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House of Commons Hansard
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Public Bill Committees
30 January 2018

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

The Committee consisted of the following Members:

Chairs: †Ms Karen Buck, Mrs Anne Main

† Blackman, Kirsty (Aberdeen North) (SNP)

† Chapman, Douglas (Dunfermline and West Fife) (SNP)

† Dakin, Nic (Scunthorpe) (Lab)

† Davies, Chris (Brecon and Radnorshire) (Con)

† Dodds, Anneliese (Oxford East) (Lab/Co-op)

† Dowd, Peter (Bootle) (Lab)

† Hair, Kirstene (Angus) (Con)

† Hardy, Emma (Kingston upon Hull West and Hessle) (Lab)

† Hill, Mike (Hartlepool) (Lab)

† Kwarteng, Kwasi (Spelthorne) (Con)

† Menzies, Mark (Fylde) (Con)

† Morris, Grahame (Easington) (Lab)

† Reynolds, Jonathan (Stalybridge and Hyde) (Lab/Co-op)

† Rowley, Lee (North East Derbyshire) (Con)

† Rutley, David (Lord Commissioner of Her Majesty's Treasury)

† Stride, Mel (Financial Secretary to the Treasury)

† Stuart, Graham (Parliamentary Under-Secretary of State for International Trade)

† Sturdy, Julian (York Outer) (Con)

† Wragg, Mr William (Hazel Grove) (Con)

Colin Lee, Gail Bartlett, Committee Clerks

† attended the Committee

Public Bill Committee

Tuesday 30 January 2018

(Morning)

[Ms Karen Buck in the Chair]

Taxation (Cross-border Trade) Bill

Clause 13

Dumping of goods, foreign subsidies and increases in imports

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I beg to move amendment 137, in clause 13, page 9, line 4, leave out “public notice” and insert “regulations”.

This amendment, together with Amendments 138 and 139, makes the power to give effect to an accepted recommendation of the TRA exercisable by regulations rather than public notice.

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With this it will be convenient to discuss the following:

Amendment 138, in clause 13, page 9, line 8, leave out “public notice” and insert “regulations”.

See explanatory statement for amendment 137.

Amendment 139, in clause 13, page 9, line 17, leave out “public notice” and insert “regulations”.

See explanatory statement for amendment 137.

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Good morning, Ms Buck. It is a pleasure to begin the second week of our Committee’s consideration of the Bill.

The amendments, like many that the Opposition have tabled, concern the democratic deficit in the Bill. As we have covered in numerous evidence sessions and in our discussions so far, the Bill is far too reliant on secondary legislation. The scrutiny of Delegated Legislation Committees—especially those that consider instruments laid according to the negative procedure, as the majority will be—is insufficient for taxation matters of such potential magnitude. Parliament will have the option to raise objections to the instruments, but they will not be debated on the Floor of the House as a matter of course.

The amendments are important because the Bill introduces an even more troubling concept: that of making law by public notice. After Second Reading earlier this month, the House of Lords Delegated Powers and Regulatory Reform Committee published a report that probed the most worrying aspects in detail. The report emphasises that the concept of public notice, on which the Bill is heavily reliant, is effectively a modern form of rule by proclamation that removes the opportunity for parliamentary scrutiny. It states:

“For Ministers and others to make law by ‘public notice’, without any recourse to Parliament, is highly unusual and such provisions should attract strict surveillance by Parliament.”

It also notes that

“the Treasury’s Delegated Powers Memorandum says that such notices will only make provision that is purely technical or administrative in nature. Nonetheless, clause 32(9) of the Bill allows anything that can be done under public notice to be done by regulations, implicitly acknowledging the importance of things done by public notice.”

It identifies the Bill as a throwback to the Statute of Proclamations 1539, which

“gave proclamations the force of statute law…it was repealed in 1547 after the death of Henry VIII”.

We should all be grateful for the institutional memory of the House of Lords.

Equally problematic are the mechanics by which public notice takes place. As the Delegated Powers and Regulatory Reform Committee emphasises, under clause 37(5) the only qualification for public notice is that the person who issues it has selected a channel that they consider appropriate, but a definition of “appropriate” is absent from the Bill. Public notice could therefore mean anything from a full-page advert in the Financial Times to a small ad in a trade journal or perhaps even a tweet. Clause 24 permits Her Majesty’s Revenue and Customs to establish a system for making rulings to determine the customs code and the place of origin of particular goods, both of which have an impact on the duty. Other rulings could affect the rights and liabilities of an individual.

The Delegated Powers and Regulatory Reform Committee recommends

“the creation of a generally applicable system for making determinations which are capable of affecting an individual’s legal position should ordinarily be dealt with by legislation, subject to scrutiny by Parliament, rather than by public notice without any such scrutiny”—

checks and balances. The Opposition agree wholeheartedly —hence our amendments.

The Government’s manoeuvres are deeply concerning. We would be failing in our duty of scrutiny if we did not step in to raise our anxieties about how powers of proclamation may be used. We are well aware of the volume of new legislation that needs to be produced to create and implement a new customs code, and of the temptation to create or take advantage of constitutional shortcuts to facilitate the process. However, protecting the rights of the individual must come first. Where matters of taxation are concerned, the parliamentary process is usually more rigorous with respect to the reasons for setting the duty.

As I have already said, the secondary legislation process is not optimal, and we believe that the balance between primary and secondary legislation in the Bill is unsound. However, using delegated legislation for these matters instead of creating regulations by public notice would surely be the least-worst option. It would allow for a bare minimum of parliamentary involvement and oversight of new tax and customs law. Even the negative procedure gives Parliament the option to reject a statutory instrument, although no formal debate takes place. Where possible, more significant matters should surely be considered via the affirmative procedure, so that at least there would be the basis for debate.

The Opposition believe that, without such debate, we will be at risk of setting a dangerous precedent that allows the ruling Executive to make regulation by public notice as it pleases, potentially even beyond the scope of the Bill. Therefore I call upon all members of the Committee to support the amendment, to ensure that we can continue to perform our vital role providing checks and balances in the structure of taxation and customs law in the UK.

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Thank you for the opportunity to speak and for chairing the meeting, Ms Buck. I would like to speak briefly around the amendments. One of my earliest questions about the Bill was: what is a public notice and how does one justify that it has been made sufficiently public? The Opposition raised that case clearly. On the definition of public notice and the fact that the person making the public notice has to make that judgment call, particularly in relation to clause 13, which concerns the dumping of goods, foreign subsidies and increases in imports, and given that the UK has not had provision to make regulations and rules, it seems sensible to say that a public notice is not the best way. Parliament should have some say. We have raised concerns previously that, although Brexit is apparently about taking back control, it appears that control is being taken back to the Executive rather than to Parliament as a whole. I will therefore support amendments 137 to 139 if they are pushed to a vote.

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It is a great pleasure to serve under your chairmanship again, Ms Buck, and to welcome back the hon. Member for Stalybridge and Hyde. This group of amendments would require trade remedies measures to be imposed and given legal effect by regulations. I appreciate the concerns in relation to the use of public notices, which were raised by both Her Majesty’s Opposition and the Scottish nationalist party representative. I am grateful for the opportunity to set out why this is an entirely appropriate procedure for imposing trade remedies measures.

If you were cynical, Ms Buck, you might think that, because the Opposition have decided to make parliamentary scrutiny the central theme of their critique of the Bill, they are leveraging that into every single argument at every single stage. I am not a cynic, and take the concerns at face value, as the genuine ones that I am sure they are.

The imperative is to act quickly once the Trade Remedies Authority has identified the need to tackle injury to UK industry. I would have hoped that Members on both sides of the Committee would recognise that the imperative is to act quickly when injury to UK producers has been identified, and to move as swiftly as possible to put that right. Measures will be calculated and recommended by a fully expert and independent body, following an extensive investigation that is governed by strict World Trade Organisation rules. Our priority has to be to ensure that those recommended measures are imposed quickly, to provide relief to industries suffering injury.

The additional proposed process would delay our ability to apply measures precisely at a time when UK industry is suffering injury, and when it has been independently established that that is so. It would run counter to the calls we have heard from industry for a swift process. The use of public notices to implement trade remedies measures is consistent with the approach taken in comparable WTO countries such as New Zealand and Australia, and is therefore in line with international good practice.

Therefore I say to the hon. Member for Stalybridge and Hyde that, to suggest that this use of public notice is untoward and could lead to further government by proclamation, even outwith the Bill, is disproportionate. The reality is that this set of amendments, as with so many put forward by the Opposition, would in fact undermine the very principles that they say they are interested in: namely, to protect UK industry to ensure that we have a proportionate and speedy response to unfair dumping or use of subsidy and make sure that injury to British industry is put right. It is a shame that, collectively, the Opposition’s amendments suggest that their priorities are somewhere else.

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The Minister’s case is that this needs to be used for reasons of speed. Can he give us detailed information about how long it takes to prepare a statutory instrument to be brought before the House, given that that does not need parliamentary time in the Chamber—it cannot be that extensive? Exactly how much time will be saved by this proposed new form of parliamentary process?

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The hon. Gentleman has been in the House for some time. I would have thought he would be familiar with the calendar of the parliamentary year, with long periods of recess when Parliament does not sit. Why on earth would Her Majesty’s Opposition, so often accused, doubtlessly unfairly, of being in hock to the producer interest and blind to wider society and the interests of the consumer and the ordinary citizen—though I decry that attitude—because of their links to the trade union movement, wish to put delays in place?

The hon. Gentleman knows full well the delays that can come with secondary legislation. To have that at the end of that extensive, independent and exhaustive expert assessment that has established injury, why on earth would the Labour party, or indeed the Scottish nationalist party, want to get in the way of swift, effective and proper defence of British jobs, British workers and British business?

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I am pleased that the Government are now concerned with ensuring that such things are put in place incredibly quickly if there is injury to UK industry. In that case, will the Government bring forward amendments to speed up other parts of the process, given that they will now be taking longer than the EU’s similar processes?

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I apologise for getting the name of the hon. Lady’s party wrong—it is the Scottish National party. We have put forward a proportionate and swift system, and hope that we would be able to deliver a speedier, more proportionate and balanced response than that of the EU. That is certainly our aim. I note again that amendments tabled by the hon. Lady’s party and Her Majesty’s Opposition suggest that their priority is entirely different.

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I am grateful for the infusion of energy that the amendments have brought to the Committee. The Minister’s bluster revealed a lot. I noticed that he did not actually answer my question. If the Government’s concern is the wish to bring a trade remedy during recess, they have to invent a new constitutional procedure to do that. I am afraid that is a very thin case and the Minister did not provide a reason why the new process is required in the interests of brevity. He was not able to give us any clear information, so we will push the amendment to a vote.

Question put, That the amendment be made.

Division 5

30 January 2018

The Committee divided:

Ayes: 8
Noes: 10

Question accordingly negatived.

View Details

Question proposed, That the clause stand part of the Bill.

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With this is will be convenient to discuss the following:

Amendment 12, in clause 32, page 19, line 32, after “which” insert—

“section (Dumping of goods and related activities: enhanced parliamentary procedure, etc)(6) applies and”.

This amendment is consequential on NC5.

New clause 5—Dumping of goods and related activities: enhanced parliamentary procedure, etc

“(1) No regulations may be made by the Secretary of State in exercise of the power in section 13(5) except in accordance with the steps set out in subsections (2) to (5).

(2) The first step is that a Minister of the Crown must lay before the House of Commons a draft of the regulations that it is proposed be made.

(3) The second step is that a Minister of the Crown must make a motion for a resolution in the House of Commons setting out, in respect of proposed regulations of which a draft has been laid in accordance with subsection (2)(b), the amount of import duty proposed to be applicable to any goods that are or are proposed to be subject to a quota.

(4) The third step is that the House of Commons passes a resolution arising from the motion made in the form specified in subsection (4) (whether in the form of that motion or as amended).

(5) The fourth step is that the regulations that may then be made must, in respect of any matters specified in subsection (4), give effect to the terms of the resolution referred to in subsection (5).

(6) No regulations may be made under the following provisions unless a draft has been laid before and approved by a resolution of the House of Commons—

(a) paragraph 1(3) of Schedule 4 (definitions and determinations in relation to goods being “dumped”);

(b) paragraph 5 of Schedule 4 (determination of certain matters relating to “injury” to a UK industry);

(c) paragraph 26(1) of Schedule 4 (provision for suspension of anti-dumping or anti-subsidy remedies);

(d) paragraph (1)(2)(c) of Schedule 5 (defining a “significant” increase)

(e) paragraph 2 of Schedule 5 (definitions relating to “serious injury” to a UK industry);

(f) paragraph 22(1) of Schedule 5 (provision for suspension of safeguarding remedies).”

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

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The Bill ensures that the UK customs regime is ready for EU exit. A key part of our readiness for exit day is our ability to operate our own trade remedies system. Trade is good for the UK. It can lead to higher wages, stimulate business efficiency and productivity and improve consumer choice. Analysis by the OECD suggests that a 10% increase in openness is associated with a 4% increase in income per head.

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Will the Minister clarify whether the Government have done a comparative impact assessment of the processes involved with the EU and the processes they are trying to put in place in terms of speed and timeliness, which we are all concerned about?

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I am grateful to the hon. Gentleman for that question. I will seek at some point in the debate to address his point.

Free trade does not and should not mean trade without rules. Trade remedies are an important safety net. They can help enforce the rules that make free trade work by addressing injury to a domestic industry caused by unfair trading practices or unforeseen surges in imports. That is why all major WTO members have a trade remedies regime, and why we are taking forward the measures in the Bill. The European Commission currently carries out trade remedies investigations and imposes measures on our behalf. Once we leave the EU, we will need to be able to do that for ourselves. Clause 13, together with schedules 4 and 5, sets up the UK framework to allow us to do just that.

These proposals fall under the international framework set by the WTO. We are legislating for the full suite of powers permitted under that framework, which will enable us to impose additional duties on imports that cause injury to UK industry. The message is clear: free trade and the benefits it brings are welcome, but the UK will act decisively to address trade that causes injury to our domestic industries.

We cannot forget the wider ecosystem of our economy. Tackling injury is the priority, and the Bill makes clear that there is a presumption in favour of imposing additional duties when UK industry suffers injury as a result of unfairly dumped or subsidised imports. In recent years, trade remedy measures have protected UK industry and its employees, particularly in the steel and ceramics sectors but also in the chemicals, biofuels and glass industries. Considering that manufacturing contributes around 10% of UK gross value added and 8% of employment, the need for the UK to have a trade remedies system once we leave the EU is apparent.

Without the ability operate our own trade remedies regime, the UK would be exposed to unfair trading practices and unforeseen surges in imports, with potentially damaging consequences for UK industry and the economy more widely. However, there must also be a mechanism for ensuring that imposing such duties is not contrary to the best interests of the UK as a whole. Duties on imports can increase costs for downstream industries that use those imports to create their products. They can also hit the purses of consumers. That is why the Bill ensures that any duties are set at the level needed to address injury to UK industry and no higher. That levels the playing field without causing unnecessary harm to downstream users and consumers.

We are also building in a safety valve to ensure that measures are not imposed where they are not in the overall interests of the UK. The economic interest test will consider whether duties would have a disproportionate impact on a particular area of the UK or on particular groups in the UK. The test will also consider issues such as the impact on the longer-term competitive environment in the UK.

Businesses can have full confidence that that test, and investigations as a whole, will be objective and impartial. The new Trade Remedies Authority, which will be established through the Trade Bill, will have the independence and technical expertise to determine complex matters of fact. When the authority concludes that measures are justified, it will make independent recommendations to Ministers, who will then reach a final decision. Ministers will be able to reject recommendations to impose duties where they consider they are not in the public interest. Where Ministers do so, they will do so transparently, and they will have to make a statement to Parliament setting out their reasons.

As Monckton Chambers noted in its response to the trade White Paper, that structure ensures that

“the complex judgments made in such cases are, and are seen to be, made independently”.

It strikes a delicate balance between ensuring that the investigation and the calculation of proportionate duties is carried out by impartial experts, and ensuring that there is an opportunity for Ministers to intervene if duties are not in the public or wider economic interest. We believe that these provisions are therefore fundamental to establish a robust but proportionate trade remedies system for the UK.

New clause 5 and amendment 12 seek to put in place a further parliamentary process for imposing trade remedies measures and to change the parliamentary processes for some of the regulation-making powers in schedules 4 and 5. As I have explained, the use of public notices to implement measures is entirely appropriate and I am pleased that the Committee came to that conclusion too. It enables independently recommended duties to be implemented quickly and effectively and is in line with international good practice.

