentarians, would be turning in his grave at the idea that a Government living on borrowed time have the arrogance, hubris and others would say bluster to treat Parliament in the fashion this Government are intent on doing.

Conservative Members have to ask themselves this question: did their constituents send them to this House to acquiesce is the systematic stripping away of parliamentary scrutiny, which is not in the national interest, or did they send them here to hold the Government to account, regardless of their party allegiance? The Minister should take seriously the concerns I have raised, as many others inside and outside the House have, about the fast and loose approach the Government are taking to parliamentary scrutiny.

[Charlie Elphicke]

The hon. Gentleman has not answered the incredibly important intervention made by my right hon. Friend the Member for Broxtowe (Anna Soubry). Can I ask him a different question? Will he be supporting amendment (e), which is the unofficial Opposition amendment?

[Peter Dowd]

The fact of the matter is that we are not closing off options, which the Government seem to have a pathological obsession with doing.

I hope that, between now and Second Reading, the Government will consider the importance of comprehensive parliamentary oversight and pay attention to the concerns of this House in relation to this whole question.

Taxation (Cross-border Trade) Bill

Peter Dowd Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“That this House recognises that the UK will need considered and effective arrangements to ensure a customs and tariff regime, including the potential of a customs union with the European Union, is in place before the UK’s exit, in order to guarantee frictionless movement of goods at UK ports and the ability to levy customs duty and VAT and to protect manufacturing and other key industries through the power to enact protective tariffs, but declines to give a Second Reading to the Taxation (Cross-border Trade) Bill because the Government has failed to provide a coherent plan for the operation of the customs and tariff regime after the UK’s exit from the European Union or for the maintenance of frictionless movement of goods at UK ports, because the Bill is not accompanied by proposals to ensure that Her Majesty’s Revenue and Customs are properly resourced and organised to implement a new customs and VAT regime, because the needs of UK manufacturers and producers have not been properly reflected in the design of the proposals and because the Bill proposes to give excessive powers to Ministers without appropriate procedures for parliamentary consultation and scrutiny.”

Here we are at the start of another year, and it feels much the same as the last one—the same old empty Bills, long on rhetoric and short on detail. Yet always the Government’s default position is a fresh set of powers for Ministers, which is the one fixed point in a changing world. This Government seem to be taking back more control from Parliament as each day passes.

The Bill ostensibly sets out to create a functioning customs framework for the United Kingdom once we leave the European Union—hope springs eternal. We accept that such an arrangement is necessary, regardless of the UK’s future relationship with the EU or, indeed, the nature of its wider trading relationship, yet once again we have been denied any detail in the Bill itself, as hon. Members have identified. There is nothing to guarantee frictionless trade through the UK’s ports from the moment of exit, no measures properly to resource Her Majesty’s Revenue and Customs for the task and nowhere near sufficient detail on the powers and provisions of the Trade Remedies Authority that will be charged with ensuring that our vital British industries are protected. Only yesterday we saw the potentially disastrous consequences of that lack of detail, with reports on the likely result of the Government’s failure to address the EU VAT area for thousands of businesses.

In short, instead of setting up a stable customs framework, this Bill provides few of the policy or, indeed, practical considerations required for the task of leaving the European Union.

[Richard Graham]

It seems rather curious to criticise the Government for denying any detail while we are in the middle of a negotiation. How could the hon. Gentleman expect any Government to guarantee anything until that negotiation is complete?

[Peter Dowd]

This Government have guaranteed absolutely nothing whatsoever. Time after time, they hide behind the veil of negotiation.

Before addressing the Bill’s specific failures in meeting the Government’s objectives, I will raise the issue of the powers created by this Bill that enable Ministers to do whatever they want. The leave campaign’s central message, the one repeated time and again and printed across its campaign literature, was that leaving the European Union would allow the Parliaments and Assemblies of the UK to “take back control” of our law making. And yet again, every piece of legislation published by the Government relating to our exit creates more powers for Ministers, while ignoring Parliament completely. Parliament is in a persistent state of having its head patted—that is as much as Parliament is getting at the moment.

[Sammy Wilson]

Given where we are in the negotiations, does the hon. Gentleman accept that a Bill that allows either for no deal or for complete mirroring of the current arrangements and all possibilities in between is the best Bill we could possibly have?

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[Peter Dowd]

The hon. Gentleman would have a point, but the Government’s record so far is to try to duck every question we ask of them. They constantly hide behind the negotiations.

[Several hon. Members rose—]

[Peter Dowd]

Lots of people want to speak, so I will move on and come back in a minute.

We now have a Government who are prepared to change the law to give themselves a majority on Public Bill Committees—that is where we are. They are prepared to ignore votes of the House on Opposition day motions, and they are now prepared to undertake the greatest centralisation of powers that Parliament has seen since the war.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

Does my hon. Friend agree with me and many Labour Members that the programme motion needs to be more detailed and needs to make it clear that we will have proper scrutiny in Committee, with more sittings than currently appear to be on offer from the Government?

[Peter Dowd]

We will get as much scrutiny as possible on this Bill.

Having completely failed to create a strong and stable Government at the last election, the Prime Minister seems to be ignoring the will of the electorate and grabbing power by any means necessary. That is particularly the case with this Bill, where Ministers are being handed powers to set import and export duties, preferential rates and quotas across any good or service sector in our economy. This Bill will give the Government the power fundamentally to reshape the environment in which our economy operates with a few strokes of a pen.

[Alex Cunningham]

As my hon. Friend says, it is critical that Parliament has a say. CF Fertilisers on Teesside is worried about the dumping of cheap goods, particularly from Russia, if we do not get the anti-dumping legislation right. The Minister says that will be addressed by this Bill and by the Trade Bill, which will have its Second Reading tomorrow, but I cannot see anything that says so. Does my hon. Friend agree that that is all the more reason why we need much more time in Committee to ensure that such guards are put in place?

[Peter Dowd]

My hon. Friend makes a good point that we need to have absolute scrutiny of the Government’s proposals.

We know what the Government would do with the powers contained in this Bill. They would tear up protections for British producers and consumers, throw workers’ rights on to the bonfire and create a free-market offshore tax haven—a miserable pound-shop economy. The Government know the price of everything and the value of nothing.

The Government do not have the authority to act in that way. The referendum and the recent election show a country divided, and it is Parliament’s job to reflect the country’s will and to develop a workable consensus. This Government, much like the disastrous Major Administration, have no mandate to implement such far-reaching changes, which is why the Labour party’s reasoned amendment would deny the Bill a Second Reading. We demand that the Government return with a Bill that sets out a clear path to our mutual objective of creating a functioning institutional framework for the handling of customs once we leave the European Union, one that provides the proper powers of scrutiny to Parliament, as promised by the leave campaign and as determined by the citizens of the UK in the recent election. Anything less is an affront to our democratic process and will only spell disaster for our country as this weak Prime Minister becomes prey to the worst instincts of many Conservative Members.

[Mr Leslie]

My hon. Friend spoke earlier about how many tens of thousands of businesses could end up with severe cash-flow problems if we leave the EU VAT area. Will he confirm that the Labour party’s policy is to try to continue participating within the EU VAT area?

[Peter Dowd]

I am happy to have a conversation with my hon. Friend outside the Chamber, but this is about the Government’s policy, not ours.

HMRC resourcing is another issue that we have to address. Everyone in this House agrees that we must avoid the nightmare scenario of gridlock at UK ports, with lorry queues stretching as far as the eye can see, yet the Government continue to do Brexit on the cheap with their refusal to fully fund and resource HMRC. Its staffing levels have been cut by 17% since 2010, and they are set to be cut further this year as it plans to close 137 offices across the country. The Minister must recognise the urgent need to hire and train more customs officers and HMRC staff, particularly if the Government are to meet their over-ambitious target of a fully operational customs system by 2019.

Although the Treasury is keen to tout technology as its magic solution to customs post Brexit, Ministers have failed to offer specifics on what a new customs system will look like and on whether it will even be ready in time. At the same time, there remains huge underlying questions about whether the current customs declaration service programme can deal with the sheer workload and pressure post Brexit.

A new IT system is no substitute for a fully resourced and staffed HMRC. Even with a transitional arrangement with the EU, the Treasury must recognise the urgent need to increase HMRC’s budget and staff, which is why the Opposition will attempt to amend the Bill to require Ministers to report back to Parliament on HMRC staffing levels and on the progress on testing and implementing these new systems.

[Rachel Maclean (Redditch) (Con)]

Does the hon. Gentleman recognise that HMRC has been given all the funding it has asked for to be ready for Brexit? Doe he recognise that the Treasury has set aside a total of £3 billion, that £400 million has gone to HMRC, that the negotiations are under way and that it will be given what it asks for to be ready on Brexit day?

[Peter Dowd]

There is no one in training and the staff on the ground take a completely different view from the hon. Lady.

The Bill outlines the trade remedies the Government will enforce against the dumping of unfairly priced goods. At the moment, these remedies are provided by the EU, but on leaving, the UK will have to enact and manage its own trade remedies. These measures are spread across this Bill and the Trade Bill and are of great importance to UK manufacturers. As I have said at this Dispatch Box on previous occasions, the Opposition will oppose any attempt by this Government to undermine UK manufacturing and jobs by the weakening of trade remedies, as well as any attempt to dismantle unilaterally the external tariff and open up UK markets to unfairly priced goods. This is a question not of protectionism, but of fairness and the rule of law, as countries that allow or encourage state dumping are not playing by international rules.

The manufacturing industry remains an indispensable part of the UK economy. According to the Office for National Statistics, manufacturing accounted for 2.3 million jobs in 2016 and 10% of the UK’s total economic output. These jobs are shared out across the minerals and ceramics, paper, steel, glass, chemical and fertiliser sectors. They are also spread across communities across the country, where manufacturing remains one of the largest employers. In my constituency alone, more than 2,500 people are employed in manufacturing, and the same will be true of the constituencies of many Members here today.

The trade remedies proposed in this Bill are pitiful to say the least. They are far weaker than the remedies currently in place in the EU and are weaker than those in most developed trading nations, and if they remain unchanged, they will put manufacturing jobs at risk.

[Stephen Doughty]

I agree very much with the point my hon. Friend is making about the pitiful nature of the trade remedies in the Bill. Indeed, I think that it poses much greater risks for industries such as the steel industry in my constituency. Does he agree that it is necessary to put paid to the myth that existed that we could not take trade remedies when we were part of the EU? Indeed, the former Steel Minister who is sitting opposite, the right hon. Member for Broxtowe (Anna Soubry), took a good decision, for which I praised her at the time, to introduce remedies on certain steel products that affected steel in my constituency. Whether these decisions are taken or not is a political choice; it is not about whether we can do this or not under the EU.

[Peter Dowd]

My hon. Friend is absolutely right on that point.

What is concerning is the fact that UK manufacturers and key industries have not been consulted on the trade remedies in the Bill. Perhaps the Minister can explain why, if the Prime Minister is happy to meet representatives from Toyota to agree a deal and the Environment Secretary is in regular contact with the National Farmers Union on future agricultural subsidies, he has failed to consult an industry that represents nearly 10% of the economy and employs millions on the trade remedies it needs to protect UK jobs.

[Stephen Kinnock]

I am sure my hon. Friend will have seen the letter in the Financial Times from the chief executive officers of the British steel, paper, ceramics, minerals and chemicals associations, along with their trade union counterparts, which puts this very well: they are deeply critical of the Bill, saying it does not do anything like what is required on trade defence and making it absolutely clear that the UK’s manufacturing base and tens of thousands of jobs around the country will be at risk if Parliament gets this Bill wrong.

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[Peter Dowd]

My hon. Friend is absolutely right on that point, and on that issue the Government just are not listening—it is as simple as that.

As I was saying, I have no doubt that if the Minister had consulted, he would have been told by industry professionals in no uncertain terms to tear up this Bill and start again. It offers no legal certainty for UK manufacturers. Schedule 4, in particular, has little detail on how investigations will be conducted or on how calculations and remedies will be applied. In addition, a mandatory lesser duty rule is completely out of step with the direction the EU is heading in and with the majority of countries in the World Trade Organisation.

The economic interest test outlined in the Bill is of particular concern, as not only is it unique to most WTO countries, but it appears to be tipped towards the consumer and against the producer; it is absolutely out of balance. It is far too wide and gives unprecedented powers to a Secretary of State for International Trade who has already advocated lowering food standards and weakening workers’ rights. The Bill does not state the duration of the remedies that would be in place, whereas the EU currently stipulates five years. Nor is the Bill clear about the rolling over of specific EU trade remedies that are set to expire and that must be replaced by the Secretary of State or whole sectors would be left vulnerable. Those are just a few of the concerns that the Opposition have with the trade remedies outlined in the Bill, and we will raise them further and seek to amend them in Committee.

As I mentioned, the Opposition recognise the need for effective customs and tariff arrangements, which will guarantee the frictionless movement of goods at UK ports. The ability to levy customs duty and VAT as well as to protect manufacturing and key industries when the UK leaves the EU is also important—

[Angela Smith]

I feel that it is very necessary to ask this question, given that a majority of Labour Members are in favour of staying in the customs union: can our Front-Bench team confirm whether or not they are in favour of staying in the customs union?

[Peter Dowd]

My hon. Friend knows that that matter has been debated on many occasions, and I am not going to go there.

The trade remedies outlined in the Bill are woeful and will not protect UK manufacturing and jobs. Similarly, the Government have failed to provide any clear indication alongside the Bill that they will properly fund and staff HMRC to make sure it can effectively manage our customs and tariff regime post Brexit. This is yet another poorly drafted Bill from an increasingly chaotic and divided Government, who seek to award themselves unprecedented power and shield themselves from any parliamentary scrutiny. That is why I urge colleagues from across the House to support our reasoned amendment.

Taxation (Cross-border Trade) Bill (Third sitting)

Peter Dowd Excerpts

Committee Debate: 3rd sitting: House of Commons
Thursday 25th January 2018 Public Bill Committees

[Mel Stride]

I welcome the hon. Lady to the Committee. She mentions the location of the new HMRC hubs as they are rolled out, and I will make two important points. First, Border Force, which is very much part of the frontline, is in the Home Office’s remit, not HMRC’s. Secondly, proximity to the hubs or otherwise is not critical in determining whether HMRC provides the support that Border Force and other agencies require. The absence of a hub close to a need does not mean that HMRC staff cannot be in proximity to that point; they do not need to be based constantly at any one hub.

[Peter Dowd (Bootle) (Lab)]

May I pick up on that? I will not repeat what my hon. Friend the Member for Oxford East said, but try to reinforce the seriousness of the evidence witnesses gave on Tuesday. Mr Runswick said:

“HMRC is closing offices in places such as Southampton…So we think that there will be a real struggle to deliver the work that HMRC does with Border Force in that situation. My union believes that HMRC should pause the office closure programme until it is clear what the Government will need HMRC to do in a post-Brexit situation.”––[Official Report, Taxation (Cross-Border Trade) Public Bill Committee, 23 January 2018; c. 37, Q45.]

I want to tease out a little more from the Minister. Does he recognise that argument at all? It seems to be business as usual.

[Mel Stride]

I welcome the hon. Gentleman to the Committee. He reiterates the point that the hon. Lady just made, so I will spare the Committee a repeat of every element of my answer. However, specifically with relation to the points made in the evidence session by Mr Runswick, the trade unions have been resistant to the changes to HMRC wholesale, right across the piece. Therefore, when it comes to arguments about whether HMRC can be effective in clamping down on avoidance, evasion and non-compliance, bringing in tax yield and so on, the argument has been run that we need a number of offices in multiple locations to do that.

The critical answer is that the very nature of running an efficient tax system and customs regime needs technology, the right skills and the right people. That lends itself to having a concentration of such individuals in hubs, where skills and IT can be developed and brought in to be effective. Without repeating my answer to the hon. Gentleman’s hon. Friend, the Government and HMRC are clear that the configurations of the new hubs will lend themselves to appropriately support the new customs regime.

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[Anneliese Dodds]

I shall speak to amendment 78, which has already been referred to. To be clear, we already have a list in the Bill of different considerations that ought to apply when calculating the rate of import duty for goods in a standard case, which includes,

“the interests of consumers…maintaining and promoting the external trade…maintaining and promoting productivity…the extent to which the goods concerned are subject to competition.”

That is why we suggest that we should have a holistic look at other matters that should be considered.

That is particularly important when it comes to the calculation of import duties with a view to environmental sustainability. When the current chief co-ordinator at the World Trade Organisation, Christiane Kraus, was at the World Bank, she spelled out reasons why environmental considerations might be relevant to the setting of trade parameters, in the absence of other mechanisms for promoting global environmental common goods. We may well be entering a period where it is very difficult to get international agreements on environmental matters, not least because of the direction of the American Administration, so it seems sensible to retain the possibility of so-called eco-tariffs in the Bill.

In addition, even inside the EU’s customs regime, there is evidence of illegal waste trading. Revelations from the Environmental Investigations Agency concerning the toxic trade in cathode ray tubes from the UK to Nigeria and Ghana make for very disturbing reading.