In relation to the regulation-making powers for indirect tax matters, it is common to have framework primary legislation supplemented by detailed and technical secondary legislation. The trade remedies framework contains a great deal of such technical detail. The secondary legislation made under the Bill will comply with WTO rules. That is why we propose that the regulations are subject to the negative procedure.

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.

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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.

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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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The Opposition parties protest too much. As we all know, the point of a trade remedies system is to be balanced, proportionate and move swiftly to protect British industry. That is why we are setting up, through the Trade Bill, the specialist body to do that: the Trade Remedies Authority. We are talking about the implementation of the Trade Remedies Authority’s recommendations. Why on earth, after that exhaustive effort, with the appropriate, balanced tests in place, would anyone want to create burdensome, parliamentary oversight? It does not make any sense.

The TRA makes the decision. If the Secretary of State disagrees with it, they will have to come to Parliament and make a statement, so there will be the opportunity to deal with that. When the TRA has made an assessment and wants to help British industry, why on earth would the Opposition parties want to make a wider political point about lack of scrutiny, just for the sake of it, when it is totally inappropriate for this measure? I leave outsiders to judge whether that is for political interests or for the interests of either British consumers or producers.

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If the Trade Remedies Authority will be so good at making decisions, why will the Government simply have to make a written statement to the House if they disagree with it, rather than go through some kind of regulation procedure? If the Trade Remedies Authority is set up in such a great way that it will always make the best decisions, why will the Minister be allowed to disagree with it simply by written statement, and not by any sort of parliamentary procedure?

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The legislation makes it clear that the Secretary of State should look at it, and various people who have commented on the structure have said that it is right that, although the main body of work should be conducted by experts, ultimately it should be a politician accountable to Parliament, part of a democratic process, who should make that decision. Were they in any way to disagree, they would have to come to Parliament to make a statement. That is appropriate and proportionate, and why on earth the Opposition parties would want to go to such lengths to try to stop us bringing in effective remedy to protect British producers, I cannot imagine.

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Very briefly, why can the Minister not give us any detail about the methodology by which injury will be calculated, or any of the basic details that the US and the EU have already put in primary legislation? He cannot tell us how that will be because it is not in the Bill. Surely, we need some parliamentary safeguards about what the decisions will be, because the Minister cannot tell us the process that will be followed.

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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

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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.

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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.

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

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You do it well.

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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.

Amendment 23 seeks to add a few additional words to the definition of the “normal value” of goods. That is to ensure that the comparable price for the purposes of determining normal value of a good would be assessed with respect to independent consumers, rather than consumption by anyone in the exporting country or territory. That is a point of clarification, to provide legal certainty as to the definition of normal value. It would give producers peace of mind that they will not be unfairly disadvantaged by comparison with supposedly normal prices, that are in fact subject to subsidy. I would hope that this amendment would cause little concern to members of the Committee and that it will be supported, and I am sure that the Minister will comment on that in due course.

Amendment 24 is consequential to amendment 25, the latter being a substantive amendment seeking to introduce proper detail to the procedure for determining the value of goods, and therefore to the understanding of comparable prices for the purposes of assessing market distortions. Again, that goes to the heart of what we want to do: we want to give a certain amount of certainty and clarity, and we have not had that. There is nothing wrong with us wanting that, and there is nothing wrong with us wanting to scrutinise that in future. This detail should already be on the face of the Bill rather than kicked into regulations. The Manufacturing Trade Remedies Association has been clear with us that the lack of detail is the cause of a great deal of uncertainty for their members. That can be fatal to businesses—not just delay, but uncertainty. They will be left in the dark until the Government come forward with the numerous outstanding regulations.

As they stand, the three related Brexit Bills will entail vast quantities of expected secondary legislation: without which it will not be possible to begin to adapt to a new system for creating a level playing field for our own producers, and for the benefit of consumers as well, which are interchangeable as we heard from representative witnesses last week. Amendment 25 would therefore put in place several safeguards to ensure that such a playing field would be achieved. It would do so by explicitly excluding prices where compensatory arrangements are in place in an exporting country from determining the normal value of a good. It would ensure that the normal value represented the value of the majority of similar goods exported to the UK, not a minority. It would make provision for situations in which a normal value was more difficult to determine because of insufficient sales of like goods. Amendment 25 would also give powers to the TRA to make a judgement call on whether value had been distorted when it was making its assessments, or use evidence from an appropriately representative country with similar levels of economic development and adherence to social and environmental factors and protections.

Amendment 26 follows from the detail added in amendment 25, and would ensure that once a proper procedure for determining normal value had been conducted in the manner I outlined, the value would be compared with the export price in a fair manner. Amendment 27 is consequential to the two before it, and would ensure that regulations made thereafter could add further guidance to the application of the provisions contained in the previous amendment, offering the Secretary of State some flexibility should additional changes be necessary. We accept that flexibility is needed in situations.

Amendments 62 to 64 would ensure that the definition of the term “serious injury” corresponded to the agreed terminology of the World Trade Organisation. Broadly, all the amendments would do little more than establish Trade Remedy Authority compliance with World Trade Organisation standards in calculating dumping margins and subsidies, and in assessing injury. In some sections, the language is derived directly from existing EU regulations: that would give the added advantage of maintaining alignment during the transition period, and potentially thereafter if desirable. Given that they are already in use throughout the globe, it is obvious that these are not unreasonable procedures to apply here in primary legislation. One would hope that the Government would bring forward similar proposals if the unfortunate outcome arises whereby they are left to regulations. The fact that these amendments constitute such normal procedures simply begs the question of why such large gaps have been left in the Bill, and highlight the uncertainty they cause.

We are still not getting answers from the Government on the fundamental issue. This is a mañana Bill: we will leave it till tomorrow. Why not simply add the necessary procedures to the primary legislation, as the amendment would do? That would give peace of mind to our fine and fantastic producers that they will be able to play on a level playing field, whatever happens. Certainty, certainty, certainty—that is what we want.

Will the Minister outline how he envisages the procedure for assessing normal value being different from the one I have set out? Will he detail which particular provisions of our amendment the Government do not wish to include and set out the reasons why? That would be helpful. Will he give specific examples of where the Secretary of State might wish to use the vast untrammelled powers he or she will be handed to alter the arrangement or take a different approach?

In short, can the Minister give the Committee any reason—just one would be helpful—why the Government should not include the standard procedure in the Bill to allow Parliament its proper role of scrutiny? I hope he will be kind enough to respond to each of these questions, as the many great producers in the United Kingdom will no doubt be listening carefully and avidly, hanging on every word he says, hoping he might ease their concerns.

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It is a pleasure as always to serve under your chairmanship, Ms Buck. As my hon. Friend has pointed out, the amendment is about certainty for business and industry. At some point, the Government need to bring detail forward. The longer detail is left, the more problematic it will be for business confidence, particularly in an industry such as steel, which is freely traded. It is a free trade industry, so it needs to ensure fair trade. That is why it is not surprising that steel has such a significant number of trade defence instruments in the European Union. That ensures a level playing field under WTO rules against other parts of the world where people want to trade unfreely.

At some point the Government need to bring forward the detail. The problem with this part of the Bill is that it is just a framework with nothing more to it. I therefore very much welcome the amendments tabled by my hon. Friends, because they would bring some certainty and sense into the area. At some point the Government will have to do that. They may say the amendments are not appropriate now—they are drawn very much from what is already there in the European Union and have been written across—so my challenge to them is to ask why they are not appropriate. When will we have the appropriate provisions in place?

We need to have certainty and confidence. These major foundation industries, such as steel, ceramics, oil and gas, that rely on strong trade defence instruments to ensure that they can trade not only freely but fairly need significant capital investment to stay at the cutting edge of development. To make that capital investment now, they need confidence about the framework of the future. That is why the Government should not dilly-dally. The sooner they can bring things forward the better.

The Opposition are doing their job in trying to be helpful to Government by bringing forward something that is compliant with WTO rules and would give the necessary confidence. We would know more about how investigations would be conducted, how calculations would be made and how remedies would be applied—the sort of detail that industry needs.

In a sense, the challenge to the Government is that we all agree. I welcome the Minister’s robust approach this morning—it is the approach we always enjoy from him—but there has been a clear commitment to speedy, timely and effective protection and relief for businesses that are unfairly competed against by the threat of dumping from abroad. However, we need appropriate mechanisms in place to deliver on that rhetoric. The longer it takes to get that detail in place, the more the hesitation, concern and lack of trust in the Government will grow. It is in no one’s interest that the Government should not be trusted in such a crucial area. Therefore, the Government, by taking steps sooner rather than later, and embracing the Opposition proposals, would be moving briskly in the direction of the Minister’s rhetoric.

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I thank the hon. Members for Bootle and for Scunthorpe for excellent contributions to the debate. I entirely agreed with many of the issues that they highlighted.

The amendments would set out a great deal of the technical detail about the determination and calculation of dumping on the face of the Bill, rather than in secondary legislation, and would require the Government to define the meaning of

“serious injury to UK producers”

affected by unforeseen surges in imports, in accordance with article 4 of the WTO Agreement on Safeguards.

Of course, we accept that it will be necessary to set out further details in legislation. As I and my right hon. Friend the Financial Secretary have said from the beginning, the Bill is a framework Bill. It is intended to provide the framework for the UK’s trade remedy system but, as is normal where there is a great deal of technical detail to be legislated for, that will be set out in secondary legislation.

Industry has contributed its thinking to the detailed technical areas, and we shall engage with all stakeholders with detailed proposals in a series of meetings starting next month. I entirely agree with those who have spoken so far about the need for speed; but they would also agree about the need to get things right. Our aim and the purpose of introducing the Bill is to make sure we have a suitable framework for the long term. That is why we are going to get it right, as well as getting it in place in the appropriate time.

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I very much welcome the Minister’s commitment to engage in a timely way with stakeholders. Can he give us a timescale by which the engagement will be concluded and proposals will come out of it, to give some detail and confidence?

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I shall do so in due course. The detail of the secondary legislation will be constrained by and compliant with the WTO rules, but the rules that we set will be appropriate for the UK. Because they will be set out in secondary legislation there will be the necessary flexibility to allow changes to be made quickly, reflecting developments in best practice and WTO case law. I am sure that the Committee will agree that that is important, and that is why we do not think it is appropriate to include those matters in the Bill.

As to market distortions I reassure the hon. Member for Bootle that the legislation will enable the UK trade remedy system to account for particular market situations in anti-dumping cases. All major economies have a trade remedies framework that allows alternative methodologies to be used in investigations when the normal value of a good cannot be properly determined based on information from exporting countries. The UK will be no different. We have already discussed this with industry and will continue to do so, to get it right.

I recognise the underlying intent of amendment 62, to increase legal certainty for UK industry by including the requirement to act in accordance with the WTO Agreement on Safeguards. However, it is unnecessary. As members of the WTO we will be required to adhere to the provisions of WTO agreements, and we have been clear about the fact that we are committed to developing the detail of the UK’s trade remedy system in a way that is fully compliant with the obligations. By way of further reassurance, clause 28 of the Bill requires the Secretary of State and the TRA to have regard to their international obligations. On that basis I hope that the hon. Gentlemen can see that their concerns will be met by the approach that we shall continue to take, and that the amendment will be withdrawn.

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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.

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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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Will the Minister confirm once more that the Government intend not to make things any more difficult for producers in terms of trade defence instruments and that, as the detail comes forward, people producing stuff in the UK will not be any worse off in future than under the current EU rules? I think that is what he is saying.

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I would go further than that. By having a system that is entirely aligned with and attuned to the interests only of UK producers, we hope to have a better system than the one we have now. I cannot give firm timelines, because the TRA is not set up yet, but hopefully it will be speedier, more proportionate and balanced, absolutely scrupulous in observing WTO case law, flexible enough to implement it, better attuned to the needs of UK producers, and more effective at averting injury to them.

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I thank the Minister for giving way and hope he will bear with me. Given the emphasis he is placing on the importance of secondary legislation, and the fact that, as he said a moment ago, the TRA has not been set up yet, has he had a chance to reconsider putting trade union representatives on the TRA?

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It took the hon. Gentleman’s contribution finally to silence the hon. Member for Scunthorpe, who normally heckles throughout everyone’s address—[Interruption.]. As has rightly been said, that is harsh but fair.

I thank the hon. Gentleman for his question. The aim is that this should be an expert body, that the normal, rigorous civil service appointments process should be observed in its appointment and that we should have an organisation that has impartiality and effectiveness as its primary concerns, rather than being driven by political or indeed representative considerations. That is what we are planning to do.

Question put, That the amendment be made.

Division 6

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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Amendment proposed: 24, in schedule 4, page 58, line 4, at end insert

“sub-paragraphs (2A) to (2L) and with”—(Peter Dowd.)

This amendment paves the way for Amendment 25.

Question put, That the amendment be made.

Division 7

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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Amendment proposed: 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.”—(Peter Dowd.)

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

Question put, That the amendment be made.

Division 8

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 28, in schedule 4, page 58, line 33, after “contribution”, insert

“within the meaning of Article 1 of the WTO Agreement on Subsidies and Countervailing Measures”.

This amendment provides a definition of financial contribution by reference to the WTO Agreement on Subsidies and Countervailing Measures.

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With this it will be convenient to discuss the following:

Amendment 29, in schedule 4, page 59, line 24, at end insert—

“and shall be determined in accordance with Article 3 of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.”

This amendment provides that the meaning of injury for the purposes of Schedule 4 shall reflect the provisions of the relevant article of the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994.

Amendment 30,in schedule 4, page 59, line 25, after “make” insert “further”.

This amendment is consequential on Amendment 29.

Amendment 31, in schedule 4, page 59, line 31, after “make” insert “further”.

This amendment is consequential on Amendment 29.

Amendment 33, in schedule 4, page 61, line 20, at beginning insert

“having regard to the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 and the WTO Agreement on Subsidies and Countervailing Measures”.

This amendment requires regulations determining what constitutes “negligible” and “minimal” to have regard to relevant WTO provisions.

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This is the second group of amendments on today’s amendment paper relating to schedule 4, on injury caused by dumping. Amendment 28 provides a definition of financial contribution by reference to the WTO agreement on subsidies and countervailing measures. Amendment 29 provides that the meaning of injury for the purposes of schedule 4 shall reflect the provisions of the relevant article of the agreement on implementation of article VI of the general agreement on tariffs and trade 1994. Amendment 30 is consequential on amendment 29, as is amendment 31. Finally, amendment 33 requires regulations determining what constitutes “negligible” and “minimal” to have regard to relevant WTO provisions.

I recognise that in the previous debate the Minister moved a little toward us in acknowledging some of the shortcomings of the Bill and the areas where there will eventually have to be clarity. These amendments concern one of the central issues regarding how we construct our future trade defence policy. In last week’s evidence session, it was made clear by representatives of UK industries that Brexit represents a potential opportunity for the UK to expedite its remedial processes when it comes to dumping and calculating injury—something that has already been referenced by all sides in the discussion today and by the Minister.

Industry also emphasised that, while assessing dumping margins can be relatively easy and straightforward, calculating injury margin needs much more involvement from industry and Government, and the results are not always so obvious. My hon. Friend the Member for Scunthorpe has again mentioned the steel crisis, and I would direct Members to read the Business, Energy and Industrial Strategy Committee’s transcripts from the previous Parliament on the crisis, which articulate very clearly the issues involved. It is of great concern to the Opposition that manufacturers and British industry are telling us that the Bill is seriously lacking in the detail they need to plan effectively for the future.

Members of this Committee, as well as its witnesses last week, have spoken at some length on the shortcomings of the proposed approach, not least that UK industry will be in the dark until all the statutory instruments that are required have been promulgated. As industry and those in many parts of the parliamentary process have repeatedly emphasised—in contrast to the Minister’s comments—it is highly unusual that secondary legislation is considered the appropriate means through which to establish the central tenets of our future trade defence policy. Indeed, it is considered normal practice by most of our major trading partners for these issues to be dealt with in primary legislation. Equally, because of the way in which the statutory instruments will be considered, this forum might well be the only opportunity to debate these measures and give them the proper scrutiny they demand.

The point of the amendments is to bring some of the detail and certainty that UK industry is seeking. Understandably, members of UK industries feel anxious voyaging into the unknown with only vague reassurances from Government. As my hon. Friend the Member for Bootle has said, there is no certainty about this Government’s future or that of the individual Ministers concerned. As the Manufacturing Trade Remedies Alliance has made clear—

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Order. Can I encourage the hon. Gentleman to be specific in relation to his amendments, as far as possible?