It is absolutely appropriate that we refer to sustainable development in relation to import duties, and to refer to it in this clause would rectify the fact that there is no mention in the rest of the Bill—I was very surprised by this—of the many factors relating to sustainable development that are otherwise covered by the EU customs regime. There is no mention of the environment, aside from the competitive environment; of forestry, aside from in relation to trading stamp schemes; or of chemicals, waste or wildlife. That is a significant departure from the EU customs regime.

The EU’s rules around authorised economic operators indicate that, for a company to become a member of that scheme, it needs to show that it does not have a record of serious infringements, including infringements against environmental legislation. EU legislation is clear that that status can be suspended if there is a threat to public safety, the protection of public health or the environment.

Many other areas in the customs regime that reference or have cross-connections with accompanying EU legislation are not picked up in the Bill. EU forest law enforcement, governance and trade—FLEGT—covers a licensing scheme for timber. That is relevant to import duty costs, because the importer is liable for the cost of the verification of any licences and of the translation of any paperwork related to its enforcement. Illegal, unreported and unregulated fishing is strictly controlled through EU regulation. Trans-boundary shipments of waste must comply with the 2006 EU waste shipment regulation.

The CITES treaty applies to wildlife, so we would still be covered by that when we leave the EU, but the EU goes further—that is incorporated in the overall customs regime. For example, there are regulations about documentation and labelling and a longer list of species upon which import controls are applied for the EU compared with under CITES. Finally, when it comes to measures about trade in environmentally-damaging chemicals, we have EU-level quotas on ozone-depleting substances and carbon-producing F-gases, and a notification procedure for other potentially dangerous chemicals.

I accept that in all those areas we could be asking for lots of different amendments to try to rectify some of these problems—I am sure Members will try—but having that environmental sustainability criterion for assessing import duties in the Bill, and placing it near the start, will raise its profile, which the Government sadly seem not to have considered at all when putting the Bill together. That is worrying given the prominence of these matters within the EU’s existing customs regime.

[Peter Dowd]

It is a pleasure to serve under your stewardship, Mrs Buck. I hope that, as in the sessions on the Finance Bill, we will have a major climbdown—the Minister and other members of the Committee will note that from that Bill.

The SNP amendment 106 would require the Government to have regard to the public interest in considering the rate of customs tariffs on our exit. It would add a public interest test to the four existing conditions that the Bill requires the Treasury to have regard to when deciding to apply customs tariffs to goods entering the United Kingdom. Those existing conditions in the Bill are the interests of consumers, the desirability of promoting external trade, the desirability of promoting productivity in the UK and the extent to which goods are subject to competition.

Members will note that, throughout the passage of the Bill, we have been seeking to ensure parliamentary scrutiny. We will continue to do so. In one of the evidence sessions, we heard from one witness, Kathleen Walker Shaw, the European officer of the GMB union, who said that she spent many evenings drafting her union’s response to the trade White Paper only to find eight hours later that the Bills had been published. I think that it is fair to say that that was not a particularly isolated view in the session.

The Opposition have concerns about the specifics of the SNP amendment, which means we take a slightly different approach. We believe that, in key sections of the Bill, the public interest is being used as a mechanism to widen the powers of the Secretary of State. That is perhaps most pronounced in schedule 4, which empowers the Secretary of State to reject a recommendation of the Trade Remedies Authority based upon a belief that it is not in the public interest. I respect people’s beliefs, but in this forum they have to be based on evidence, and I am not sure that we will get much of that. We have tabled a number of amendments of our own, and I want to dwell on them.

It is incumbent on me to point out that public interest is not defined in the Bill. That leaves a good deal of room for manoeuvre for the Secretary of State to determine the public interest, without appropriate parameters about precisely what it means. Precision is not one of the endearing features of the Bill. We are happy for the Government to have powers to take the public interest into account in certain circumstances, but only on the basis that it is concretely defined in primary legislation. That is yet another lacuna in the Bill, and a stubborn point that will be addressed time and again in these proceedings.

The Minister used the example of national security in the evidence session on Tuesday. That does seem a useful definition of public interest, and we believe that national security should provide an explicit limit to the definition of public interest in the Bill. We know, after all, that the Secretary of State has some novel ideas about what the public interest might be. They are views that ostensibly focus on the needs of the consumer over the producer. However, it has to be said that that is a one-dimensional approach taken by the Government, which was laid bare in the witness session. In response to the Financial Secretary’s question about consumers potentially being disadvantaged compared to producers, Ms Crawford responded:

“Consumers are also workers who are employed in some of these industries, and they will not benefit from having unfair trade practice disadvantage them and the quality of their goods. That is something we must bear in mind.”––[Official Report, Taxation (Cross-border Trade) Public Bill Committee, 23 January 2018; c. 42, Q53.]

That is a more sophisticated definitional approach than the Government’s.

Although we support the efforts of the Scottish National party to introduce checks and balances, we have concerns at this stage. In that regard, we cannot support the amendment. I hope the hon. Member for Aberdeen North will take our statement in good faith.

[Mel Stride]

We have had a wide-ranging debate on this group of amendments, much of which covers matters that we will come to later in the Bill. I will focus my remarks on the details of the amendments and the clause.

The hon. Member for Scunthorpe rightly pointed out that I said earlier that the Government’s intention was to ensure that we had a minimum of change in the regime, for the obvious reason of providing familiarity and certainty to businesses. That is an important point and it is why clause 8(5) takes precedent from the Treaty on the Functioning of the European Union. It is very much grounded in where we currently are, as opposed to venturing out to pastures new, some of which would be unfortunate or inappropriate, or so the Opposition would have us believe.

The hon. Member for Oxford East mentioned authorised economic operators, which we will come to in clause 22, to make the general point that a number of things do not appear in the Bill, such as our habitats and various other things in existing EU legislation. On AEOs, the Bill introduces powers in clause 22 that will allow us to address exactly those elements when HMRC and the Treasury come to lay regulations as to, for example, what qualifications there might be to become registered as a certified AEO. Those kinds of issues can be picked up at that time and scrutinised further by the House.

The meat of clause 8 is in subsection (5), which states:

“In considering the rate of import duty that ought to apply to any goods in a standard case, the Treasury must have regard to…(a) the interests of consumers in the United Kingdom”

and

“(b) the desirability of maintaining and promoting the external trade of the United Kingdom”.

It is hard to see how that would not have to take into account the manufacturing element and the health of the manufacturing sector. Subsection (5)(c) states that the Treasury must have regard to

“the desirability of maintaining and promoting productivity in the United Kingdom,”

It is very difficult to see how the manufacturing sector, which represents around 10% of the UK economy, could be entirely ignored or in any sense neglected. Subsection (5)(d) states that the Treasury must have regard to

“the extent to which the goods concerned are subject to competition.”

I suggest that manufacturing would be core to any decisions on the setting of duties made in that context.

Subsection (6) states:

“In considering the rate of import duty that ought to apply to any goods in a standard case, the Treasury must also have regard to any recommendation about the rate made to them by the Secretary of State.”

As the Committee will know, the term “Secretary of State” refers to any Secretary of State in any Department, so on concerns relating to sustainable development, the relevant Department—

--- Later in debate ---

[Mel Stride]

Amendment 2 would require the Treasury to consider recommendations made by a relevant Select Committee or a resolution of the House of Commons when considering the rate of import duty that ought to apply in the standard case.

The Treasury will listen closely to recommendations from a range of interested parties, including relevant Select Committees and, of course, Members of the House. In addition, Select Committees already have the power to question Ministers on policy within their departmental remit, and the Treasury will answer any questions from relevant Select Committees. Therefore, the Government believe that it is not necessary to include that in the Bill.

Amendment 3 would place the same obligation on the Treasury when considering what provisions to include in regulations related to quotas, such as determining the rate of import duty applicable to goods that are subject to quotas, and amendment 4 would introduce that requirement when making regulations concerning tariff suspensions. For the same reasons that I set out in relation to amendment 2, the Government do not believe that it is necessary to include such provisions in the Bill.

I have one final point in response to the point made by the hon. Member for Aberdeen North about scrutiny and needing provisions in the Bill. This Bill will, of course, have Report stage, which will be an opportunity for scrutiny by a far wider group than a Committee on which the Government might typically have a majority of one. Every Member of the House will have an opportunity to participate in that debate and consideration of further amendments.

[Peter Dowd]

The amendments seek to ensure that the Treasury must have regard to any Select Committee recommendations or House of Commons resolutions in two circumstances: first, when setting the rate of import duty on a specified good; and secondly, when lowering the rate of import duty on specific goods. Through the amendments, we seek to improve the mechanisms of accountability and ensure that any decision taken by the Treasury on duties and tariffs is taken on the basis of a democratic approach to the management of our economy, with a full and proper place for Parliament and its constituent parts.

We want the UK to have a full and functioning customs system in place when we leave the European Union. The powers transferred in the Bill give the Chancellor, the Secretary of State or others the ability to restructure the entire economy at a few strokes of a pen, without any consultation with those affected by changes to our customs regime. That is deeply concerning for anybody.

Since the Government failed to win a majority at the recent general election, we have seen numerous attempts to centralise power within ministerial portfolios, reducing the role of Parliament and the scrutiny of Government decisions, as has been alluded to on a number of occasions today. The Bill is yet another example of that trend. As the Lords Delegated Powers and Regulatory Reform Committee made clear, the current trend is towards a “massive transfer of power” to the Executive and away from Parliament. Every parliamentarian in this room should be deeply concerned about that because, at the end of the day, we get £75,000 a year to come here and scrutinise the Government and we are not being allowed to. We are therefore seeking to introduce the checks and balances necessary to ensure that a future customs framework and its operation continue to have proper democratic scrutiny and oversight. Stakeholders should be brought into the process.

The amendments would introduce an advisory capacity for Select Committees or the House in the process of determining import duties. That would broaden the number of those who have a democratic role in supporting and informing decision-making. That is what we are here for. Currently, as the Lords Committee made clear, the Bill provides 150 separate powers to make tax law. We are merely suggesting that widening the number of parliamentarians who can influence those decisions is a matter of building a genuinely rigorous democratic process.

Crucially, as hon. Members are aware, Select Committees are made up of Members from across the House. That cross-party approach can only support a proper decision-making process on the important issue of customs tariffs. We hope therefore that Members will consider the benefits of including the expertise of a Committee or the House in general within the vital process of examining evidence and providing independent advice— the Government may not wish to hear that advice, but it should nevertheless be given to them. Ultimately, that can only help to support the work of the Treasury in achieving the best outcome, regardless of party concerned.

It is reasonable in distillation to assert that Mr Blackwell from the Hansard Society said that there is a problem that

“the balance between Parliament and the Executive...has always been on the side of the Executive”––[Official Report, Taxation (Cross-border) Public Bill Committee, 23 January 2018; c. 51, Q71.]

This is a chance to rebalance that. Given the extent of delegation to Ministers set up in this Bill and other Brexit Bills, the role of Parliament is being downgraded. The Government know that; Members in this room know that; consumers know that; and producers know that and the public know that. The Government should think on that. Frankly, they should come clean, have the courage of their convictions, acknowledge it publicly and, in so doing, stop hiding behind what for many people are the vagaries of procedure—negative, affirmative and so on. We ask the Committee to support our amendments today in the interests of democratic scrutiny.

Question put, That the amendment be made.

Taxation (Cross-border Trade) Bill (Fifth sitting)

Peter Dowd Excerpts

Committee Debate: 5th sitting: House of Commons
Tuesday 30th January 2018 Public Bill Committees

The additional processes proposed could both delay our readiness for operating an independent trade remedies framework at the point of EU exit and affect the responsiveness of our framework to subsequent developments, such as best practice and WTO case law. Taken together the amendments would hamper the UK’s ability to act swiftly to provide an important but proportionate safety net to domestic producers. I commend the clause to the Committee and urge Members to withdraw the amendments.

[Peter Dowd (Bootle) (Lab)]

It is lovely to serve under your chairmanship again today, Ms Buck. The Minister has clearly had three or four Weetabix today, given his assertions. I say to him: legislate in haste and repent in court at leisure—for these are the sort of things that will be challenged in the courts. Unless the judges in those courts are going to be enemies of the people, we are best to get it right first-hand. Lord Judge made that very point today, and he was formerly Lord Chief Justice; so we cannot ignore parliamentary scrutiny on this particular issue.

New clause 5 establishes a system of enhanced parliamentary regulations for setting quotas under clause 13 to give effect to recommendations of the TRA, with a requirement for the House to pass an amendable resolution authorising the quota provisions of the proposed regulations. It also requires that certain regulations under schedules 4 and 5 be subject to the affirmative procedure.

I have made this point in the past and make it again. The new clause seeks to introduce a scrutiny role for Parliament in this crucial area of taxation and trade policy. The current provision in clause 13 gives the Secretary of State powers through regulation to introduce a tariff rate quota to determine the amount of import duty applicable to certain imported goods, after he has accepted a recommendation from the Trade Remedies Authority. It also gives the Secretary of State the power to revoke or suspend the tariff rate quota.

New clause 5 would instead ensure a democratic and open process, by making sure that Parliament has that power—not just the Secretary of State. The enhanced parliamentary procedure also ensures that there is a failsafe in the event that the Trade Remedies Authority makes a recommendation for the suspension of a quota and the Secretary of State refuses. In that instance Parliament has the ability to overrule the Secretary of State and side with the expert recommendation of the Trade Remedies Authority if it so decides.

I am sure that hon. Members of the Committee are hearing echoes from last week in relation to the issue of parliamentary scrutiny. We have heard about it today, and that is our job on this side of the Committee. I am not sure whether the Minister thinks we should not do that, but we will continue to do it. We are concerned that if we do not have parliamentary scrutiny and oversight and the expertise that comes with that, we will end up in the courts. The Minister’s wish that things do not get delayed will be thrown out of the window by the approach that the Government seem to be taking.

Suffice to say that, if the Government are arguing that this is a money Bill, which it is, and it goes to the House of Lords— who will probably have to watch it go past as though it was a bus—they are tacitly accepting that the measures contained here are essentially fiscal. It is therefore appropriate that statements made to the House of any regulatory changes in relation to fiscal matters are Parliament’s responsibility and duty, as they have been for centuries, and we believe that there should be a vote if appropriate. The system outlined would provide a very robust means of doing that. I know that virtually every Minister, not just this Minister, would not want to have that level of scrutiny, but it comes with the job; scrutiny has to be there. Of course, an annual fiscal statement, such as that expected in the spring, with subsequent parliamentary authority could also prove a mechanism for us to test it out.

I hope that Conservative Members will not take a blasé approach and brush aside the issue of parliamentary democracy on the grounds that the Opposition somehow want to drag the matter out in the future. We do not; we want to make sure that this works properly. We all accept that we have to have a process in place, but let us get it right and hold Ministers to account.

[Kirsty Blackman]

The Government have asked for an awful lot of trust. They are asking us to trust them to make the right decision. Given that they do not have a track record of making such decisions over a very long number of years, it is very difficult for us to trust the Government on that. There is also the fact that the Government said that they would table amendments to clause 11 of the European Union (Withdrawal) Bill, and then they did not.

I do not think that the Conservative Government have quite recognised what they are doing with all their decisions to hold power in the Executive over any number of things. When the Conservatives are inevitably no longer in government there will be another Government in place, and they will be in opposition saying, “Why are so many decisions being made by the Executive without parliamentary scrutiny?”

The UK is at a point where we are choosing how our future looks in relation to Brexit. We are choosing how things will go in this Parliament, and into the future. We are choosing how much say we will have over trade policy, so it is vital how we decide to go about this. The way that the Government are setting this up is absolutely wrong. There should be parliamentary scrutiny of such things, and democratically elected Members should have the opportunity to look at them, to have an input and not just have them done by public notice.

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[Graham Stuart]

Our purpose here is to be probed, so even when that probing is redundant or tiresome, one should deal with it in as fair a way as one possibly can. As we know, this is a framework Bill; the secondary legislation, which will have parliamentary scrutiny, will bring in the details as it does in most other jurisdictions. We will follow a balanced, proportionate and effective basis to ensure that we assess that injury in the right way, and we will do so under the aegis of the WTO. Efforts to cut and paste aspects of the WTO system on to the face of our legislation when we are subject to WTO rules anyway are unhelpful and unnecessary.

Question put and agreed to.

Clause 13 accordingly ordered to stand part of the Bill.

Schedule 4

Dumping of goods or foreign subsidies causing injury to UK industry

[Peter Dowd]

I beg to move amendment 23, in schedule 4, page 58, line 2, after “consumption”, insert “by independent customers”.

This amendment requires the comparable price for the purposes of determining the normal value to be assessed with respect to consumption by independent customers.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 24, in schedule 4, page 58, line 4, at end insert “sub-paragraphs (2A) to (2L) and with”.

This amendment paves the way for Amendment 25.

Amendment 25, in schedule 4, page 58, line 6, at end insert—

“(2A) For the purposes of sub-paragraph (2) the following shall apply.

(2B) Where the exporter in the exporting country does not produce or does not sell the like goods, the normal value may be established on the basis of prices of other sellers or producers.

(2C) Prices between parties which appear to be associated or to have a compensatory arrangement with each other shall not be considered to be in the ordinary course of trade and shall not be used to establish the normal value unless it is determined that they are unaffected by the relationship.