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I will be, Ms Buck.

The package of amendments offers a relatively straightforward solution to these issues by using a pre-existing, widely accepted set of terms to define injury. As referred to in amendment 29, the agreement on implementation of article VI of the general agreement on tariffs and trade 1994 is a set of World Trade Organisation rules, which already provides a blueprint to many major global economies. That will form a solid basis, which UK industry can use to start planning how it will adapt to the new post-Brexit landscape.

Complying with the requirements in the amendments will help to provide consistency following our exit from the European Union, and align us with existing trading standards in economies we seek to trade with globally. It makes little sense to delegate this decision to secondary legislation when we are already in a position to opt for a widely accepted and road-tested definition that would keep us aligned with potential trading partners. That would also have the major advantage of offering certainty to UK industries today—not years from now—on how the trading landscape will look post-Brexit, and allow them to plan accordingly.

I urge the Ministers to support this amendment. It is a relatively small commitment, which would help to bring consensus and certainty to the British economy.

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These amendments seek to include specific reference to the relevant WTO agreements in the Bill. As I said in our earlier discussion, the Government have carefully considered the right balance between primary and secondary legislation. Where there are very technical provisions in a regime, those are usually set out in secondary legislation because they are very detailed. That is the case here, so we have taken powers to make the necessary regulations.

As a member of the World Trade Organisation, the UK will be required to abide by the WTO agreements. We intend fully to comply with these obligations, and the regulations will therefore reflect the detail of the WTO agreements. However, as I have said, clause 28 does require the Secretary of State, and the TRA, to have regard to international obligations, which should provide any reassurance needed.

It has been suggested that the injury margin is more complicated and harder to define than the dumping margin. We do not believe that that is the case. Both calculations are based on industry data and export data and involve a number of variables where the TRA would be afforded discretion to use its expertise in determining the appropriate approach.

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Does the Minister recognise that the EU is moving away from that calculation and that, according to the evidence that was presented to us, that calculation involves greater bureaucracy but does not make a great deal of difference in the end, in terms of impact on prices?

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I do not agree with the hon. Gentleman. From a technical point of view, I do not believe that the EU is moving away from its approach to injury. As I say, we are subject to the WTO. The Secretary of State has to have regard to international obligations, and the detail needs to go into secondary legislation. I therefore ask hon. Members to withdraw their amendment.

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I am grateful for the Minister’s response, which gave us some degree of detail that we have not had to date, but I think that there is a difference of opinion on some of the evidence we heard last week. In my notes, the Manufacturing Trade Remedies Alliance made it clear that the methodology of the assessment on how to decide appropriate trade remedies was, in its words, a key detail that it is missing. It said that that was relevant in particular to the application of the lesser duty rule and that it would welcome further clarity and legal certainty. With that in mind, I will press the amendment to a vote.

Question put, That the amendment be made.

Division 9

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 32, in schedule 4, page 61, line 20, leave out from ‘minimal’ to end of line 33.

This amendment removes the need for a market share requirement to be met before the TRA may initiate a dumping or subsidisation investigation.

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With this it will be convenient to discuss the following:

Amendment 34, in schedule 4, page 61, line 45, leave out paragraphs (g) and (h).

This amendment is consequential on Amendment 32.

Amendment 35, in schedule 4, page 62, line 1, leave out ‘(d)’ and insert ‘(c)’.

This amendment is consequential on Amendment 32.

Amendment 36, in schedule 4, page 62, line 6, leave out ‘(d)’ and insert ‘(c)’.

This amendment is consequential on Amendment 32.

Amendment 37, in schedule 4, page 62, line 16, leave out ‘(d)’ and insert ‘(c)’.

This amendment is consequential on Amendment 32.

Amendment 38, in schedule 4, page 62, line 37, leave out ‘(d)’ and insert ‘(c)’.

This amendment is consequential on Amendment 32.

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We tabled the amendments because the proposed market share requirements will not only put us out of step with comparable nations but stop action being taken to prevent uncompetitive disruption of infant industries. According to the Government’s proposals, applications to the TRA for an investigation will be subject to a UK market share threshold. As with so much in the Bill—as we have been discussing—we do not know how the threshold will be determined nor what its range is likely to be, let alone the actual value for different industrial sectors. The Government have given as their explanation for the measure the filtering out of cases with little chance of success. Yet, as already discussed in Committee, the Government have already set out a range of tests that must be passed before any action can be taken—tests that are already more stringent than is the case under EU legislation, and considerably stronger than those that the EU is moving towards.

I normally agree fully with every word that is uttered by my hon. Friend the Member for Scunthorpe, but I did not completely agree when he said that he was pleased to hear the Government saying, or hinting at least, that we would have a system at least as favourable to British industry as the existing one. With the different tests to do with economic interest or public interest, whether those applied by the TRA or the Secretary of State, that regime is far more stringent than that applied by the EU.

In addition, I am concerned that the measure proposed in the Bill could cause a lot of ambiguity and be problematic for the TRA. We are informed that the TRA must accept an application that meets the UK market share threshold, although of course both it and the Secretary of State can then decide not to proceed as a result of their overly stringent tests once they get into the investigation—but let us leave that aside. If an application does not meet the UK threshold but does meet WTO thresholds, the TRA may use its discretion as to whether to accept it. However, we can legitimately ask why the TRA should be put in a potentially difficult position, especially when legal action could be levelled against it by the company that is deemed to have engaged in dumping precisely because the TRA has used that discretion.

In addition, I do not understand why the UK has decided to adopt an apparently higher threshold of market share before applications may be accepted when, according to the stakeholders I have talked to, no other country seems to have adopted that approach. This is not about criteria within the investigation: it is about the criteria necessary before an investigation is allowed at all. As with the unique electoral system that led to the hanging chad problem in the US, there is a clear reason why this approach is so unique: it is not workable. The Minister rightly referred to learning from best practice, so it would be helpful for us to know which countries have that test in place before an investigation can be started and why it was believed that this is best practice. I have so far not been able to find any countries that operate such a system. If there are some, it would be wonderful to hear about them.

The Minister suggested in his previous remarks that, much of the time, all the Government are doing is simply transposing WTO requirements. However, the terms of the general agreement on tariffs and trade enable countries to take action, particularly to prevent uncompetitive disruption to infant industries. That could be prevented by this kind of test before an investigation can even be started. That process of uncompetitive disruption to infant industries is known as material retardation, which is quite a well-known concept when it comes to trade disputes and is interpreted quite broadly.

Rules within the Mercosur agreement—the South American trade agreement—state that countries can take measures, first, to ensure that infant industries can be established, but also that there can be, without uncompetitive disruption, the establishment of a new branch of production in an existing industry, the substantial transformation of an existing industry or the substantial expansion of an existing industry supplying a relatively small proportion of domestic demand. That is a very wide reading of what measures against material retardation can enable, and a broad reading of the concept of an infant industry as well. Those rules are already in action in the Mercosur agreement, so I hope the Minister will clearly explain why the UK should deny itself those kind of powers that other countries seem keen to avail themselves of.

I hope he will also indicate how he envisages that market share restriction working, which will be used even before investigations start. I read the “Trade Remedies Research” paper, produced by Van Bael & Bellis and Copenhagen Economics, which I am sure other Members have looked at as well. They looked in great detail at some of the methodological issues relating to the use of trade remedies and they indicated in detail the variety of considerations relevant to calculating market share that the EU has used once an investigation has opened—not as part of a test to determine the opening of an investigation but as part of determining the harm caused by dumping.

They indicated the potential drawbacks of, for example, setting a quantitative measure on the evolution of import volumes in relative terms—in comparison with domestic consumption—in order to determine how the market share of foreign exporters against UK industry has changed over time following dumped imports. That is because our market in the UK is small, and so domestic consumption can vary dramatically from year to year because the number of industry operators tends to be more concentrated.

There are some very difficult methodological issues here when it comes to calculations that might be involved in an investigation. We are talking about the TRA having to carry out calculations potentially with a similar level of methodological difficulty, even before an investigation is opened. Will the Minister indicate what kind of methodology he proposes to avoid those problems? Above all, will he please let us know why our country seems to be adopting this approach, which, as I say, I cannot find any analogue for in comparable nations?

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I will say just a few things to follow on from the shadow Front Benchers on this. It is strange that market share is being used in this regard as something that will be taken into account. It is almost as if the TRA cannot be bothered to investigate a company if it does not have a certain market share. For that industry, and for manufacturers in particular, it does not matter what their percentage of market share is; what matters is the injury that is being done to them by dumping. Market share is not relevant, and I do not understand why it is included in the Bill. It may be relevant to the Treasury because it affects the tax take it gets from the industry, but it is not relevant to the protection we should be affording to the industry.

This proposal has geographical implications, given that these new goods will be made in the industrial north of the country. Those products may not meet the market share threshold, but they may be incredibly innovative and may improve productivity and make this country a better place to be. Those things will not be taken into account.

I have argued previously that if the fishing industry is decimated as a result of Brexit, that is a geographical issue for the affected communities. It does not have a massive implication for the Treasury’s tax take, but it does for those communities. I fear that this market share test is not only unnecessary, but has implications for the choices that communities make.

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The communities that are the most vulnerable to that disadvantage are often those that voted most strongly to leave because of their fear that they are not getting a fair deal at the moment.

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Absolutely, and conversely they are the ones that have been getting the most European funding, so the choice they thought they had to make because of the inequality and uneven economic growth in the United Kingdom will make them lose out in more than one way.

On the issue of new good and fledgling industries, we cannot predict what the world will look like in 20 years’ time. Who could have predicted the rise in the need for electric vehicle charging points, for example? If something suddenly becomes a thing, the effects cannot be predicted. For example, companies making paper straws in the UK are probably seeing their shares going through the roof. We cannot predict the market share of those companies and how quickly it will grow as a result of changes in the culture of the country. I do not think the market share test is appropriate. It is strange to have it in the Bill, and the Government need to rethink it.

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I thank hon. Members for their contributions. I hope I can reassure them about the issues they raised. Perhaps there has been some misunderstanding, which I can clear up.

Amendment 32 and its consequential amendments 34 to 38 seek to eliminate a market share threshold that we have designed to make sure businesses have a transparent benchmark for judging whether their complaint is likely to be successful. On the question of why we have the threshold, an independent evaluation of the EU system suggested that the system should focus on producers’ market share as a way of informing inquiries.

I was also asked which other countries have the threshold. We understand that other countries consider whether cases are likely to result in measures at the point of applications, but they tend to use rather opaque systems. The market share threshold is intended to give industry greater certainty in a more transparent way about how the system will operate in this country. We are learning from experiences in other countries and are seeking to improve on them to the betterment of our system.

The provisions for the market share threshold fit with the industry’s calls for the TRA to focus on the cases that matter most. For instance, the British Ceramic Confederation said in its response to our White Paper that the TRA

“should not spend its time investigating vexatious complaints and needs to focus on cases where there is a real UK manufacturing interest.”

The market share threshold will be part of providing that.

Hon. Members asked about the methodology behind the market share threshold. We are working closely with industry and producers as we develop our secondary legislation, including on methodology. Let me explain the value of the market share threshold, which amendment 32 and its consequential amendments propose deleting. It will enable UK industries, and the Trade Remedies Authority, to avoid spending time and resources on a lengthy investigation process unlikely to result in measures being imposed. For example, a company could be the only producer of widgets in the UK and therefore meet the WTO requirements to bring a case, but if that company has a de minimis share of the UK market as a whole, putting duties in place would have a disproportionate effect on the rest of the market. I am pleased to clarify, however, that the Government recognise that there are some cases in which such an approach would be inappropriate, so the Bill provides that the TRA may waive the market share threshold.

Hon. Members also raised infant industries. The hon. Member for Oxford East suggested that the market share threshold might prevent emerging industries from seeking trade remedies. That is not what the market share threshold is designed to do, so to prevent such a situation, the Bill allows the TRA to choose to waive the market share threshold in special cases. That will help in cases such as those she describes, in which an emerging UK industry struggles to establish itself in the face of dumped or subsidised imports.

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I am grateful for the Minister’s comments. The additional information that he provides is useful, but he still has not made it clear whether any other countries operate such a restriction. I appreciate what he says about the potential opacity of other regimes, but we have not had a clear answer to that question. It may well be that some independent actors have written an evaluation of the EU system that says that such an approach should be implemented. However, as I understand it, the EU has not committed to moving towards such a system. It seems to be just the UK that is explicitly adopting it as a policy commitment, unlike any other country.

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Order. The hon. Lady is straying from an intervention into a full speech.

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I thank the hon. Lady for that comprehensive intervention. As I said in reply to the hon. Member for Bootle, our aim is to make improvements. We want a better system that provides greater certainty for UK industry, and one that makes the TRA focus, as the industry has requested, on the cases of greatest import, not an opaque system as in other countries. The TRA may quickly respond to someone with a de minimis market share who comes forward with no real case and tell them that they have no chance, but what we are doing is creating a system that is much easier to understand and more transparent.

I hope the secondary legislation we implement will include other world firsts, too. So long as what we do is based on a proportionate, balanced approach that is fully compliant with the WTO and better tailored to the needs of British industry, I shall be proud to see us innovate. I am not afraid to innovate if it is in the interests of British industry and a better system. We should aspire to doing that.

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The Minister argues that, in the case of a producer with a small market share in the UK, there may be a disproportionate effect on UK consumers. Given that an economic interest test takes into account the impact on consumers, is the market share test necessary?

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For the reasons I have set out, I think the market share test is an eminently sensible part of our regime. I hope the Committee will agree.

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I am grateful to the Minister for letting us intervene—he has been very generous in that respect. I say gently that I would have hoped for a little more impact assessment before we signed up to a system that is, to adopt the kind of language he used, unique in the world and a world-beating innovation, if we are indeed doing that.

The hon. Member for Aberdeen North made clear that vexatious complaints will be screened out by the economic and public interest tests, which are more stringent than those in the EU regime that we will take on board under the TRA.

The Minister referred to this process being an indication to firms of whether they have any hope of success, but it is not. We are not talking about a guideline. We are talking about a threshold that is a block. Yes, that block can be disregarded by the TRA, but it cannot be overruled by the complainant. That is the whole point. It is not just an indication. It is stronger than a guideline or a set of theoretical considerations. It is potentially a block on firms trying to seek redress through the TRA, which is unique in the world. I had hoped that we might have more explanation of that, despite the Minister’s valiant attempts.

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Let me try to come back again. The share test comes at the beginning. We have to think about the order. The point is to provide transparency at the beginning of the process and to ensure, exactly as industry has asked, that we do not waste time on complaints, vexatious or otherwise, that have no chance of resulting in measures. That is the whole point of the test. It will be quickly applied and—the Opposition do not seem to have understood this—will have exemptions for infant industries. The system will provide a more transparent form of that which is routinely applied in other countries.

Question put, That the amendment be made.

Division 10

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 39, in schedule 4, page 64, line 21, at end insert—

“Part 2A

Recommendations: general provisions

12A (1) The provisions of this paragraph apply to all recommendations made by the TRA under this Schedule.

(2) In any case where the TRA makes a recommendation to the Secretary of State, the TRA must, at the same time as making that recommendation, provide any relevant select committee of the House of Commons with—

(a) a copy of that recommendation, and

(b) an account of the evidence on which the TRA has based that recommendation.”

This amendment requires recommendations made by the TRA under Schedule 4 to be made available to relevant select committees of the House of Commons, along with an account of the evidence basis for the recommendation.

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With this it will be convenient to discuss amendment 70, in schedule 5, page 83, line 44, at end insert—

“Part 2A

Recommendations: general provisions

11A (1) The provisions of this paragraph apply to all recommendations made by the TRA under this Schedule.

(2) In any case where the TRA makes a recommendation to the Secretary of State, the TRA must, at the same time as making that recommendation, provide any relevant select committee of the House of Commons with—

(a) a copy of that recommendation, and

(b) an account of the evidence on which the TRA has based that recommendation.”

This amendment requires recommendations made by the TRA under Schedule 5 to be made available to relevant select committees of the House of Commons, along with an account of the evidence basis for the recommendation.

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These amendments have been grouped because they both refer to making recommendations by the new Trade Remedies Authority, and the evidential basis for those recommendations, available to the relevant Select Committees of the House.