(2D) Sales of the like goods intended for consumption in the exporting foreign country or territory shall normally be used to determine the normal value if such sales volume constitutes 5% or more of the sales volume exported to the United Kingdom, but a lower volume of sales may be used when, for example, the prices charged are considered representative for the market concerned.

(2E) When there are no or insufficient sales of the like goods in the ordinary course of trade, or where, because of the particular market situation, such sales do not permit a proper comparison, the normal value shall be calculated on the basis of—

(a) the cost of production in the country of origin plus a reasonable amount for selling, general and administrative costs and for profits, or

(b) the export prices, in the ordinary course of trade, to an appropriate third country, provided that those prices are representative.

(2F) Sales of the like goods in the domestic market of the exporting foreign country or territory, or export sales to a third country, at prices below unit production costs plus selling, general and administrative costs shall be treated as not being in the ordinary course of trade by reason of price, and disregarded in determining the normal value, if it is determined that such sales are made within an extended period in substantial quantities, and are at prices which do not provide for the recovery of all costs within a reasonable period of time.

(2G) The amounts for selling, for general and administrative costs and for profits shall be based whenever possible on actual data pertaining to production and sales, in the ordinary course of trade, of the like product by the exporter or producer under investigation.

(2H) When it is not possible to determine such amounts on the basis prescribed in sub-paragraph (2G), the amounts may be determined on the basis of—

(a) the weighted average of the actual amounts determined for other exporters or producers subject to investigation in respect of production and sales of the like product in the domestic market of the country of origin,

(b) the actual amounts applicable to production and sales, in the ordinary course of trade, of the same general category of products for the exporter or producer in question in the domestic market of the country of origin,

(c) any other reasonable method, provided that the amount for profit so established shall not exceed the profit normally realised by other exporters or producers on sales of products of the same general category in the domestic market of the country of origin.

(2I) If the TRA determines that it is not appropriate to use domestic prices and costs in the exporting country due to the existence in that country of significant distortions, the normal value shall be constructed exclusively on the basis of costs of production and sale reflecting undistorted prices or benchmarks, subject to the following provisions.

(2J) “Significant distortions” for this purpose means distortions which occur when reported prices or costs, including the costs of raw materials and energy, are not the result of free market forces because they are affected by substantial government intervention.

(2K) The TRA shall use the corresponding costs of production and sale in an appropriate representative country with a similar level of economic development as the exporting country, provided the relevant data are readily available; and, where there is more than one such country, preference shall be given, where appropriate, to countries with an adequate level of social and environmental protection;

(2L) If such data are not available, the TRA may use any other evidence it deems appropriate for establishing a fair normal value, including undistorted international prices, costs, or benchmarks; or costs in the exporting country to the extent that they are positively established not to be distorted.”

This amendment makes further provision on the face of the Bill about how the normal value and the comparable price are to be determined in certain circumstances.

Amendment 26, in schedule 4, page 58, line 6, at end insert—

“(2M) A fair comparison shall be made between the export price and the normal value.

(2N) The comparison for the purposes of sub-paragraph (2M) shall be made at the same level of trade and in respect of sales made at, as closely as possible, the same time and with due account taken of other differences which affect price comparability.

(2O) Where the normal value and the export price as established are not on such a comparable basis, due allowance, in the form of adjustments, shall be made in each case, on its merits, for differences in factors which are claimed, and demonstrated, to affect prices and price comparability.”

This amendment provides for fair comparison between the export price and the normal value.

Amendment 27, in schedule 4, page 58, leave out lines 8 to 15 and insert—

“(a) to provide guidance with respect to the application of sub-paragraphs (2) to (2O).”

This amendment replaces the provision for definitions of key terms and the determination of related matters in individual cases with guidance about the application of the existing provisions and those contained in Amendments 25 and 26.

Amendment 62, in schedule 5, page 80, line 5, at end insert—

“and shall be determined in accordance with Article 4 of the WTO Agreement on Safeguards.”

This amendment provides that the meaning of serious injury for the purposes of Schedule 5 shall reflect the relevant provisions of WTO Agreement on Safeguards.

Amendment 63, in schedule 5, page 80, line 6, after “make” insert “further”.

This amendment is consequential on Amendment 62.

Amendment 64, in schedule 5, page 80, line 9, after “make” insert “further”.

This amendment is consequential on Amendment 62.

[Peter Dowd]

Clearly, being tiresome is my role in life, as far as the Minister is concerned.

[Graham Stuart]

You do it well.

[Peter Dowd]

I do it very well. I will make sure I have five Weetabix on Thursday.

I am glad to turn to some of the very substantial amendments that we seek to demonstrate to the Committee are essential for the proper operation of our customs regime and to provide a level playing field for vital British industries. We want to ensure that British industries do well. We wish them the best and we want to set the framework for them to do well. I say gently to the Minister that the only political points being made are from him. We all want British industry to do well; we all have industry and businesses in our constituencies—I have a huge port in my constituency. Frankly, the idea that Labour wants businesses to do well simply because of parliamentary democracy is nonsensical.

The amendments clarify a number of important points about constructing a functional trade remedy mechanism that will not be open to challenge in the courts and will not slow the process down. The Government seem to have completely missed that. The amendments will establish a level playing field for the purpose of promoting and encouraging free trade across UK borders, ensuring that British producers are not unfairly disadvantaged.

It is important at this stage to remind ourselves of the comments made at the Bill’s evidence session on this particular point, to briefly set the context for the amendments. Dr Cohen from the British Ceramic Confederation pointed out last week that a remedy is not a matter of protectionism, but is simply a means of addressing “unfair competition” when overseas manufacturers are not playing by the internationally agreed rules. Dr Cohen made it clear, by using the example of the ceramics industry in the Minister’s constituency, that it is not the case that our producers have skimped on investment or have failed to seek out productivity enhancing measures, because they take every opportunity to compete. Indeed they have made very heavy investment in

“state-of-the-art, energy-efficient manufacturing with digital printing technology.”

Given a level playing field, this industry can, in Dr Cohen’s words,

“take on the world. All we want is a level playing field” ––[Official Report, Taxation (Cross-border Trade) Public Bill Committee, 23 January 2018; c. 67, Q104.]

and trade remedies that allow us to ensure the greatest level of trade.

--- Later in debate ---

[Peter Dowd]

I thank the Minister in good faith for his explanation. None the less, the Opposition take the view that there is a cumulative effect to the proposals. It is okay for the Minister to say that this is a framework and that we will add all the detail later, but there is a difference between a framework and a skeleton. This is not a framework but a skeleton. We must add meat to the bones of the skeleton, but we have not got that here today.

While I accept what the Minister is saying in good faith, we need to press this issue. We must make the point that we need more detail and more certainty. Of course, he might not be the Minister in the not-too-distant future—we do not know who the Minister might be. Therefore, while I have every faith in him, I am not sure whether I can say that about the future Minister.

[Graham Stuart]

It is a framework Bill—skeletal or otherwise—and the detail will come in secondary legislation, as is entirely normal for issues such as this. In response to the question from the hon. Member for Scunthorpe on when we will be ready to bring secondary legislation forward, we will do so as soon as possible. Evidently, that will need to be in time to ensure that the UK system is ready for when we exit the EU. That is the time constraint. We are working on this. We will engage in detail with industry, starting next month. We are bringing this forward as quickly as we can.

If the Opposition decide to press the amendment, that is fine, but cutting and pasting WTO agreements with which we will comply is not the same as having an appropriate system in place for the UK. This is not the right moment or place for these proposals, because this is framework legislation.

On why we should have secondary legislation, we need flexibility to adapt to developments in WTO case law and, if the Committee were to support the Opposition’s amendments, that flexibility would be removed. Changes in WTO case law are frequent: for instance, only last week there was a panel decision on article 2 of the WTO anti-dumping agreement. It is therefore important that we have the flexibility that only secondary legislation provides, so I ask the Opposition to think again.

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[Peter Dowd]

I beg to move amendment 40, in schedule 4, page 65, line 2, leave out from “goods” to end of line 3.

This amendment removes the requirement for the TRA to be satisfied that requiring a guarantee meets the economic interest test.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 58, in schedule 4, page 75, line 23, leave out from first “the” to end of line 24 and insert—

“economic benefits of the remedy to the United Kingdom industry within the meaning of paragraph 6 are significantly outweighed by the economic costs to the importers, users or consumers of the goods in the United Kingdom.”

This amendment provides greater specificity to the operation of the economic interest test.

Amendment 59, in schedule 4, page 75, line 29, leave out sub-paragraph (i).

This amendment removes the requirement to take account of the economic significance of affected industries and consumers in the United Kingdom.

Amendment 75, in schedule 5, page 93, line 22, leave out from first “the” to end of line 23 and insert—

“the economic benefits of the remedy to the United Kingdom industry within the meaning of paragraph 3 are significantly outweighed by the economic costs to the importers, users or consumers of the goods in the United Kingdom.”

This amendment provides greater specificity to the operation of the economic interest test.

Amendment 76, in schedule 5, page 93, line 28, leave out sub-paragraph (i).

This amendment removes the requirement to take account of the economic significance of affected industries and consumers in the United Kingdom.

--- Later in debate ---

[Peter Dowd]

This group of amendments relates to the economic interest test in the Bill. It requires the Trade Remedies Authority or Secretary of State to consider an economic interest test before recommending an anti-dumping remedy. That means that the TRA or Secretary of State must take account of a number of additional factors when considering whether to apply an anti-dumping remedy, to determine whether the remedy will be in the United Kingdom’s wider economic interest.

This is a highly unusual measure. The Manufacturing Trade Remedies Alliance describes the application of an economic interest test as “unique” among WTO users of trade remedies. There are few precedents for a functioning economic interest test, as only a handful of Governments conduct them. This provision is not in the WTO agreement or in EU regulation. Furthermore, the economic interest test in the Bill is very widely drawn, allowing the TRA or Secretary of State to introduce a wide range of additional macroeconomic considerations into the determination of a trade remedy.

It has been only two years since the former Chancellor of the Exchequer stood on a platform of building a Britain

“carried aloft by the march of the makers”,

yet now we are being carried off in a different direction, hence our amendment. Hon. Members on both sides of the Committee will note that, despite that, we have not taken the step of seeking to remove the economic interest test entirely, to bring the UK into line with well worn national agreements and regulations. Instead, in the spirit of conciliation, we have tabled a number of amendments that would clarify the exact uses of an economic interest test and ensure that the Secretary of State could not overwrite the democratic process entirely.

Amendment 40 would remove the economic interest test from the consideration of the Trade Remedies Authority at the preliminary stage of determination. Part 2 of schedule 4 gives the TRA powers to make an initial, provisional recommendation to the Secretary of State that dumping may have occurred and that therefore all importers of the goods in question should be required to give a guarantee in respect of any additional amount of import duty that would have been applicable, or may be applicable, subject to further investigation. The Bill requires the TRA to have considered first whether that requirement to guarantee is necessary to prevent injury and, secondly, whether it would meet the economic interest test.

As amendment 40 makes clear, we do not believe that it is appropriate for the economic interest test to be inserted at this early stage, when provisional remedies are being required ahead of a later full and final determination. The addition of an economic interest test at this point in the process places a large additional burden on the TRA when only provisional guarantees are being requested. It is impractical for the TRA to be expected to carry out a full economic interest test at this stage. It could also bear down on the speed at which all necessary provisional remedies are applied. That relates to the points about speed and pushing things on, as the Minister would like. Slowing the process will allow injury to producers to continue unchecked, reducing the efficiency of the system as a whole.

Furthermore, the application of the economic interest test at this stage in the remedy process goes well beyond WTO rules, which require only a consideration of injury. This would leave the UK with a higher bureaucratic threshold to rectify injury than most nations we hope to trade with. Surely the Minister must agree that a central ambition of any Trade Remedies Authority is responsiveness and agility, but this measure flies in the face of what he told us earlier. Our amendment removes the burden of the economic interest test being placed on the TRA at this early stage in proceedings to allow it to take swift provisional measures pending further investigation, and so that we can act quickly as and when necessary to protect our industries.

Amendment 58 addresses part 6 of schedule 4, which sets out the economic interest test in more detail. We hope to address the balance of priorities that the economic interest test attempts to juggle to give proper due to the interests of producers and, subsequently, consumers, workers and so on. The point was made in the evidence session that producers are also consumers, who will no longer be able buy anything if they lose their jobs due to dumping injury.

This amendment clarifies the exact circumstances in which the economic interest test is considered not to have been met. There is little detail in the Bill regarding what those circumstances might be. Instead, sweeping powers are given to the Secretary of State to make up his or her mind as he or she sees fit. That is in keeping with the Government’s wider approach to the Bill.

This amendment clarifies that the economic interest test will be assumed to have been met so that a remedy can be applied, unless the

“economic benefits of the remedy to the United Kingdom industry… are significantly outweighed by the economic costs to the importers, users or consumers of the goods in the United Kingdom.”

It attempts to clarify the balance of forces that should weigh up any judgment in that regard. That is a completely reasonable addition to the Bill, which merely adds necessary detail where it is lacking, and gives all parties concerned clarity about how different interests will be considered. I hope the Minister will accept this amendment, which will clearly improve the Bill without cutting across the established roles of different actors in the process being developed.

Amendment 59 looks a few lines further down the list of factors that the TRA or Secretary of State should take into account when

“considering whether the application of an anti-dumping remedy or anti-subsidy remedy is not in the economic interest of the United Kingdom”.

Our amendment seeks to remove the first provision that states that the TRA or Secretary of State should consider the economic relevance of

“affected industries and consumers in the United Kingdom”.

As it stands, schedule 4 gives preference to large enterprises over small and to established sectors over new. Without our amendment, the Secretary of State could stamp out a small, growing sector or extinguish an embryonic area of British entrepreneurship because they deemed it not of “economic significance” to the UK. That would be a travesty. It seems to be an incredibly short-sighted approach to the UK economy and, if I may say so, strangely interventionist from a party that claims not to believe in the state picking winners. By extension, it cannot justify allowing the state to forcibly create losers.

It is highly unusual and inappropriate to allow the Secretary of State to write off an infant industry or area of consumption based on a crystal ball prediction of its future significance. Amendment 59 removes this dangerous sub-paragraph from the Bill to ensure that Secretaries of State keep their minds on likely impacts across the different interests at play, rather than gambling with the UK economy. Again, this is not a radical step, but a sensible reduction in the scope of the powers being handed to the Secretary of State, tabled in the name of democracy and, for the Minister, good economic management, of which the Government are losing sight.

Amendment 75 addresses one of the strangest lines in the Bill: sub-paragraph 2 of schedule 5 part 5, on page 93. For a Bill with very little detail, it is incredible that the Government managed to include a sentence of such baffling circularity. It bears repeating, so the Minister may hear it read aloud. It is reminiscent of Danny Kaye in the film “The Court Jester” saying:

“The pellet with the poison’s in the vessel with the pestle; the chalice from the palace has the brew that is true.”

It is well worth watching, and this pales into insignificance—I am sure Danny Kaye would do a better reading of it than I. It says:

“The economic interest test is met in relation to the application of a safeguarding remedy if the application of the remedy is in the economic interest of the United Kingdom.”

It is remarkable—I think it is wonderful—that somebody produced that phrase. Perhaps the Minister would like to elaborate on it, while using the words “economic interest”, “application” and “remedy” just once each. I eagerly await his explanation of the useful addition that the clause makes to an otherwise rather slim Bill.

Nevertheless, amendment 75 may help the Minister by adding the wording that I tried to add to schedule 4 of the Bill through amendment 58. Amendment 75 is therefore effectively a consequential amendment, in that it adds much-needed clarity to the balance of interests that the Secretary of State should weigh up when assessing the economic test in schedule 5, to match the amendment that we have set out in schedule 4 already.

Similarly, amendment 76 removes the requirement that the Trade Remedies Authority or the Secretary of State consider

“the economic significance of affected industries and consumers in the United Kingdom”.

Again, we seek with the amendment to adjust schedule 5 of the Bill to align it with the changes that I outlined in my comments on schedule 4, this time to reduce the scope of the Secretary of State to predict the future success or otherwise of sectors of the British economy, or to preference large-scale industries over emergent or otherwise vital forces that might just end up giving our ailing, low-productivity economy a much-needed boost.

In summary, as hon. Members on both sides can see, we are engaging with this vital section of the Bill fully and constructively, to ensure that the right balance of interests is properly considered when trade remedies are investigated, and to construct a properly efficient process for doing so. I look forward to the Minister engaging with all the amendments on similarly constructive terms, and I hope that Committee members will carefully consider supporting them to ensure the best level playing field for UK industry, fair regard to producers and consumers alike, and an agile and efficient means of remedying any disputes that might arise.

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[Graham Stuart]

What I can confirm is that our system will be much more transparent. It will allow those who apply to it, or might be affected by it, to be clearer about how the system will work. That form of transparency is one of the fundamental principles on which we have built this structure.

[Peter Dowd]

That was a valiant attempt to show why the Government are taking a hammer to crack a nut.

[Nic Dakin]

I would appreciate my hon. Friend’s view on whether there are more tests, fewer tests or the same number of tests, transparent or otherwise. The Minister did not answer that question.