Clearly, how the TRA operates is essential to our future trade policy. We know some things from the Bill about how it will operate—schedule 5 refers to the procedure that will be followed where an increase in imports of goods causes serious injury to UK producers, so there is more detail than we had previously—but the intention is for further detail about the interpretation of what constitutes a significant increase to be set out in secondary legislation. The TRA will also have considerable discretion in many areas of its operation.

Given the stage we are at with the Bill, we are being given a fairly limited set of options in terms of addressing the lack of accountability in key parts of how the framework will operate. These amendments would introduce an additional layer of scrutiny and consultation, which is needed to ensure that the interests of UK industry are properly represented. Select Committees provide vital checks and balances, and given their policy specialisms and ability to call relevant witnesses, they are best placed to scrutinise decisions by the TRA.

These amendments would not only allow us to address the democratic deficit, but provide a platform for engaging with the wide range of inputs needed fully to understand the implications of TRA decisions on different parts of our economy and different segments of UK industry. That might include the Transport Committee, the Treasury Committee, the International Trade Committee and, of course, the Exiting the European Union Committee. The amendments would provide an important democratic backstop to the new process that avoids concentrating too much power in the hands of the Secretary of State or the TRA. In the absence of greater detail in the Bill, I urge members of the Committee to support the amendments to bring some much-needed future accountability to the TRA and to our trade defence policy.

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New paragraphs 12A and 11A, introduced by amendments 39 and 70, would require the recommendations made by the TRA under schedule 4 to be made available to relevant Select Committees of the House of Commons, along with an account for the evidence base of those recommendations. Let me begin by stating that transparency is one of the four design principles set out by the Government for the trade remedies framework. The inherent assumption of a lack of scrutiny implied by the amendments is simply untrue.

To protect the TRA’s status as an independent public body, its recommendations to the Secretary of State should not be subject to political influence before a decision to accept or reject them has even been taken. Those recommendations will be made on the basis of the framework set out in this legislation and underpinned by technical and procedural details to be set out in secondary legislation. Giving the Select Committee a role in that process will undermine the impartiality of the process—an impartiality which is supported by industry. Publishing the recommendation in advance of the decision by the Secretary of State could also further undermine impartiality by increasing lobbying of Ministers by the affected parties, and could also lead to unnecessary disruption of the markets affected.

The Bill provides for public scrutiny of both the TRA and the Secretary of State’s decisions. Whether the Secretary of State accepts or rejects the recommendation, the evidence base for the TRA’s recommendation will be made available to the public, as is required under the terms of the WTO agreements. Furthermore, if the Secretary of State rejects the TRA’s recommendation to apply measures, he or she must lay a statement before Parliament setting out the reasons for that decision. Parliament will then be able to hold the Secretary of State to account if it considers the reasons to be unsound.

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It would be lovely if the Minister could explain how parliamentarians can hold Ministers to account if they make a written statement.

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The hon. Lady has been a Member of this House for some time and will know that there is a series of means by which that can be pursued. Making a statement to the House provides the initial spur to start that scrutiny, if that is what the Select Committee or others decide. There are urgent questions, Adjournment debates, Backbench Business Committee debates—I will not list them all, as the hon. Lady is probably rather better on parliamentary process than I am. She will know that there is a huge number and they can all be used. Her Majesty’s Opposition or the SNP and their spokesmen have other means by which to raise the issue.

On that basis, I ask the hon. Gentleman to withdraw the amendment.

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I have two observations to make, the first of which is on impartiality. I would strongly refute that scrutiny by Select Committee would increase the partisanship or the partiality of the transparency of the process. The House’s Select Committees are to me the best example of cross-party working and cross-party accountability in the entire parliamentary process, and we should not shy away from using them when they can improve the process.

Secondly, there was reference to technical and political considerations. The decisions are not just technical. Of course they will draw on technical expertise and criteria, but they are inherently political. We saw that in the steel crisis, where frankly even with very clear technical evidence of dumping, there was a political point of view—not one I share—that the benefits to the UK of dumped steel outweighed the benefits of protecting the UK steel industry. That was not held by all parts of the Government, but certainly by some.

A transparent process that allows decisions to be analysed in that context would certainly add to the process, especially when we consider the lack of detail we have so far. I therefore press the amendment to a vote.

Question put, That the amendment be made.

Division 11

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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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.

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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.

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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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Let me start by explaining that the objective of the economic interest test is to ensure that measures are in the best interests of the UK. It ensures that measures are not imposed where they might have disproportionate impacts on wider groups such as downstream industries or, as the hon. Gentleman rightly said, consumers. Let me take the amendments in turn and set out why they would undermine our objective of a balanced and proportionate trade remedies framework.

With amendment 40, the Opposition seek to remove the application of the economic interest test before the imposition of provisional anti-dumping and anti-subsidy measures. It would mean that the test is considered only at the final stage of imposing definitive measures. Given that provisional measures can have profound wider economic impacts, we believe that the test should be met before they can be imposed, just as before definitive measures. That ensures consistency between the two stages of the investigation, and operates in the same way as the existing Union interest test in the EU’s regime, thus providing continuity for UK businesses.

I understand the concerns of UK industry that the inclusion of the test at the provisional stage could delay the application of measures. However, that will not necessarily be the case. In practice, the TRA will have the ability to gather evidence on the economic impacts of applying or not applying measures in parallel, rather than sequentially, to other aspects of the investigation.

Turning to amendments 58 and 75, the Government are clear that the economic interest test operates on a starting presumption in favour of anti-dumping and anti-subsidy measures. This is because the test is applied only once the TRA has found that dumped or subsidised imports have injured UK industry and that measures would be needed to correct that injury. This presumption can be rebutted only where the wider economic impacts of applying measures are disproportionate or outweigh that need to correct material injury to UK industry. This is reversed for safeguarding measures, which tackle unforeseen import surges that may be injuring UK industry but reflect fair trading practice. Safeguarding measures are not targeted and can be imposed on all imports of a particular product, so can have a much more wide-ranging impact on the country’s economy. Accordingly, the burden of proof on the TRA in rebutting the presumption is reversed. The presumptions and the way in which they operate are already reflected in the Bill.

Finally, amendments 59 and 76 seek to remove the first economic factor that must be considered under the economic interest test. In order to consider the wider economic impact of measures, it is only logical to build a factual picture of who could be affected by measures, and of their size and significance to the UK economy. This will not be limited to direct impacts. The integrated nature of our markets means that many businesses are deeply integrated into supply chains, and may be relied on by a significant upstream or indeed downstream market. This first factor of the economic interest test ensures that those wider interests are properly identified in a comprehensive way, which then forms an important context for the other elements of the test. In my view it would be a mistake to delete it.

Any determination under the test must be based on relevant considerations under all the economic factors taken as a whole. I hope this clarifies that the test clearly operates on a presumption in favour of anti-dumping and anti-subsidy measures, and is not intended to deny protection for markets or businesses based on their size.

On whether the economic interest test is unusual or unique, I would say it is not. We have sought to learn from and improve the Union interest test, which industry is already familiar with through the EU. The EU Union interest test is based on

“an appreciation of all the various interests taken as a whole, including the interests of the domestic industry and users and consumers.”

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Can the Minister clarify whether we will have more tests, fewer tests or the same number of tests at the end of the process?

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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.

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

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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.

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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.

Division 12

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

View Details

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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.

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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).

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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—

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Trade Bill (Fifth sitting)

The Committee consisted of the following Members:

Chairs: Philip Davies, † Joan Ryan, James Gray, Sir David Crausby

† Badenoch, Mrs Kemi (Saffron Walden) (Con)

† Bardell, Hannah (Livingston) (SNP)

† Brown, Alan (Kilmarnock and Loudoun) (SNP)

† Cummins, Judith (Bradford South) (Lab)

† Esterson, Bill (Sefton Central) (Lab)

† Gardiner, Barry (Brent North) (Lab)

† Hands, Greg (Minister for Trade Policy)

† Hughes, Eddie (Walsall North) (Con)

† Keegan, Gillian (Chichester) (Con)

† McMorrin, Anna (Cardiff North) (Lab)

† Prisk, Mr Mark (Hertford and Stortford) (Con)

† Pursglove, Tom (Corby) (Con)

† Rashid, Faisal (Warrington South) (Lab)

† Smith, Nick (Blaenau Gwent) (Lab)

† Stewart, Iain (Milton Keynes South) (Con)

† Vickers, Martin (Cleethorpes) (Con)

† Western, Matt (Warwick and Leamington) (Lab)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

† Wood, Mike (Dudley South) (Con)

Kenneth Fox, Committee Clerk

† attended the Committee

Public Bill Committee

Tuesday 30 January 2018

(Morning)

[Joan Ryan in the Chair]

Trade Bill

Clause 2

Implementation of international trade agreements

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I beg to move amendment 5, in clause 2, page 2, line 13, leave out subsections (3) and (4) and insert—

“(3) Regulations under subsection (1) may make provision for the purpose of implementing a free trade agreement only if—

(a) the other signatory (or each other signatory) and the European Union had ratified a free trade agreement with each other immediately before exit day, or

(b) where the regulations are made before exit day, the other signatory (or each other signatory) and the European Union have ratified a free trade agreement with each other on the day the regulations are made.

(4) Regulations under subsection (1) may make provision for the purpose of implementing an international trade agreement other than a free trade agreement only if—

(a) the other signatory (or each other signatory) and the European Union had ratified an international trade agreement with each other immediately before exit day, or

(b) where the regulations are made before exit day, the other signatory (or each other signatory) and the European Union have ratified an international trade agreement with each other on the day the regulations are made.”

This excludes from the scope of section 2(1) those international trade agreements agreed between the UK and a third country where the corresponding agreement between the European Union and that third country has been signed but not ratified.

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With this it will be convenient to discuss the following:

Amendment 9, in clause 2, page 2, leave out line 33.

This would remove the Henry VIII power allowing for the modification of primary legislation that is retained EU law.

Amendment 10, in clause 2, page 2, line 40, at end insert—

“(7A) An ‘international agreement that mainly relates to trade, other than a free trade agreement’ means a strategic partnership agreement or mutual recognition agreement that is ancillary to a free trade agreement as defined in subsection (7).”.

This would define international trade agreements that do not fall within the category of a “free trade agreement” as defined under subsection (7).

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I am delighted to see you in the Chair, Ms Ryan. I look forward to the Committee proceeding at a rapid pace under your guidance. I am tabling amendments 5, 9 and 10, in my and my colleagues’ names, as on the amendment paper.

We are now talking about the implementation of the new international trade agreements to be negotiated between the UK and those third countries that already have an agreement with the European Union. The Government are seeking to appropriate to themselves the power to make regulations to implement those new agreements without any scrutiny by Parliament. I cannot state it better than the House of Commons Library briefing paper, which states that the Bill

“seeks to minimise Parliament’s role”

in this regard, in that it will make all secondary legislation under clause 2(1) subject to a negative resolution procedure only.

The rationale behind this attempt to sidestep due democratic process is that the trade agreements that the EU had previously negotiated with the third country in question had already undergone scrutiny when they were prepared for ratification—that is the argument the Minister used last week when we debated this. By the Government’s sleight of hand, he would say there needs to be no parliamentary scrutiny of any new UK trade agreement because that job will already have been done on the earlier agreement negotiated by the EU.

The Minister was particularly keen to point out that we were suggesting that all the levels of scrutiny that took place at the EU would be done away with. I think he thought he was trapping us when he asked us to agree that a good level of scrutiny had taken place, and that we should allow these measures to go through on the nod because that scrutiny had already happened. We reject that argument, and we were pleased to register that business representatives who gave oral evidence to the Committee agreed with us. The Committee will recall that.

The new trade agreements are not only legally distinct, as the Government have admitted, but may well include substantial new obligations, which will have been through no process of scrutiny whatever. That is why we demand a new approach to these agreements in subsequent amendments to schedule 2, where scrutiny is addressed. However, the provisions of clause 2(3) and (4) go even further, in that they allow the Government to sidestep scrutiny of not only those new UK agreements that are set to replace existing ones, which have been through the full scrutiny process prior to ratification, but UK trade deals that replace EU agreements, which have not even been through the process of ratification. Our amendment speaks to that extraordinary attempt to undermine democracy still further, the significance of which might be demonstrated if I give the Committee an example.

The economic partnership agreement between the EU and Japan was finalised last month. Negotiations were concluded on 7 December last year, and the text of the agreement is currently undergoing the double process of what is called legal scrubbing and translation into the official languages of the EU, so that it can proceed to signing in 2018. The agreement will subsequently undergo the due process of ratification by Japan and within the EU, including parliamentary scrutiny by the European Parliament. However, that process will not be completed until later in 2019, if experience is any guide, and therefore after the point at which the UK is no longer a member of the EU.

Japan is also one of the countries with which the Government have established a trade and investment working group. That working group held its first meeting in Tokyo during November of last year, and is tasked with advancing the trade and investment relationship of the two countries, with the eventual aim of signing a UK-Japan trade agreement at some point in the coming years.

According to the Bill, any future UK trade deal with Japan will be counted as a roll-over agreement, and will therefore escape parliamentary scrutiny altogether, because the EU and Japan will have signed a trade agreement during 2018—that is, before the UK leaves the EU. Note that that will be the case even if the future UK-Japan deal bears no resemblance to the EU-Japan economic partnership agreement. As stated earlier, the Bill makes no requirement for the future UK deal to match the EU’s agreement in any way, shape or form; the Bill requires only that the other country and the European Union were signatories to a free trade agreement before Brexit takes effect. The regulations to implement those new obligations will be subject to a negative resolution procedure, which is the effective negation of parliamentary scrutiny, as the Government would have us consider the new UK-Japan deal simply to be a roll-over or a grandfathered agreement.

I would like to draw attention to the oral evidence provided last Tuesday by Dr Lorand Bartels of the University of Cambridge, who spoke to exactly that issue. Dr Bartels drew particular attention to the forthcoming trade agreement with Japan, and pointed out that

“there is a fundamental difference in international law between a signed and provisionally applied agreement and a ratified agreement.”[Official Report, Trade Public Bill Committee, 23 January 2018; c. 42.]

The Government would do well to heed that distinction. I hope that the Minister might accept our amendment and that he will see it, in a friendly spirit, as one that might improve the Bill.

Without the amendment, we are in danger of effectively granting the Government carte blanche to do what they like to secure a new UK-Japan deal. That would be a major concern to businesses and workers up and down the UK. Japan is a major player on the world stage, and Japanese companies are important investors in our economy, so the obligations that we, as a nation, undertake in relation to those companies are critical to the future of some of our most dynamic industries. Are the Government really telling us that we, as parliamentarians, should have no right to scrutinise those obligations?

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Despite the fact that the Government have continued to argue that there is no need for parliamentary scrutiny in the Bill because existing deals have been subject to sufficient scrutiny in the European Union, does my hon. Friend agree that that is not the case here and therefore that it is vital in the interests of the British people that we secure such an amendment?

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I am grateful to my hon. Friend for his intervention because he reinforces the very point that I am trying to establish. Despite the processes that are currently in place for scrutiny of trade deals as they proceed through Europe, and ultimately through the European Scrutiny Committee and through the House under the Constitutional Reform and Governance Act 2010 procedure, we have here a situation in which a deal that was going to be concluded between the EU and another country can proceed to be signed, but not implemented. Then, in the lacuna—that is, the space between that signature and our leaving the EU—we could be confronted by the Government with a completely different set of trade relations. The trade agreement could be totally different, yet, under the Bill, the Government would have the power to sign and implement it simply because they had already signed a previous agreement before we had left the EU. That cannot be the right procedure for what could be completely new issues under that future agreement.

In one sense, the amendment is a modest one, given the seriousness of the issue it addresses. It merely seeks to exclude from the antidemocratic provisions of the Bill any regulations stemming from treaties such as a future UK-Japan trade agreement, where the correspondent EU agreement will have been signed but not yet ratified, along with all the scrutiny that ratification requires.

Other EU trade agreements could fall into this same category: the EU-Vietnam free trade agreement, the text of which is also being prepared for signing at some point this year; the EU-Singapore free trade agreement which has been initialled but held up by internal EU discussions as to whether it is a mixed agreement or exclusive EU competence, leading to the European Court of Justice ruling on this issue in May last year; and, potentially, some of the economic partnership agreements still to be finalised between the EU and different groupings of African, Caribbean and Pacific states, which were criticised so trenchantly by Professor Alan Winters of the UK Trade Policy Observatory in his oral evidence to the Committee last week. Also in this category is CETA, the comprehensive economic and trade agreement between the EU and Canada, which has been signed but not yet fully ratified, as it is a mixed agreement requiring ratification in each of the EU member states, in addition to the centralised EU institutions of the Council of Ministers and the European Parliament.

Finally, the amendment tightens up the language of subsections (3) and (4) by requiring not just that the EU and the other signatory or signatories should have ratified trade agreements, prior to Brexit, but that they should have done so with each other. The Bill as it stands simply says that they must have signed “a” trade agreement; it does not say that they have to have signed it with Japan—with the corresponding party. This is ridiculous. The Minister is looking confused. If he wants to intervene, I would be happy to give way to him on this point because it is material.

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I thank the hon. Gentleman for allowing me to intervene. I am a little confused about his position on CETA. If CETA is not yet ratified by all the EU28 countries, the amendment, if it became law, would effectively prevent the UK from transitioning CETA to be a UK-only agreement. I know that the hon. Gentleman is opposed to CETA, and he represents a minority view within his party. However, the great majority of Labour MPs welcome CETA and voted in favour of it. It is also something that has already taken effect, so the effect of his amendment would be to take us out of the provisions of CETA that have already been in place and been provisionally adopted since September.

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The Minister, of course, chose not to respond to the point I allowed him to intervene on because of his confusion.

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The hon. Gentleman asked me to explain my confusion.

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I am happy to address the Minister’s point and have set out the Labour Front-Bench position very clearly. He should know that the provisions of the amendment do not do what he has claimed they do. What it says is that there must be proper parliamentary scrutiny. He is denying precisely the opportunity for that to happen when a treaty has been signed but not yet ratified. The point of the amendment is to ensure that proper scrutiny can take place and that ratification can have taken place to ensure that.

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On the point about CETA, does my hon. Friend share my concerns about the implications of bringing in certain provisions of the deal and not ratifying—for example, the investor-state dispute settlement provisions? The key point is that there will not be sufficient scrutiny or consultation or an impact assessment carried out.

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My hon. Friend pre-vents me—I think that is the sort of Latin term: he goes before me. He picks up a theme I was about to come to. The ISDS procedures have been a major concern of not just parliamentarians but many other people in this country and across Europe. Any hon. Member who says that his postbag and email have not reflected that has simply not been examining them carefully enough.

On my point about the requirement to sign “a” trade agreement, clause 2(3) states:

“Regulations under subsection (1) may make provision for the purpose of implementing a free trade agreement only if—

the other signatory (or each other signatory) and the European Union were signatories to an international trade agreement immediately before exit day”.

It does not specify that it must be the same agreement, and stating the need for a treaty “with each other” would clarify that, which is what the amendment seeks to do. There is no great confusion, but there might be some because the clause is ambiguous.

Amendment 9 speaks to the first of two Henry VIII powers. Those powers are the most egregious example of the power grab that characterises the Bill, despite the extraordinary spectacle of the Secretary of State using the letters page of The Guardian to claim the opposite—a travesty I detailed on Second Reading and which, for reasons of time, I do not wish to reprise here. For the record, though, I draw attention to paragraph 2 on the very first page of the delegated powers memorandum that accompanies the Bill, which states, in plain English:

“The Bill contains 6 individual provisions containing delegated powers. Two of these, clauses 2(1) and 7(3), include a Henry VIII power.”

I am still waiting for the Secretary of State to correct the record that he so carefully muddied previously. Amendment 9 simply seeks to remove the first of those two Henry VIII powers.

Ms Ryan, I am glad that your grouping of amendment 9 with amendment 5 has enabled me to speak to it now, because it follows nicely on from my comments on the UK-Japan trade agreement. It is bad enough that talks towards a trade agreement should have been initiated behind closed doors by a secret working group—no agendas, no minutes, no access to any documentation, no website to keep Parliament or the public abreast of what was being decided in our name—but at the end of that charade, a set of formal negotiations, still in secret, determined what obligations we as a country might or might not be saddled with for a long time.

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Does my hon. Friend agree that if the Government are certain of their ability to roll over existing agreements, there is surely no need for the Henry VIII powers?

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My hon. Friend is entirely right. The Henry VIII powers show that the Government also realise that it is not simply replica provisions that are being rolled over but, in fact, new agreements that may contain substantially different clauses. Because of that, they need powers to be able to progress those agreements. The Committee tried to address that during its sitting last Thursday afternoon but the Minister has been reluctant to take the matter on board, even when pressed on how he thought, given the Government’s red lines, he would be able to roll over our current agreement with Norway on the free movement of people, and that with Turkey on the relationships we have through that country’s agreement with the EU customs union. The Minister has failed comprehensively to address those points. It would be interesting if he were to do so when he responds to this group of amendments, but I fear my hon. Friend might languish in hope rather than expectation of the privilege of hearing such a response.

The arrangements in these new agreements would be laid before Parliament for a few days without the requirement of either a debate or a vote, and at the end we would find out that the Secretary of State had appropriated the power to rewrite primary legislation by turning himself into a modern-day Henry VIII. This is not just an abstract threat. I was pleased to read the written evidence submitted to this Committee by the civil liberties organisation Liberty, which agrees with us that

“the Trade Bill presents a significant threat to the rule of law”

and human rights. Liberty argues, as do we, that the inclusion of the Henry VIII power in clause 2 is unacceptable to anyone who believes in parliamentary sovereignty. If we go back to the beginning of the process of Brexit, some people believed it was entirely about regaining parliamentary sovereignty, not about giving increased powers to the Executive.

Liberty points out that the Bill’s reference to primary legislation that is retained EU law could include such vital Acts of Parliament as the Equality Act 2010 and the Modern Slavery Act 2015, as well as legislation to combat climate change, such as the Energy Act 2013. Crucially, it could also include the Data Protection Bill currently under consideration by Parliament, which implements the EU’s general data protection regulation. We have been told on numerous occasions by businesses and their representatives from the service sector just how important it is for their post-Brexit cross-border exports to be granted what is called adequacy status under the general data protection regulation. Any change to such a crucial piece of legislation must surely be brought through Parliament and not done under the fiat of the Secretary of State.

The Government know they have exceeded the limits of what is acceptable in calling for a Henry VIII power under clause 2 and then suggesting that it is somehow appropriate for that power to come under the negative resolution procedure, the lowest form of parliamentary scrutiny. The delegated powers memorandum admits that it is a bridge too far, even for a Government such as this, stating:

“It is recognised that Parliament will want considerable assurances from the Government that this power will not be used beyond what is necessary to ensure a seamless transition of the agreements in scope.”

We have no interest whatever in “assurances from the Government”. We want the Government to show due recognition of the proper boundaries to their powers in a mature democracy such as the UK. We are not a tinpot dictatorship, and we resent the suggestion that assurances can ever represent a sufficient substitute for parliamentary democracy. That is why our amendment would remove this Henry VIII power entirely and require any modifications to primary legislation to be undertaken in the correct manner, with full parliamentary involvement.

Finally, I turn to amendment 10, where we seek to rectify the Bill’s failure to define what is meant by the vague category of international trade agreements that mainly relate to trade but are not free trade agreements. The explanatory notes suggest that this will include

“key trade agreements, and associated ancillary agreements, that the EU currently has with third countries.”

The note gives one example only, namely mutual recognition agreements. Dr Lorand Bartels, in his oral evidence, said that it might also include customs co-operation agreements that relate to trade facilitation. Ultimately, national legislation is not doing its job properly if it leaves everyone playing a guessing game regarding what it might or might not refer to, and especially not if it seeks to transfer unprecedented powers to the Executive.

We have tried to help the Government out here—I am being very helpful to the Minister this morning, if only he would realise it. Our amendment takes up the challenge from the explanatory notes and identifies the two main categories of agreement that have traditionally accompanied the EU’s free trade agreements as ancillary texts in recent years—either, in the case of mutual recognition agreements, because they help to minimise unnecessary non-tariff barriers in the regulatory sphere, or, in the case of strategic partnership agreements, because they establish social and political conditionalities to accompany the commercial aspects of the trade agreements themselves. At the end of the day, we need the Government to say what they have in mind for that category. Of course, it may be that Ministers have nothing in mind, and it would be good to know that, too. The public and the country need certainty, and the Bill does not provide it in those areas.

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It is a pleasure to serve under your chairmanship, Ms Ryan. Let me reassure you that, by exit day, the Government aim to have ratified all EU mixed free trade agreements that are currently provisionally applied. They include, for example, the EU-Canada CETA agreement and the Southern African Development Community co-operation in accreditation.

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If it is the Minister’s intention, as he says, to do what the amendment asks him to do, namely to apply these clauses only to agreements that have been ratified—and he says that they will all have been ratified—what problem does he have with accepting the amendment?

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The answer to that is straightforward. Although it is our intention to have ratified the agreements, that does not necessarily mean that they will have been ratified by the other EU27 countries. That is the important thing. I will come on to why the hon. Gentleman’s amendment would put at risk agreements that the UK is already party to and that UK businesses are already benefiting from.

We must remember that EU free trade agreements that contain areas of shared or member state competence must be ratified by all 28 member states before they come into force. As we know, that process can take considerable time. We drafted the clause 2 power so that signed EU free trade agreements fall within its scope. That will ensure that it can be used to implement agreements to replace those that have been signed, and which may have been provisionally applied but are yet to be ratified by the EU or the partner country.

Many such agreements are benefiting businesses and consumers as we speak. In other words, they have already taken effect. I know that the hon. Gentleman is opposed to CETA, for example, but we believe that it has benefited UK businesses considerably since it was provisionally applied and took effect in September. I know that he wants to throw away those benefits, so I remind him that most of his party sensibly sees the merits that CETA provides this country. Under his amendment, we would be unable to implement a free trade agreement that falls within this category, which would risk a cliff edge in any trading relationships covered by such an agreement.

To take another example, the UK ratified the EU’s Andean FTA with Colombia and Peru in 2014. In 2016, UK trade with those countries had a value of more than £2 billion. However, that FTA is still awaiting ratification by both the European Union and a number of EU countries. If that is still the case by exit day, the amendment would prevent the clause 2 power from being used to implement a transitioned FTA with Colombia and Peru, resulting in a likely reduction in trade flows between the UK and the Andean countries.

Let me turn to a few points that the hon. Gentleman raised elsewhere. He asserted that the agreement has to be signed by both parties. Clause 2(3), which relates to free trade agreements, states that in order for the Government to be able to use the power when implementing an agreement with a partner country, both the EU and that country must have signed a free trade agreement before exit day. In other words, both must have signed the same agreement.

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It does not say “the same”.

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I think the hon. Gentleman said it was ambiguous, but the Government’s intention is clear. We have all laid it out frequently: to transition the effects of the 40-plus EU FTAs, not to renegotiate new agreements. He mentioned the cases of Norway and Turkey. As I laid out at considerable length at the Select Committee on International Trade last week—I know two of his colleagues are members of the Committee—the situation will depend largely on the UK’s future relationship with the European Union, which is a matter for the current negotiations, as Norway, Turkey and Switzerland’s relationships are very much linked to whatever our future relationship with the EU might be.

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Of course, the Minister is entirely right to say that the nature of the agreements that we conclude with those countries would depend on our future relationship as we negotiate our withdrawal from the EU, but the point is that this Bill is supposed to be simply rolling over the existing agreements. The Minister has made a great deal of the fact that we want no change and are simply rolling over what exists into what comes afterwards. That is the trap that he has set for himself, and he must extricate himself.

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I will just repeat what the Secretary of State said on Second Reading: the Bill is designed to be robust to the different cases of where the future UK-EU relationship might lead us following the negotiations.

The hon. Gentleman mentioned Japan. In the small number of cases where the EU seeks to establish an FTA, it might be too late to go through conventional EU scrutiny here, and there are also our agreements that will now be sole EU competence. Also, they might not necessarily happen through the current EU scrutiny process. We will consider this in due course, but we are committed to Parliament having its say. Earlier this month we published a response to the trade White Paper, and the Government will consider views as we develop proposals regarding the role of Parliament in future trade agreements.

If we are to avoid trade disruption, we need to make sure that signed EU agreements that are not yet ratified by the EU, including the examples I have given, such as CETA, the Andean agreement and the partner country agreements, fall within the scope of the Bill, otherwise we will jeopardise a considerable part of the current trading relations that benefit this country so much. Contrary to what the hon. Gentleman says, the amendment would not improve the Bill. It would actually threaten a great number of our existing trading arrangements.

It is worth remembering that a delay in ratification by another EU member state has no real relevance to the content of an agreement, or indeed to UK scrutiny of it. It is merely a reflection of that country’s domestic situation. To allow such a state of affairs as that suggested in the amendment, and to cause disruption to UK businesses, would be profoundly unsatisfactory.

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Does the Minister agree that, as Alan Winters said in the evidence session when talking about business and concerns about continuity, the issue is not only transparency and scrutiny, but a recognition—we are calling for this in the amendment—that some changes required in any trade agreement will be technical or substantive? There is a need to understand the degree of what is substantive, and that is not determined anywhere. That is what we and the witnesses—business or academic—are calling for. There is nothing in the Bill that ensures the scrutiny of what is substantive and what changes should be allowed.

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I would say two things to the hon. Gentleman. By the way, I cannot remember whether he was in favour of CETA or against it, or what his individual position was within the Labour party on some of these agreements.

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I wasn’t present.

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Of course—the hon. Gentleman was not yet elected at that time.

The Government’s intention is clear. This is a technical roll-over: there will not be substantive changes to the agreement. However, that is not what this amendment deals with. The amendment talks about making sure that all deals that have yet to be ratified are outside the scope of the Bill. Our position is clear: agreements that have been signed but not yet ratified should be within the scope of the Bill.

On amendment 9, the clause 2 power is a restricted so-called Henry VIII power. It allows only for the amendment of primary legislation that is retained EU law. As I think we all now know, retained EU law is EU law that the European Union (Withdrawal) Bill converts into UK law, as well as the EU-derived domestic law that the Bill preserves. It is a very restricted power.

Because transition trade agreements will have been implemented substantially through EU law, we may need to amend retained EU law if we are to implement any technical changes but keep these agreements operable beyond exit day, which clearly must be a goal for all us. That is why it has been necessary to ensure that the clause 2 power can amend a specific part of primary legislation. Removing this aspect of the power would jeopardise its ability to ensure continuity and future operability in our existing trade agreements.

We should also note that, as little primary legislation is retained EU law, this is a highly restricted so-called Henry VIII power. Let me be clear that this power cannot be used to amend the vast body of primary legislation that is not retained EU law—that is in line with our intention to use the power only to maintain the effects of our existing trade agreements.

We have also constrained the power in other ways, by including a sunset clause that I know we will debate in later amendments, and by preventing it from being used to implement a free trade agreement with a country that has no such agreement with the EU before exit day.

Amendment 10 would narrow the definition of a trade agreement to the extent that certain agreements that would be widely accepted as instrumental aspects of trade relationships, such as bilateral procurement agreements, would be ruled out of scope.

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The Minister mentioned a few times proper parliamentary scrutiny of future trade agreements but, clearly, the provision confirming that there will be parliamentary scrutiny in future should not be in the Bill.

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I am absolutely clear that this Bill relates to the transition of our existing trade agreements. How we approach future trade agreements will be a matter for future consideration. I mentioned earlier that we will look carefully at the responses to the consultation. Of course, if the hon. Gentleman has views, we are keen to hear them. Indeed, we will be seeking views from across this House on what Parliament’s views on these matters might be, but that is entirely a matter for the future.

Amendment 10 would clearly create an unacceptable risk that agreements essential to trade could not be effectively provisioned. If the members of the Committee are concerned about the scope of this power, please let me reassure them that, as I referred to earlier, we have already set out in clause 2 restrictions on the scope of the power.

Given these constraints, the existing drafting of the power, and our clear and firm assurances that this power is not intended to be used for the implementation of future trade agreements, it would be strange to include this amendment, which sets out the required procedure for future trade agreements. I therefore ask the hon. Gentleman to withdraw amendment 5.

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I am not prepared to withdraw and I propose that we move to a vote.

Question put, That the amendment be made.