[Peter Dowd]

I am not privy to the details, but I believe there will most probably be more tests. I think those tests will be more bureaucratic and will lead to inflexibility. By the time we get around to designing them, they will be more complicated than they need to be. The Government’s position, as I have indicated, is to take a hammer to crack a nut. They are not fleet of foot enough on this issue. I have tried to lay out where we think the Government should give careful consideration. Though I hear what the Minister says, and his concern about transparency, this is so transparent that we can see through the Bill. That is the problem: there is nothing there. Though the Minister has tried to reassure us, I think he has missed the point. The Government are going into potentially dangerous territory and poking their fingers into all sorts of places that they do not necessarily need to poke into. We will therefore push the amendment to a vote.

Question put, That the amendment be made.

--- Later in debate ---

[Peter Dowd]

I beg to move amendment 41, in schedule 4, page 66, line 1, leave out from “dumping” to “in” in line 2.

This amendment removes the reference to the amount of the subsidy as an upper limit on the anti-dumping amount in the recommendation under paragraph 14.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 42, in schedule 4, page 66, line 6, leave out from “dumping” to end of line 7.

This amendment is consequential on Amendment 41.

Amendment 43, in schedule 4, page 66, line 7, at end insert—

‘(3A) The provisions of sub-paragraph (3) are subject to the provisions of sub-paragraphs (3B) and (3C).

(3B) If the TRA finds that the dumping has been fully or partially caused by market distortions affecting the prices of raw materials or other industrial inputs paid by the exporting producers, the estimated anti-dumping amount shall be the margin of dumping as determined in accordance with sub-paragraph (3)(a).

(3C) If the TRA finds that there is an inadequate level of social and environmental protection in the exporting country, the estimated anti-dumping amount shall be the margin of dumping as determined in accordance with sub-paragraph (3)(a).”

This amendment provides for the anti-dumping amount to be the margin of dumping in certain specified circumstances.

Amendment 44, in schedule 4, page 66, line 8, leave out paragraph (4) and insert—

‘(4) For the purposes of sub-paragraph (3)(b) the TRA shall, in determining the amount which it is satisfied would be adequate to remove the injury described in that provision, take account of all elements of the material injury being caused to the UK industry, including, but not limited to, the impact of reduced sales volumes, price suppression and curtailment of investment.

(4A) Regulations may make further provision for the purposes of sub-paragraph (4).”

This amendment makes provision on the face of the Bill for the main factors to be considered in determining the amount for the purposes of paragraph 14(3)(b).

Amendment 49, in schedule 4, page 69, line 18, leave out from “dumping” to “in” in line 19.

This amendment removes the reference to the amount of the subsidy as an upper limit on the anti-dumping amount in the recommendation under paragraph 18.

Amendment 50, in schedule 4, page 69, line 22, leave out from “dumping” to end of line 23.

This amendment is consequential on Amendment 49.

Amendment 51, in schedule 4, page 69, line 23, at end insert—

‘(4A) The provisions of sub-paragraph (4) are subject to the provisions of sub-paragraphs (4B) and (4C).

(4B) If the TRA finds that the dumping has been fully or partially caused by market distortions affecting the prices of raw materials or other industrial inputs paid by the exporting producers, the anti-dumping amount shall be the margin of dumping as determined in accordance with sub-paragraph (4)(a).

(4C) If the TRA finds that there is an inadequate level of social and environmental protection in the exporting country, the estimated anti-dumping amount shall be the margin of dumping as determined in accordance with sub-paragraph (4)(a).”

This amendment provides for the anti-dumping amount to be the margin of dumping in certain specified circumstances.

Amendment 52, in schedule 4, page 69, line 24, leave out paragraph (5) and insert—

‘(5) For the purposes of sub-paragraph (4)(b) the TRA shall, in determining the amount which it is satisfied would be adequate to remove the injury described in that provision, take account of all elements of the material injury being caused to the UK industry, including, but not limited to, the impact of reduced sales volumes, price suppression and curtailment of investment.

(5A) Regulations may make further provision for the purposes of sub-paragraph (5).”

This amendment makes provision on the face of the Bill for the main factors to be considered in determining the amount for the purposes of paragraph 18(4)(b).

[Peter Dowd]

I thank the organisations that sent in further written evidence today; that was very helpful. The TUC, among others, gave us information that helps with the amendments. Amendments 41 to 44 and 49 to 52 concern the removal of a mandatory lesser duty rule for estimating the injury of state-sponsored dumping. This is a potentially contentious area, and we have to get the balance right. Schedule 4 rightly defines dumping as imported goods priced below their normal value, where “normal value” means the domestic price, or another value if that is appropriate. I touched on this earlier. This definition recognises that the injury margin of domestic prices here does not always reflect the actual injury to UK manufacturers when dealing with goods from distorted economies such as Russia or China.

UK manufacturers are rightly concerned about leaving the methodology for these specified cases to regulation created by the Treasury and/or the Secretary of State, with little parliamentary input. The Opposition’s amendments on the trade remedies and Trade Remedies Authority seek to address this concern and ensure that the methodology by which the TRA calculates the injury caused to manufacturers by dumping sufficiently protects UK manufacturing and industry. I refer hon. Members to the TUC document, which gives the examples of aluminium foil, aluminium road wheels, coated fire paper and continuous filament glass fibre production. One of the biggest concerns that UK manufacturers have with the trade remedies Bill is outlined in schedule 4—that is, the introduction of a mandatory lesser duty rule. That requires the calculation, in dumping investigations, of the level of injury to domestic industry, in addition to the level of dumping. The duties correspond to the lesser of the two indicators, which means that they might not necessarily properly reflect the damage to British industry. That is important in a whole range of areas. My hon. friend the Member for Scunthorpe referred to this in relation to steel; and we heard about ceramics. It is important that we get this right. In other words, it is relatively straightforward to calculate the cost of dumping, but less easy in relation to injury, with a full investigation, which may be an appropriate action. I think that Dr Cohen was pretty clear about that in her evidence.

As witnesses from key industries, including steel, ceramics and chemicals, pointed out last week, the best estimate of the distortion to trade is the dumping and subsidy margin. The creation of a mandatory lesser duty will result in lower duties that in some cases may not reflect the actual injury. It is labour-intensive for the investigating authority and does not reflect the full—

Taxation (Cross-border Trade) Bill

Peter Dowd Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

Given that there may not be a Third Reading, I will start very briefly with some thank yous. I would like to thank Scott Taylor, one of our researchers. I would also like to thank the work of the Public Bill Office, particularly that of Colin Lee and Gail Poulton, who have been absolutely excellent in their support to all of us who have been here throughout the passage of the Bill.

I want to talk about the history of the Bill and how we got to this point. We had the Committee stage earlier this year. On the Saturday morning after it finished, and almost out of the blue, the UK Government announced that they would not be entering into a customs union. They clearly did not think it through, bringing out the announcement at the most stupid time: after all the debates in Committee. It was totally ill-thought-out.

We then had the Chequers agreement on 6 July. The White Paper was published on 12 July, which Members will note was the day after the amendments were tabled to this Report stage of the Bill—we all had to table our amendments before we had actually seen the White Paper. I thank the Minister for coming to Westminster Hall to give us some level of reassurance, but pretty much all the reassurance he could give was, “Please look at the White Paper that’s coming out on Thursday.” It has, therefore, been really difficult to prepare for the Bill. It has been really difficult to write this speech, trying to game exactly what is going to happen tonight. I am still not clear.

There are too many factions in this House. We have the UK Government, the Conservative remainers, the European Research Group, the Democratic Unionist party, the Labour leavers, the Labour remainers and the Labour Front Bench. The UK Government will not support things put forward by anybody who supports remain. The Labour Front Bench will not support anything put forward by the Conservative remainers. The members of the ERG will not support anything put forward by anybody except themselves. The Democratic Unionist party will support whatever the UK Government tell it to, on the basis that it is being paid to do so. It is a complete shambles. Trying to do anything sensible in this House is incredibly difficult, especially given that we know there is a majority for a customs union among the Members of this House. Despite that, we are going to end up in a situation where members of the ERG, who believe in the polar opposite of a customs union, are having their amendments accepted. When the rest of us put forward anything vaguely sensible, our amendments are not accepted.

This is certainly not about sovereignty for the people or sovereignty for Parliament; it is about sovereignty for a very small group of elite Tories who want to have their say. The Government are letting them have their say. I could not be more angry about the fact that the ERG’s amendments are apparently going to be accepted. I do not want to direct all my ire at those on the Government Front Bench. Those on the Labour Front Bench need to be absolutely clear on their position. They need to be clear that they will support the softest possible Brexit. If they are talking about a jobs-first Brexit, they need to recognise the benefits of the customs union and the single market. They have the opportunity to do that tonight by supporting some of the amendments that have been tabled by those who support a soft Brexit.