Division 2

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 6, in clause 2, page 2, line 29, at end insert—

“(4A) Regulations under subsection (1) may make provision for the purpose of implementing an international trade agreement only if the provisions of that international trade agreement do not conflict with, and are consistent with—

(a) the provisions of international treaties ratified by the United Kingdom;

(b) the provisions of the Sustainable Development Goals adopted by the United Nations General Assembly on 25 September 2015;

(c) the primacy of human rights law;

(d) international human rights law and international humanitarian law;

(e) the United Kingdom’s obligations on workers’ rights and labour standards as established by but not limited to –

(i) the commitments under the International Labour Organisation’s Declaration on Fundamental Rights at Work and its Follow-up Conventions; and

(ii) the fundamental principles and rights at work inherent in membership of the International Labour Organisation;

(a) women’s rights and are in accordance with the United Kingdom’s obligations established by but not limited to the Convention on the Elimination of All Forms of Discrimination Against Women;

(b) children’s rights and are in accordance with the United Kingdom’s obligations established by but not limited to the Convention on the Rights of the Child;

(c) the United Kingdom’s environmental obligations in international law and as established by but not limited to—

(i) the Paris Agreement adopted under the United Nations Framework Convention on Climate Change;

(ii) the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES); and

(iii) the Convention on Biological Diversity, including the Cartagena Protocol on Biosafety; and

(d) the sovereignty of Parliament, the legal authority of UK courts, the rule of law and the principle of equality before the law.”

This would ensure that international trade agreements do not conflict with the provisions of international laws or conventions on human rights and the environment, or with the rule of law.

The amendment is designed to apply to regulations implementing all UK trade agreements, of whatever sort. It is a high-level amendment that sets out our trade policy in the proper context of respect for human rights, environmental sustainability and the rule of law. I hope therefore that the Government will have no difficulty in accepting it as a friendly amendment.

The casual observer might think it bizarre that a trade agreement could endanger human rights. Luckily, help is at hand. For those members of the Committee who have not read it, I heartily recommend the comprehensive report of the United Nations independent expert Alfred de Zayas for the UN Human Rights Council, dated 12 July 2016, in which he enumerates the many ways in which trade agreements may indeed infringe on human rights and sadly have done so in the past.

I will not take the Committee through the whole report, but suffice to say that de Zayas examines the threat posed to human rights by international trade and investment across not only civil and political rights, but economic, social and cultural rights such as the rights to work, health, education and one’s own culture. In all cases, de Zayas offers examples of where international trade and investment activities can threaten the enjoyment of human rights. He warns against creating any new agreement that might exacerbate the harm that has already been done as a result of failure to pay proper heed to the nexus between trade and investment, and human rights.

I will draw out one recommendation in the UN independent expert’s report, because it is so utterly pertinent to our discussion of the Bill. His first and foremost recommendation to Parliaments around the world states:

“No parliament should approve trade agreements without exercising oversight functions and examining the compatibility of the agreements with human rights treaty obligations in the light of impact assessments.”

That sentence might usefully be read out, I suggest, at the beginning of every sitting of the Committee and at any subsequent debate on trade policy held by this House.

The amendment seeks to ensure that future UK trade agreements will never be able to undermine human rights in the ways that Alfred de Zayas describes so powerfully for the UN Human Rights Council. In particular, proposed new sub-paragraph (c) aims to establish a proper hierarchy in cases of conflict between human rights law and the treaty obligations of international trade agreements, so that human rights law will always take priority. That is in line with the Vienna declaration and the programme of action adopted by the world conference on human rights on 25 June 1993.

Sub-paragraph (c) also speaks to the basic legal principle of pacta sunt servanda, namely in this case that states are obliged to fulfil their human rights treaty obligations in good faith and should never enter into any trade or other commercial agreements that would undermine or in any other way render impossible the fulfilment of their human rights treaty obligations.

Our amendment goes further, however, in light of the fact that we have higher-order principles that are not related to human rights alone. We also require the UK’s international trade agreements to be consistent with international humanitarian law, which is the body of law governing the conduct of war, so that there can be no question of the UK entering into any agreement with a trading partner that might undermine such a critical pillar of the international order.

One obvious example of what happens when that principle is ignored can be found in the ongoing difficulty caused at European level by Morocco’s attempt to include the fishing rights of the Sahrawi people in its trade agreement with the EU. The trading relationship between the two partners has been critically undermined as a result of the European Court of Justice 2016 ruling that Morocco has no right to negotiate a fishing agreement with the EU covering the waters of the occupied Western Sahara, a territory that the UN has confirmed must be granted the right to self-determination, but where the Sahrawi population has lived under Moroccan military occupation for more than four decades.

Just this month, the ECJ advocate-general publicly stated that the EU fisheries deal with Morocco should be declared invalid because of its failure to accord with international humanitarian law. I am sure that, like us, the Government would not wish any future UK trade agreement to fall into a similar trap.

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Trade deals often impact a wide range of public policy areas. For example, a deal done with a foreign state can impact on the provision of services such as transport. The powers outlined in the Bill could potentially remove a duty on service providers to make reasonable adjustments for people with disabilities. According to Liberty, that would make access to transport more difficult for one in five of the UK population. Does my hon. Friend agree that, as we build the foundations for our future trade policy—I understand that the Minister argues with that—it is vital that the legislation contains provisions that protect such human rights, which are incredibly important for a huge number of people?

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It is incredibly important to include an ethical dimension to any human rights legislation in the Bill. We also require all future UK trade agreements to be consistent with the sustainable development goals adopted by the UN General Assembly in September 2015.

The importance of those goals needs no further elaboration but may be a useful point on how the world’s poorest countries have been marginalised from the gains of global trade over the past 40 years. Although emerging economies such as China have clearly been able to use the export opportunities of a globalised economy to develop into leading actors in many fields of trade and investment, the countries that are home to the bottom billion, as the poorest have been called, have been left behind.

That is precisely what the World Bank’s former research director, Paul Collier, warned of in his best-selling book “The Bottom Billion”, where he concluded that reliance on trade is more likely to lock yet more of the bottom billion countries into the natural resource trap than to save them through export diversification.

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I do not agree with the hon. Lady’s last argument. Millions of people have been lifted out of abject poverty because of trade. I would like to make clear that this is a friendly amendment, as the hon. Lady described it, for future trading agreements, rather than the agreements that the Minister has referred to.

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It is important that we establish the principles of human rights within our trade agreements.

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I entirely agree with the principle that human rights are important. I just want to be clear whether we are talking about existing agreements being transitioned, as dealt with by the Bill to which the hon. Lady has tabled her amendment, or, as her remarks indicate, about future agreements some way in the distance.

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I am talking about both because human rights are the basis of principle, not a point, so my proposal covers both.

To prove the point, the world’s least developed countries saw their share of global merchandise fall still further, to under 1%, in 2015. Africa has seen its share of global trade cut by a half over the past 30 years. It is our task to ensure that the poorest countries can benefit from trade and investment. To that end, the sustainable development goals included three specific targets on trade, set out for all countries to follow, which include promoting a universal, rules-based, open, non-discriminatory and equitable, multilateral trading system under the World Trade Organisation.

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In his speech to the World Trade Organisation in Buenos Aires, the Secretary of State reaffirmed his commitment to trade as a main tool for development, which is fantastic. The Government should therefore be keen to support the amendment, which reaffirms the UK’s commitment to the provisions of the SDGs, human rights, workers’ rights and environmental protections, which are key elements of development, growth and stability, as the Secretary of State said.

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I absolutely agree. The sustainable development goals include the capacity to increase significantly the exports of developing countries, with a view to doubling the least developed countries’ share of global exports by 2020. The SDGs can also allow for timely and lasting duty-free and quota-free market access for the least developed countries, consistent with WTO decisions, including by ensuring that preferential rules of origin applicable to imports from the least developed countries are transparent, simple and contribute to facilitating market access.

The Labour party made a manifesto commitment to guaranteeing the world’s least developed countries continued duty-free and quota-free access to the UK market, post-Brexit. I am pleased that the Government agreed to match that pledge, but we need to go considerably further if we are to ensure that our trade policies really contribute to the realisation of the sustainable development goals. That is why this is such an important part of the amendment, and one that I am sure the Government will support.

One of the most powerful ways to ensure that international trade leads to poverty reduction and enhanced life chances is to ensure that working people benefit fully from the opportunities it offers. To that end, we wish to ensure that all new trade agreements are fully consistent with the UK obligations on workers’ rights and labour standards, starting with the International Labour Organisation’s declaration of fundamental rights at work, and its eight core conventions covering freedom of association, forced labour, child labour and discrimination. However, simply linking to those conventions is far from sufficient, as has been seen in so many cases where trade agreements have led to an undermining of other labour rights. We require a deeper commitment to principles and rights at work that are inherent in the UK’s membership of the ILO, to ensure that there can be no race to the bottom in labour standards as a result of the UK’s new international trade agreements.

Again, I have no doubt that the Government will share our desire to keep labour standards high. The Secretary of State for International Trade, who has not always been known as a champion of workers’ rights, made the case in a debate on exiting the European Union and global trade in the House on 6 July last year. I should be pleased to quote him at length, which is not something that I find myself doing too often:

“There are those who would make the case for a Britain with lower regulatory standards and fewer protections in place across the economy for the environment, for workers and for consumers. Let me tell the House that Britain will not put itself at the low-cost, low-quality end of the spectrum, as it would make no sense for this country economically to do so, nor morally would it give us the leadership we seek. I believe there is no place for bargain-basement Britain.”—[Official Report, 6 July 2017; Vol. 626, c. 1365.]

Encouraged by the Secretary of State’s new-found identity as a defender of high standards and workers’ rights, the Government will, I am sure, have no trouble in supporting this part of the amendment.

Equally, all new trade agreements must be consistent with women’s rights, not least because it has often been women workers who have suffered most in the international trading system.

Integration into global supply chains promised much to women workers in countries where they had not previously enjoyed other economic opportunities. In Bangladesh, for instance, formal employment in the export-oriented garment industry has provided millions of women workers with a regular source of independent income, which has in turn allowed them to enhance their social status and political participation. When done properly, trade can be a source of empowerment, yet many of those working women have found themselves trapped in dead-end jobs characterised by poverty wages and dangerous working conditions. That is a particular threat to workers at the bottom of global value chains producing goods for distant retailers that have ultimate power and control over the conditions under which their suppliers operate. The ILO has noted that all too often trade via global supply chains

“tends to generate economic benefits… (in terms of high productivity), but not necessarily for workers”.

For far too many women in the global economy, the promise of empowerment is eclipsed by the grim realities of exploitation. Trade agreements must be consistent with children’s rights, with the UK’s environmental obligations, and with the provisions of other international treaties ratified by the United Kingdom. Surely the Government will agree with us on these points. They must respect CITES—the convention on international trade in endangered species of wild fauna and flora—as well as the convention on biological diversity. None of these are idle concerns. The European Commission’s official impact assessment for the Transatlantic Trade and Investment Partnership recognises that under every potential outcome, the proposed EU-US agreement would create what it called dangers for natural resources and for the preservation of biodiversity.

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The hon. Lady refers to TTIP and new trade deals; I am sorry for pressing this point, but they are not the point of this Bill. I agree with her on all the standards that she wishes to see in place, and I do not want Britain to race to the bottom, but that is not the point of the Bill; it is for future Bills. Please could we stick to the roll-over agreements that we are talking about in this Bill?

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Order. I remind the hon. Gentleman that it is for me to guide hon. Members on whether they are in scope.

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I remind the hon. Member for Milton Keynes South that the opening line of the Bill says that its aim is to

“Make provision about the implementation of international trade agreements”

per se. It is about principle, and about the fact that the Bill is a legal entity in itself.

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It is not.

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It is the Trade Bill. These principles, including on human rights, should be held dear; if they are not held dear by Government Members, they are at least by Opposition Members. Environmental degradation has just been dismissed as collateral damage when it comes to international trade agreements. That is no basis on which to construct a new trade policy for a United Kingdom.

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The hon. Lady makes an excellent speech. Does she agree that we all have deep concerns about fair trade? There is already a creep in supermarkets looking at fairly traded products, rather than Fairtrade products, and we will see significantly more of that if the Bill passes without amendment. Given that many of our constituencies are Fairtrade towns, that should be of significant concern to all of us.

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I thank the hon. Lady for that intervention. Fair trade should absolutely be a key element of any Bill that deals with trade.

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My hon. Friend quite properly reminds the Committee that the amendment is in scope—otherwise it would not have been selected; the Chair would have ruled it out of scope—because of the words at the front of the Bill. The amendment would of course have an impact on the roll-over agreements, as the Government call them, which are legally distinct, new agreements. If these provisions were put into law, they would apply to all new agreements that we completed in the future. I do not doubt that many Government Members would be happy to see included these provisions about human rights, equality and the rights of children—things that David Cameron, when he was Prime Minister, was keen to negotiate as one of the leaders on the SDGs. Would Government Members accept that the amendment is not only in scope, but could have a positive effect on future conclusions of trade agreements?

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I thank my hon. Friend for his intervention.

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I thank my hon. Friend for being so generous. To amplify that point, I think it was Nick Dearden who, during the oral evidence sessions, spoke about modern trade deals and the huge opportunity presented to us. It is almost a no-brainer to include the things listed in the amendment. There is almost an assumption that they should be included, and that is why we are putting forward the amendment. These are modern trade deals. We have an opportunity to update the arrangements. This is a simple amendment.

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For clarity, when we vote, we will vote on the amendment as on the amendment paper. It is perfectly in order for the hon. Member for Bradford South to discuss the principles that she wishes to see applied in the Bill.

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Finally, our amendment demands that the UK’s international trade agreements be fully consistent with the legal authority of UK courts, the rule of law and the principle of equality before the law. It does not take Sherlock Holmes to deduce that the amendment is designed to prevent the undermining of our legal system by the introduction of investor- state dispute settlement mechanisms in any future UK trade agreement.

ISDS represents an extraordinary transfer of power to foreign investors who gain exclusive rights, unavailable to any domestic investor, to sue host Governments in their own private judicial system. The investment protections they are granted go far beyond what they could be entitled to expect in any of their domestic courts. That has in turn spawned a massive industry of trade lawyers and hedge funds keen to speculate on the massive gains to be made from suing a country over any new rule or regulation that might be construed as being unfair to multinational companies operating there.

There have been more than 800 ISDS cases brought by foreign investors against their host countries. Some Governments have been forced to back down from introducing perfectly reasonable social or environmental measures. In the first ISDS case brought against Germany under the energy charter treaty, the Swedish power company Vattenfall sued in relation to its new coal-fired power plant outside Hamburg. The authorities were forced to drop the environmental conditions designed to protect the water quality of the River Elbe. In the infamous case brought against Canada under the ISDS provisions of the North American Free Trade Agreement, the US company Ethyl successfully sued the Canadian Government over their ban on the use of the fuel additive MMT. The ban had been introduced on public health grounds to guard against the inhalation of particles of manganese, which is known to be a neurotoxin. When the ISDS tribunal ruled against Canada’s procedural defence, it settled the claim by paying $13 million to Ethyl, rescinding the ban and issuing a public apology.

The prospect of being on the receiving end of such an attack generates its own regulatory chill, dissuading countries from upgrading their regulatory regime for fear of being sued for hundreds of millions of pounds in front of wholly unpredictable tribunals where the adjudicators often turn out to be working out as counsel for their corporate clients at the same time. The inclusion of ISDS or its equivalents in the most controversial bilateral trade agreements of recent years has been one of the key factors behind the loss of legitimacy and public support for international trade in general. We would do well to address that fact at this juncture.

The EU Trade Commissioner Cecilia Malmström was not exaggerating when she complained that ISDS had become the most toxic acronym in Europe. It turned her TTIP dreams into a nightmare, and it will do the same for any future UK trade agreements that seek to include it. There is absolutely no justification for the introduction of ISDS in any trade or investment agreement negotiated for the UK, and there is no need for it either. The UK holds more foreign investment stock than any other EU member state and boasts a higher score than any other European country on the index measuring the quality of judicial processes. Foreign investors can have full confidence in the UK judicial system and can rely on our domestic courts for any redress they seek as a result of unfair treatment, just as we do.

The previous coalition Government commissioned an official cost-benefit analysis of the prospect of extending ISDS rights to North American investors at the outset of the TTIP negotiations in 2013. The report they received is still well worth reading. It found that there would be no benefits to the UK economy from introducing ISDS, only costs. With that rebuke ringing in our ears, I trust that the Government will vote in favour of the amendment, as they should.

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I strongly support the hon. Lady’s point about the value of human rights and the importance of workers’ rights and environmental standards, not only as we trade abroad but in how we deal with our domestic politics. That is very important. I am sorry that, at the tail end of her point, she started to suggest that one side of the House somehow does not agree with that. In fairness, there is a range of views across the spectrum, but the principles about human rights and workers’ rights and so on are there.