The Scottish National party does not support fully a number of amendments that we plan to vote for tonight. Our position is that Scotland voted to remain in the EU, so we would like to remain in the EU. Scotland supports remaining in the single market and the customs union, so the SNP will support anything that keeps us in the single market and the customs union. In the absence of those options being on the table, we will do what we can to protect the economic and cultural interests of the whole United Kingdom. Even though some of the amendments are not brilliant, we will vote for anything that makes Brexit slightly softer than the Brexit that is being proposed. I needed to make it clear that just because we support an amendment here does not mean that it is a preferred option. It means that it is not quite as bad as some of the other options.

I make it clear that I will press new clause 16, in my name and the names of my colleagues, and I would also like to speak in favour of our other amendments. The SNP position is crystal clear, as I said. The UK Government position is not. I welcome some clarity that is given in the White Paper that was published after Chequers, but I have major concerns about some of it. It mentions specifically a trusted trader scheme. On the trusted trader scheme that we have—the authorised economic operator scheme—I have raised concern after concern about it, and I am not the only one; organisations such as the British Chambers of Commerce have, too. If there is to be an expanded trusted trader scheme, it needs to actually work. It needs to be applicable to small businesses and businesses need to be able to access that scheme. We are now at the stage that businesses should know what those schemes are. If the Government are going to bring them forward, they need to do so as quickly as they possibly can so that businesses can be clear on what basis they will be trading in future. That is really important.

I am pleased to see that diagonal accumulation has been recognised in the Chequers agreement. I have been talking about it for some time, and I am really glad that it has been recognised and that we will have a situation where we will possibly still be able to export cars to South Korea, because that is really important for our car industry. I am pleased that the Government have now made it clear that they are pursuing that.

Protective geographical indicators are also mentioned in the Chequers White Paper. I am slightly concerned about the way the Government are going on this. It would be very good to have more information around that. A PGI scheme that applies only to the UK and does not recognise EU PGIs is a bit of a problem, so we need more clarity from the UK Government on how they intend the PGI scheme to work. I know that there is a negotiation, but if we could have their point of view first, that would be very useful.

I want to briefly mention some of the other meat in the Bill and something that the British Retail Consortium brought to us. It encapsulated some of the issues with the Bill very neatly. It said that there are not yet agreements on security, transit, haulage, VAT and people and that we need mutual recognition on veterinary, health and other checks with the EU. It seems that the Government are pursuing some of this, so that is good news. We need investment in IT systems to deliver the customs declaration system. Again, I am still not convinced that this will come through in time, so if the Minister could give reassurance that it will, I would very much appreciate it. We need co-ordination between agencies at ports and borders, as well as investment and capacity and staff at ports. The Government have not done enough on both those things. They have not put the extra resource into ports. They have not told ports how they will be administering these things in the future. If ports are going to have to massively increase their staff numbers, they need to know now how they will do that.

On queuing, a two-minute delay at Dover will create a 17-mile queue, so it is not as though Operation Stack will just happen as normal. This will not be Operation Stack. It will be an incredibly large version of it, and Operation Stack was bad enough. The BRC also mentioned AEOs, particularly in relation to small and medium-sized enterprises. All those things are still concerns about the Bill and I will raise them on Third Reading, if we have a Third Reading debate, because I do not believe that the Bill is fit for purpose as it is.

I specifically want to talk about the new clauses from the ERG. If the UK Government are bound to accept them, we have a very, very severe problem. I have major issues with new clauses 36 and 37 and amendments 72 and 73. New clause 36 relates to reciprocity. Page 13 of the Chequers agreement says:

“At the core of the UK’s proposal is the establishment by the UK and the EU of a free trade area for goods.”

It then goes on to make clear on page 17 that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

This new clause directly contradicts that.

What is the point in having a White Paper released on a Thursday if the Government are going to ignore it on Monday? I do not understand how we can be in that position. How can businesses know where we are going if the Government do not even know where they are going? For the Government to be accepting amendments by a group of around 14—who knows how many of them there are?—ERG members to get a hard Brexit is absolutely ridiculous. If there is going to be a Brexit, we need a Brexit that does what the Labour party suggests it should do: protects jobs. We need the Labour party to support a Brexit that protects jobs as well, not just us.

The Bill is a mess. It does not do what it set out to do, which is replicate the union customs code, and it does not now do what the Chequers agreement said it would on Friday. We need everybody in the House, from all the various factions I mentioned earlier, to get behind proposals that protect jobs and the sovereignty of the people, not just the sovereignty of an elite few.

[Peter Dowd (Bootle) (Lab)]

I read the White Paper on the train home on Thursday, if only out of a sense of morbid curiosity, but following the Prime Minister’s capitulation to the Brexiteers today, that curiosity has turned to a sense of the macabre. To begin with, we had the woman in the bunker with the blacked-out windows saying we were outward facing. Are we? This from the Prime Minister who invented a hostile environment for the Windrush generation and for disabled people claiming their rightful benefits and whose Government have been on the wrong side of the law more times than Arthur Daley.

The Prime Minister went on to state that we had a dynamic and innovative economy. Do we? Our economy is 35% less productive than Germany’s; we invest less and we have the most regionally imbalanced economy in Europe. Growth is sluggish and inflation stubborn. And on it goes—it gets more surreal. She says we live by common values of openness and tolerance for others and the rule of law. Really? The only thing the Conservative party is open to and tolerant of is big fat donations from Russian oligarchs. But here is where it gets really interesting. When she speaks about sticking to our principles, one has to wonder which principles she is referring to—the ones she referred to yesterday and which are enshrined in the White Paper or those she holds this afternoon, which tear the White Paper to shreds. Perhaps the Minister can enlighten us.

The Prime Minister wanted to deliver an ambition to “once and for all” strengthen our communities, our Union, our democracy and our place in the world. I will take those claims one by one: our communities have been ripped apart by austerity; our Union is in danger from Ministers out of touch with the needs of any nation and afraid to move away from their desks in case someone else takes it; our democracy is threatened by swathes of Henry VIII powers; and our place in the world is a laughing stock due to the Prime Minister’s supine sycophancy to Donald Trump, who humiliated her.

The White Paper—what is left of it—came from the pen of a Prime Minister obsessed with silly soundbites. She used to talk about “Labour’s magic money tree” until she wanted a magic money tree of her own with which to bribe the Democratic Unionist party, when that phrase was quickly ditched. What about the infamous “strong and stable” mantra? It turned out to be more like a strong and stable smell of panic during the election and was ditched as well. Finally, it seems that this White Paper has also been ditched.

As for Northern Ireland, I present, the buffer zone—a 10-mile-wide area along the entire boundary between Northern Ireland and the Republic. Under the EU’s trading rules, to be operational this buffer would have to be policed on both sides of the 10-mile divide. Did we really spend decades trying to get rid of divides in Northern Ireland only to resurrect them? I think not. As for the facilitated customs arrangement, we are not clear what about it constitutes a partnership, as it would effectively leave UK customs officials working to maintain a customs union that we are no longer a part of.

Regardless of who is responsible for managing the duties, it remains unclear how the FCA would be frictionless. Presumably, the final destination of goods would have to be queried as they enter the UK. This would slow down the passage of goods across our borders and prevent intricate supply chains from functioning properly. It would lead to waste, uncertainty and expense for business, to higher prices for consumers and to job losses and production moving abroad, as the right hon. Member for Broxtowe (Anna Soubry) pointed out. In that regard, the comments from the hon. Member for Gainsborough (Sir Edward Leigh) were unconscionable.

What about the UK border? Does the Minister expect checks to be in place to ensure that goods that claim the UK as their final destination are not diverted into the EU once they arrive? Presumably, we would need customs checks and controls between the EU and the UK to reconcile goods to documents when, for example, UK anti-dumping duties exceed those applicable on import. Can the Minister clarify? Can he tell us how many trusted traders—the Tories using the word “trusted”; that’s a laugh, isn’t it?—are currently registered with the Government’s scheme and how many they believe will be registered by the end of the transition period?

Of course, all this can be avoided if the House chooses to support Labour’s clear and pragmatic solution to the issues of frictionless trade within the EU and preventing a hard border in Northern Ireland. New clause 11 presents Labour’s practical solution to the problems that have confounded the Conservatives. In our new clause, we call on the Government to negotiate a new customs union with the European Union, to be in place when we leave the current customs union at the end of the transition period. That is the only way to ensure that we can have frictionless trade with our largest trading partner and help to prevent a hard border between Northern Ireland and the Republic. It is what business needs and producers want, and it is what would most benefit the public.