I cannot support the hon. Lady’s amendment, not because of the values that she talked about at some length but because, in her own words, the amendment seeks to change any future trading agreement. On a point of principle, I do not think that is something the Committee has the power, or is in the position, to do. On that principle, I will vote against the amendment, and I hope other Members do the same.

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I thank the hon. Member for Bradford South for her interesting and wide-ranging speech. I wholly agree with her strong comments on human rights and the UK being a leader in that space and the wide range of fields referred to in the amendment. In fact, I think all Conservative Members wholly endorse that.

However, I assure the hon. Lady that the amendment is unnecessary. The UK has always sought to comply with international law, and we will continue to uphold our strong commitments to human rights and labour and environmental standards around the world, as well as to the sustainable development goals, gender rights, disability rights, endangered species, fighting climate change and so on. The process of exiting the EU will not alter that position, and we will still be bound by our commitments under international law. Both the Secretary of State and I stated in the Chamber on Second Reading that our aim in undertaking the transition programme is to seek continuity in the effects of existing trade agreements. This is not an opportunity to renegotiate the terms of those agreements, which have already been scrutinised by Parliament.

The hon. Lady referenced least developed countries. I remind her that, despite her warm words, she voted against the Taxation (Cross-border Trade) Bill on Second Reading, which is currently being considered in another Committee and which enshrines a system of trade preferences for developing countries as we leave the EU, to make sure that those powers are in place for the UK to offer unilateral trade preferences. Unfortunately, if her vote on that Bill had been the majority view in the House earlier this month, the UK would not have a system of trade preferences for developing-world countries as we exit the EU.

The amendment is unnecessary, particularly in relation to our compliance with international law.

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The Government recently published a 25-year plan for the environment, committing the UK to:

“Leave a lighter footprint on the global environment by enhancing sustainability and supporting zero deforestation supply chains.”

Does the Minister agree that it is vital that the Bill is amended to ensure that the Government can meet that commitment, and to ensure that trade policy does not result in a reduction in environmental standards and protections or in an unacceptable, unsustainable global footprint?

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Let me be absolutely clear: there is no intention to reduce environmental standards. In fact, the point of the 25-year environment plan was to enshrine this country’s commitment to the environment over a very long period of time. I heartily commend that plan, but it is not part of today’s Bill. I am happy to underline that we will, of course, remain compliant with international law. On the basis of that assurance, the broader applicability of international law, and the UK’s commitments in all such areas, I ask the hon. Member to withdraw the amendment.

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Will the Minister give way?

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I will, of course, take an intervention from the hon. Member for Warwick.

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My constituency is Warwick and Leamington. They get funny about that in my area.

Based on my humble experience, I do not think we have the same kind of reputation for environmental safeguards as certain other countries—our history is weak in that area. One of the reasons for tabling the amendment was to ensure that those sorts of standards are included, and that we are putting that forward for our own protection, as well as the offensive interests of other Governments. The Minister may have a different view from mine. I understand that he has lobbied in Brazil on behalf of certain oil giants such as BP and Shell, so he will take a different stance. I believe that it is an important issue, which is why we tabled this important amendment.

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I thank the hon. Gentleman for that late but wide-ranging intervention. Let me try to deal with each of his points. On Brazil, it is quite clearly on the record that the discussions were to ensure a level playing field for UK companies, not to change Brazilian domestic requirements in a way that would harm the environment in Brazil.

Secondly, we have an exemplary record on the environment over the last seven years. The UK was a leader in the Paris agreement and the negotiations behind it, as the shadow Secretary of State will know only too well—he takes a keen interest in that and is even the party’s spokesperson. When it comes to recent regulations such as the banning of microbeads and efforts to prevent plastics from entering the environment, the Government have an exemplary record. On that basis, I ask the hon. Member for Bradford South to withdraw her amendment.

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We will push the amendment to a vote.

Question put, That the amendment be made.

Division 3

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 7, in clause 2, page 2, line 29, at end insert—

“(4A) Regulations under subsection (1) may make provision for the purpose of implementing an international trade agreement only if the provisions of that international trade agreement do not in any way restrict the ability—

(a) to make public services at a national or local level subject to public monopoly;

(b) to make public services at a national or local level subject to exclusive rights granted to private operators; and

(c) to bring public services at a national or local level back into the public sector for delivery by public sector employees.”

This would ensure that international trade agreements cannot restrict future decisions in respect of the delivery of public services.

It is a pleasure to serve under your chairmanship, Ms Ryan. Amendment 7 seeks once and for all to exclude public services from the remit of any future UK trade agreements. That nut has proved extremely difficult to crack in all of the multilateral and bilateral international trade negotiations that the UK has been involved with to date. Given the object lesson we have just been taught by the collapse of Carillion and the deep uncertainty it has caused in relation to the outsourcing of public services, we are more determined than ever to get it right for the future.

Service trade negotiations were introduced to the multilateral trading system through the general agreement on trade in services. GATS was part of the package of multilateral agreements negotiated in the Uruguay round of global trade talks, which took place between 1986 and 1994 and led to the creation of the World Trade Organisation. Each country submitted a schedule of GATS commitments detailing the level of liberalisation it would offer to other WTO members on a sector-by-sector basis and across the four different modes of service delivery—namely, cross-border supply, consumption abroad, commercial presence and movement of natural persons. That was done by what is known as positive listing, which means that only sectors put forward for liberalisation would be subject to the GATS market access and national treatment provisions. EU member states were able to register their own national limitations to the levels of liberalisation listed for each sector, either by withholding sectors from liberalisation entirely or by attaching national conditions to the opening of their markets. That means that, across the 160 service sectors, the EU’s schedule of commitments runs to more than 540 pages in length.

Services have become an important element in the bilateral trade negations that have proliferated since the demise of the WTO’s Doha round. Contrary to what is often heard in the media, the comprehensive economic and trade agreement between the EU and Canada—CETA—included the most far-reaching commitments to services trade liberalisation ever made by the EU. They were made by a negative listing, which means that only sectors specifically listed for protection from liberalisation would be excluded from the deal’s market access and national treatment provisions. That is commonly known as the “list it or lose it” approach, and it makes for a much more extensive liberalisation outcome than the positive list approach that has been used in multilateral services negotiations.

In all of those negotiations, there has been considerable concern about the potential for public services to fall foul of WTO rules on monopolies, competition and market opening. To that end, the original GATS text included an exemption for services

“supplied in the exercise of government authority”.

That exemption has been carried over into most other bilateral agreements. We sometimes hear people who are new to this issue claiming that this provides a carve-out for public services. However, the exemption for services supplied in the exercise of governmental authority is closely defined to mean only services that are supplied on a non-commercial basis and without any competition from the private sector. There is consensus among all trade policy experts that it is a carve-out not for public services, but only for specific state functions, such as the judiciary, the army or the police.

The detailed paper on the subject published by Professor Markus Krajewski notes that academics and trade policy practitioners alike now accept that most public services, including social, health and educational services, as well as network-based and universal services, are not covered by the exemption clause. The EU agrees. The European Commission has confirmed that public services such as the NHS are not protected by the governmental authority exemption. The relevant passage from the Commission’s proposal to modernise the EU’s treatment of public services in future EU trade agreements states:

“The scope of the GATS includes services which may be considered by each Member to be ‘public services’. A wide variety of so-called public services, including certain activities relating to education, healthcare, postal, telecommunications, waste collection, water provision, electricity, transport, etc as they exist today in many countries, including in most EU Member States will have certain commercial aspects and may be provided to some extent by private operators on a competitive basis. Where this is the case, they would normally fall within the scope of the GATS as representing ‘tradable’ services.”

Recognising that GATS included public services, the EU set about registering a horizontal limitation in its schedule of commitments—the so-called public utilities exemption. This was intended to allow EU member states to maintain public monopolies for some public services and to have the flexibility to outsource others to the private sector—something that today seems a great deal less attractive than it once did, following the collapse of Carillion. Most importantly, the EU’s public utilities exemption was designed to allow member states to bring back failed outsourcings into the public service without any fear of breaking WTO rules on restricting markets that had already been committed to liberalisation.

However, the EU’s legal team soon came to realise that the public utilities exemption was itself defective. Two papers that it published in 2011 confirmed that public services were still potentially exposed to the trade liberalisation regime, as incorporated in both multilateral and bilateral agreements. The same concern applied to the major bilateral trade deals under negotiation with the US and Canada—TTIP and CETA—as well as the negotiations that are continuing outside the WTO framework towards a plurilateral trade and services agreement, known as TISA, in which we understand the UK is currently engaged only by virtue of its membership of the EU. The Minister might want to confirm whether the UK is engaged in those negotiations when he responds. In all these cases, the inclusion of public services is a major cause of concern, not least among trade unions, which have come out against all such deals unless there can be an unequivocal guarantee that public services will not be included.

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Does my hon. Friend agree that modern-day international trade agreements extend into a wide range of public policy making and it is therefore essential that our Government maintain the capacity to deliver public services?

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That is absolutely right. It is at the heart of amendment 7 that our Government and this country retain the right to decide who runs vital national services. Our concern from the body of evidence over the years—I have started to run through where some of those concerns come from—is that there is doubt about whether that will continue to be possible.

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I am fully behind the principle of the amendment. Scotland still leads the way in terms of Scottish workers being employed under public ownership. We are looking at a public sector energy company and a public sector bid to run the ScotRail franchise. I completely support that public sector ethos. As was mentioned, the Bill is supposed to be about existing trade agreements being rolled over into UK law. Is the hon. Gentleman saying that even under existing EU trade deals, these public service operations are at risk, meaning that that would be a concern when any one of those deals was rolled over?

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If the amendment is agreed, we are making sure that there is no prospect of there being a problem or concern about any of these things arising. I am glad that the hon. Gentleman mentioned some of the important elements of public services that are still in the public sector in parts of the United Kingdom, because in the Labour manifesto last year that is certainly what we envisaged for the whole country.

We believe that those with concerns are right to be concerned, given that the European Commission has said the following about including public services in the multilateral services regime in its proposal on modernising the system:

“Indeed, it is important for the EU that GATS does cover public services, as the EU, for whom services represent 70% of the overall economy, and where EU harmonisation has led to the liberalisation of former public monopolies in areas such as telecoms and postal services, is also the world’s largest exporter of services and seeks access to other markets.”

That is why public reassurances and best endeavour commitments from Ministers are not the issue here. Legal certainty and absolute exemption are required, which again answers the point made by the hon. Member for Kilmarnock and Loudoun. Amendment 7 seeks to exclude, once and for all, public services from the fear of being trapped by world trade rules, by prohibiting Ministers passing regulations to implement the trade agreement if that agreement in any way restricts the ability to keep public services in public hands or to bring them back into public hands once they have been outsourced.

In the wake of the disastrous collapse of Carillion, I would hope that the common sense of the amendment is so overwhelming that it will receive support from the Government. We cannot have a situation where the outsourcing of public services to the private sector might end up entangled in trade rules so that future Administrations find themselves in any way restricted in bringing those public services back into the public sector for delivery by public sector employees.

When the Secretary of State gave evidence to the International Trade Committee last February, he was invited by my hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) to repeat the words:

“The NHS is off limits in any future trade deal.”

In reply, the Secretary of State stated:

“Let me tell you, as the person who will be in charge of negotiating that, it would not be happening on my watch.”

Let us hope that the Secretary of State’s commitment will encourage the Government to vote in support of the amendment and to ensure that our NHS and our other vital public services will never be pawns to be bargained away in international trade negotiations.

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It is a pleasure to serve under your chairmanship, Ms Ryan. I will expand briefly on the point I made in my intervention. We fully support the principles behind amendment 7. Scottish Water is still in public ownership in Scotland. Caledonian MacBrayne ferries recently went out to tender and there was a public sector bid, so that remains run by the public sector. Going forward, the Scottish Government are looking at the ScotRail franchise possibly coming into the public sector, as well as public sector energy companies. Of course, we all value the different national health services across the constituent countries of the United Kingdom.

The hon. Member for Sefton Central touched on Carillion, which is certainly a good example of how private does not always equal better. We have now seen the latest east coast main line fiasco—Stagecoach and Virgin were able to walk away and not honour their commitment to the public purse in the franchise moneys they were meant to pay. It is clear that that service has been run successfully in the public sector before and there is no reason why that could not be done again. We would certainly like to see more rail franchises operated by the public sector.

For those reasons, we would welcome these protections being added to the Bill. I would like to think that the amendment is not really required, but there does sometimes seem to be a confused position in the Labour party. The leader of the Labour party, the right hon. Member for Islington North (Jeremy Corbyn), has suggested that we cannot be in the single market and have rail nationalisation. This is not correct, given how many national rail companies operate in the UK and run UK franchises. Clearly, we can have nationalisation and be in the EU single market.

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Perhaps the hon. Gentleman will allow me to clarify. I believe that the contention is not that we cannot have a nationalised industry as a member of the single market; it is that once the sector has been liberalised, it then becomes very difficult to take it back under national control. That is the point my party’s leader was making, not the one he suggests.

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I thank the hon. Gentleman for that clarification. I would still contend that there is a confused viewpoint regarding the single market and how it aligns with membership or otherwise of the EU. Again, where the rail franchising system in the United Kingdom has been liberalised, clearly there is no impediment to the Scottish Government making a public sector bid. That proves that it can happen within the EU single market.

In conclusion, I welcome any commitment to strengthen the public sector ethos and public sector ownership, and I will be interested to hear what the Government have to say.

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As I have mentioned, the aim of continuity means that this exercise will not be used as a back-door way to alter how the UK delivers public services. I make it clear to the Committee that the protection of public service delivery is written into many EU trade agreements and they already include safeguards to protect EU country Governments from being forced to privatise their services. That protection has worked for 20 years.

I will turn to some of the individual points that have been raised. The hon. Member for Sefton Central talked about the agreement on government procurement. Just to be clear, the GPA operates on a positive list basis—that is, only areas listed by GPA members in their GPA schedules are covered by the GPA’s obligations.

Secondly, the hon. Gentleman will know, as I do, that negotiations on the trade in services agreement are ongoing at the WTO, but are not making a great deal of progress. The UK’s position, as it currently stands, will be represented in those discussions by the European Union.

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If the Government will not support the amendment today, will the Minister provide assurances to the Committee and to the British people that the Bill will not put vital public services, such as the NHS, at risk of piecemeal privatisations that are ultimately detrimental to those who rely on those services?

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We have been clear that many EU trade agreements presently provide those protections and we have been clear that this exercise of transitioning existing EU free trade agreements will not be used for any back-door attempt to do anything to the NHS that would prevent our right to regulate domestically for the NHS. This party has a proud record of defending and protecting the national health service, and that will continue.

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Does the Minister recall that during the drafting of CETA, while Germany put a clear exemption into the agreement’s text that it would not allow any privatisation of its health service in that way, the UK failed to do so? One reason the ancillary document—the interpretative document—was necessary was to make that clear, but that document was not binding in law. As such, the Government do not have a good record on this, do they?

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The hon. Gentleman and I had an extensive debate on this matter in February. We are satisfied that the protections in CETA are adequate for protecting our national health service and our right to regulate in the domestic market.

It has long been an aspect of UK Government policy under successive Governments to make sure that trade agreements work for services. That is actually in the UK national interest—80% of our country’s GDP comes from services and 79% of our employment comes from services—and has been an objective of successive Governments.

I remember when the hon. Gentleman was a Minister under Tony Blair. The Blair Government rightly ensured, in particular within the European Union, that services were part of the trade agenda. Although the hon. Gentleman has changed his opinion on many matters in the intervening 10 years since Mr Blair left office, I am a little surprised that he and his colleague now seem to be arguing against the UK doing more to ensure that services are a key part of future trade deals.

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Will the hon. Gentleman give way?

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Of course I will allow the hon. Gentleman to intervene, to clarify where he is with Tony Blair.

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My relationship with our former Prime Minister is probably not in scope for the Committee. However, I assure the hon. Gentleman that the Labour party and the Opposition in Committee do not in any way want to stop the very valuable exports that our service industries make to the rest of the world. We want to see them flourish, but we want them to do so within a framework that does not prejudice the protections that should properly—as the Minister has acknowledged—be in place for public services and the public sector in this country, and the right to protect our national health service and to ensure that public procurement can be done properly.

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I think we shall leave it at that. I thank the hon. Gentleman for his clarification of where he stands in relation to Tony Blair.

Protecting the UK’s right to regulate public services is, of course, of the utmost importance. UK public services are protected by specific exceptions and reservations in EU trade agreements where relevant. As we leave the EU, the UK will continue to ensure that rigorous protections are included in all trade agreements that it is party to. On that basis, I ask the Opposition to withdraw the amendment.

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I will not be drawn on everything the Minister said, but I will go back to what the hon. Member for Kilmarnock and Loudoun said in his short speech. The amendment and the Bill are about trade agreements and not about the single market. My hon. Friend the Member for Brent North made it clear on Second Reading exactly what our relationship with the single market will be once we have left the European Union—if we are not a member of the European Union, it is not possible to have a say in the rules, so we are therefore not a full member whatever our relationship with the single market. He explained it extremely well.

The amendment is about the relationship with future trade agreements and about having the right protections for public services. I go back to what I said in my speech: the amendment is about ensuring that we have the ability in law to bring services back in, in the light of Carillion, whether they are to do with the NHS or other services. In the public interest—the public good—this country should have the ability to decide where its public services are run.

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Back in February last year, as I understand it, the Minister told the International Trade Committee that the NHS would remain off limits in trade negotiations and that he would not sacrifice the Government’s right to regulate public services. Does my hon. Friend therefore share my surprise that the Minister is not keen to include the amendment in the Bill?

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I share my hon. Friend’s surprise because, as I said in my speech, repeated public reassurances and “best endeavour” commitments from Ministers are not the issue; legal certainty and absolute exemption are required. If the Minister will not accept the amendment, perhaps he will tell us now that he will bring forward his own amendment later in our proceedings to achieve exactly that.

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We are talking here about future trade agreements, on which I have clearly laid out our position. I will just pick up on a point made by the hon. Member for Warwick and Leamington. I think he is incorrect in what he said on any evidence I might have given to the International Trade Committee last February. To be clear—and perhaps to my regret—I did not appear in front of that Committee until last week.

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It is odd to be intervened on about the comments of another Member. I suspect my hon. Friend the Member for Warwick and Leamington meant the Secretary of State. I thought all Ministers spoke as one in Government, although we have seen enough evidence in recent days, weeks and months to suggest that that is not entirely true. Today is perhaps the latest example, with the leaked reports from the Secretary of State for Exiting the European Union. We are wandering, and I think the Chair might have something to say on that.

Over the weekend, the Prime Minister left a degree of ambiguity in her words on this issue. As my hon. Friend the Member for Brent North quite rightly reminded us, the German Government felt sufficiently concerned about CETA to exclude healthcare from its provisions. We should be very mindful of that. The Government are keen to, in their words, roll over that agreement, although with the acknowledgement that that may involve technical changes. Perhaps we can all agree that it will become a corresponding agreement.

There is a body of evidence from across the years showing the need for cast-iron guarantees to protect public services, so that they can be delivered in the public good and brought back in house where necessary. Without it being legally binding in the way we have set out in the amendment, it is difficult to see how that can be achieved. I will ask again: if the Government will not support the amendment, will they bring forward their own amendment that delivers on exactly that point later in our proceedings? There will be further opportunities in this House and in the other place to do so.

Question put, That the amendment be made

Division 4

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 8, in clause 2, page 2, line 29, at end insert—

“(4A) Regulations may only be made under section 2(1) if—

(a) the provisions of the international trade agreement to which they relate are consistent with standards for food safety and quality as set and administered by—

(i) the Department of Health;

(ii) the Food Standards Agency; and

(iii) any other public authority specified in regulations made by the Secretary of State;

(b) the Secretary of State is satisfied that mechanisms and bodies charged with enforcement of standards for food safety and quality have the capacity to absorb any extra requirement which may arise from the implementation of the agreement;

(c) the provisions of the international trade agreement to which they relate are consistent with policy to achieve reduction in the risk of disease or contamination as set and administered by—

(i) the Department of Health;

(ii) the Food Standards Agency; and

(iii) any other public authority specified in regulations made by the Secretary of State;

(d) the provisions of the international trade agreement to which they relate are consistent with achieving improvements in public health through any food policy priorities set and administered by—

(i) the Department of Health;

(ii) the Food Standards Agency; and

(iii) any other public authority specified in regulations made by the Secretary of State;

(e) the provisions of the international trade agreement to which they relate are compliant with policy to achieve targets for farm antibiotic reduction set by the Veterinary Medicines Directorate;

(f) the provisions of the international trade agreement to which they relate are compliant with retained EU law relating to food standards and the impact of food production upon the environment; and

(g) any food or food products to which the provisions of the international trade agreement apply meet standards of labelling, indication of provenance, and packaging specified by the Food Standards Agency.

(4B) A statutory instrument containing regulations of the Secretary of State under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”.

This would ensure that international trade agreements maintain or enhance food safety standards in the UK.

The amendment speaks to the critical issue of food and food safety, in the context of our future international third country agreements. No Committee member needs me to tell them of the central importance of maintaining food safety standards in this country and ensuring that the British people can have confidence in those standards. However, perhaps it is necessary to provide some explanation of why this has become such a totemic issue in the debate around international trade.

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In her opening remarks, the hon. Lady has talked about reassuring the British people. I note that the amendment mentions the Department of Health and the Food Standards Agency. Is it not deficient because it does not recognise the devolved Administrations? I wonder whether that is an omission, because Food Standards Scotland actually gave evidence to this Committee.

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The hon. Gentleman makes a very good point.

It is easy to joke about chlorine chicken or hormone beef, and at least one of the witnesses in the oral evidence sessions noted that we have heard more about those particular delicacies than we would ever wish to. Yet there is a profoundly serious point underlying the reference to them—a point that was hammered home in November last year when Wilbur Ross, the man appointed by Donald Trump to be US Secretary of Commerce, addressed the annual conference of the CBI.

Mr Ross put the UK on notice that we will have to relax our food safety laws if we wish to have a trade deal with the USA. He specifically called out the sanitary and phytosanitary regulations that we have in place to protect against the importation of potentially dangerous products, and he complained that they act as a barrier to US exports, seeing as the regulations that US producers have to abide by in their home markets are much lower than those that apply in Europe. Mr Ross explicitly warned the British people that we need to downgrade our food standards if we wish to have a trade deal with the USA.

The regulatory system that we have developed over decades in the UK is based on the precautionary principle, which states that where there is a risk that public health or safety might be compromised, regulatory bodies must err on the side of caution. The principle applies even if the level of risk cannot be fully quantified under the science that we have today. Any company or individual who wishes to introduce a product or process to the market must—quite rightly—prove it is safe to do so.

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On the point made earlier by the hon. Member for Kilmarnock and Loudoun, proposed new sub-paragraph (iii) of the amendment refers to

“any other public authority specified in regulations made by the Secretary of State”.

Does my hon. Friend agree that that therefore makes provision for the other Administrations’ bodies to be included in the scope of the amendment, although I entirely take the hon. Gentleman’s point that Food Standards Scotland was not specifically mentioned, and it might well have been?

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I thank my hon. Friend and the hon. Member for Kilmarnock and Loudoun for their interventions, in which they both made valid points.

In the USA, the requirement is reversed. Those who wish to introduce products or processes to the market are free to do so unless the authorities can prove that they are unsafe. What they have tried to call the “scientific” approach to food safety, as opposed to the risk-based approach that we enjoy in this country and throughout Europe, has meant that the USA has ended up with lower standards of food hygiene and food safety. That is why the processes behind meat production on either side of the Atlantic are so radically different.

More than 90% of US beef is produced with the use of bovine growth hormones that have been linked to cancers in humans. We have food safety regulations in place across Europe that have banned any imports of hormone-grown beef from the USA and other countries for 30 years. US poultry producers are permitted to douse chicken and turkey carcasses with chlorine washes before selling them on to consumers. Again, that practice has been banned in Europe for more than 20 years, and the USA has challenged the ban at the WTO as being a barrier to its ability to penetrate the EU market.

The connection with animal welfare is paramount in this respect, in that the European regulations seek to introduce at least some consideration for the welfare of the animals that are farmed for human consumption. The USA has no comparable regulations on animal welfare, and the conditions in which its industrial farming takes place do not bear thinking about. Let me make the central point clear: the issue before us in this Bill is not whether we like the idea of eating hormone-grown beef, or whether we care about animal welfare in the raising of poultry for slaughter—those are debates we can have another time; the issue before us here is that we must be the ones to decide on food safety and animal welfare issues, and we must do so in an open forum as the elected representatives of the people of the United Kingdom.

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Does my hon. Friend agree that, if we do not secure an amendment to protect food safety standards in the UK, we will be failing our constituents and potentially putting public health at risk?

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My hon. Friend makes a very important point. It is important that we consider those wider issues in this Committee.

It is unacceptable that we might come to such a debate in the future only to discover that our right to choose what we eat and how it is produced has already been traded away in secret negotiations by a Secretary of State who ranks getting a trade deal far above protecting food safety for the British people. Amendment 8 would simply ensure that our trade agreements conform to food safety policies, not the other way around.

The significance of the challenge laid down by Wilbur Ross at the CBI last November was lost on no one. Two days after the speech, the EU’s chief negotiator, Michel Barnier, responded to Wilbur Ross and posed the No. 1 question for the UK: do the British people wish to remain aligned with the European Union’s relatively high standards, or do we want our food safety standards to be downgraded so we can do a dirty deal with the USA?

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Does my hon. Friend agree that, given the Secretary of State’s statement that there

“are no health reasons why you couldn’t eat chickens that have been washed in chlorinated water”—

of course, that is the same Secretary of State who said that Brexit is the easiest thing in human history—it is crucial that we set out in statute that international trade agreements must maintain the food safety standards in our country?

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My hon. Friend is absolutely right that that must be set out in regulations and in statute.

I want to spell out clearly the connection between this amendment and one of the key issues in the post-Brexit settlement between the UK and the EU—namely, the border issue on the island of Ireland. Hon. Members will recall the dramatic scenes last month when our Prime Minister finally managed to move us on to negotiations with the EU about what our long-term relationship should be after Brexit. That was achieved by way of an agreement in respect of the island of Ireland, which committed the UK to the following:

“In the absence of agreed solutions, the United Kingdom will maintain full alignment with rules of the Internal Market and the Customs Union which, now or in the future, support North-South cooperation, the all-island economy and the protection of the 1998 Agreement.”

When pressed further on what exactly that might mean, the Prime Minister was more explicit. She specified that there are six areas that are covered at present by north-south co-operation on the island of Ireland, and confirmed that one of them is agriculture.

The significance of the Prime Minister’s words goes far beyond the immediate issue of how we are to relate to the remaining 27 member states of the European Union in the future. Any suggestion that the UK might downgrade its food safety regulations to do a deal with the USA or any other trading partner would wreak havoc among farming communities both north and south of the border in Ireland, which would find themselves unable to continue trading freely. Allowing the Secretary of State to contemplate such a divergence in a trade deal with the USA or any other trading partner would jeopardise the peaceful co-existence that we have all endeavoured to hold together since the Good Friday agreement was signed 20 years ago. That is why amendment 8 is so important, and we hope the Government will vote to support it.

There are real threats. The USA agricultural lobby called for EU rules on pesticides to be downgraded in TTIP, given that we have far stricter regulations on the levels of chemical pesticide residue permitted in food. It called for our ban on the sale of genetically modified organisms to be eliminated, given that 70% of all processed food in US supermarkets is now made with genetically modified ingredients. It also called for an end to the mandatory labelling of products containing genetically modified ingredients, on the grounds that it represents a hidden barrier to trade. Consumer choice would go out of the window with public health, food safety and animal welfare rights.

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Does my hon. Friend agree that this is clearly an issue, as has been described, of consumer information and consumer rights, in terms of not just the quality of food being put on our plates but the conditions in which our animals are kept, the state of the abattoirs and the standards we maintain so highly in this country?

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I thank my hon. Friend for that intervention, and I repeat that it is important to maintain the regulatory standards we have in this nation.

The US Government trade representative confirmed in writing at the very outset of the negotiations that the USA’s TTIP negotiators would be seeking to eliminate or downgrade those sanitary or phytosanitary measures that prevent US exports from entry into the market of the UK and other EU member states. That was one of the central reasons why TTIP became so toxic across country after country in Europe, and why the European Commission soon discovered that it had no legitimacy to continue the TTIP negotiations at all.

I should also note that there is a commercial aspect to this. The celebrity chef, Jamie Oliver, was so concerned about the potential impact of TTIP on his business—which is based on high-quality food imports at every stage of the supply chain—that he took it upon himself to call on the previous Secretary of State for cast-iron guarantees that food standards would not be included as part of the TTIP negotiations. The Secretary of State was unable to give him those guarantees, since the TTIP negotiations were, at that same moment, addressing sanitary and phytosanitary measures at the express demand of the US Government. Of course, those negotiations were going on behind closed doors.

That is what Wilbur Ross meant when he warned that the USA would demand the downgrading of UK food standards. That is why it has been so appalling to see the current Secretary of State laughing off the threat represented by such a downgrading of our standards.

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I have been listening carefully, but to be absolutely clear, I think the hon. Lady referred to the previous Secretary of State. Obviously, the current Secretary of State is the first and only Secretary of State for International Trade. Could the hon. Lady perhaps clarify whom she is referring to as the previous Secretary of State?

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I am referring to the right hon. Member for Twickenham (Sir Vince Cable).

Amendment 8 also seeks to ensure that the food we eat comes from healthy animals that are naturally resistant to disease, not dosed up with antibiotics as an alternative to maintaining food hygiene throughout the production process, which is a standard model of industrial farming in the USA. We all know about the real threat of superbugs that develop their resistance to antibiotics. That is why the Veterinary Medicines Directorate has set targets for the reduction of antibiotic use in agriculture. This is where the interface between animal welfare and food safety becomes most compelling, and why British farmers should be proud to produce food that adheres to the highest standards—all the way from farm to fork.

Finally, this amendment would ensure that the bodies responsible for upholding and enforcing food standards in this country have the capacity to meet any extra requirements placed on them.

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I was just reading some of the evidence submitted by Sustain, the alliance for better food and farming, which says exactly what my hon. Friend is saying:

“We want affordable food, not cheap food, which may be poor quality or unsafe to eat. Cheap, poor quality, imported food will come at a cost—to the farmer or food producer, to animal welfare, to the environment or jobs in UK food and farming. There may be hidden costs to our NHS and economy from food poisoning and lost days at work.”

Does my hon. Friend agree that this amendment will help to protect our food standards?

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I thank my hon. Friend for that intervention and wholeheartedly agree that this amendment would help to protect our food standards.

To clarify my previous comments and the intervention by the Minister, I was referring to the right hon. Member for Twickenham in his former role as Business Secretary.

Finally, this amendment would ensure that the bodies responsible for upholding and enforcing food standards in this country have the capacity to meet any extra requirements placed on them as a result of new UK trade agreements. We absolutely do not wish to see any downgrading of capacity in relation to food safety officers or others responsible for ensuring that we can have confidence in the food on our shelves.

Once again, I find it hard to see how the Government can find any reason to object to this amendment, and I hope that we can count on support from the Government Benches in voting it through.

The Chair adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at Two o’clock.

Trade Bill (Sixth sitting)

The Committee consisted of the following Members:

Chairs: † Philip Davies, Joan Ryan, James Gray, Sir David Crausby

† Badenoch, Mrs Kemi (Saffron Walden) (Con)

† Bardell, Hannah (Livingston) (SNP)

† Brown, Alan (Kilmarnock and Loudoun) (SNP)

† Cummins, Judith (Bradford South) (Lab)

† Esterson, Bill (Sefton Central) (Lab)

† Gardiner, Barry (Brent North) (Lab)

† Hands, Greg (Minister for Trade Policy)

† Hughes, Eddie (Walsall North) (Con)

† Keegan, Gillian (Chichester) (Con)

† McMorrin, Anna (Cardiff North) (Lab)

† Prisk, Mr Mark (Hertford and Stortford) (Con)

† Pursglove, Tom (Corby) (Con)

† Rashid, Faisal (Warrington South) (Lab)

† Smith, Nick (Blaenau Gwent) (Lab)

† Stewart, Iain (Milton Keynes South) (Con)

† Vickers, Martin (Cleethorpes) (Con)

† Western, Matt (Warwick and Leamington) (Lab)

† Whittaker, Craig (Lord Commissioner of Her Majesty's Treasury)

† Wood, Mike (Dudley South) (Con)

Kenneth Fox, Committee Clerk

† attended the Committee

Public Bill Committee

Tuesday 30 January 2018

(Afternoon)

[Philip Davies in the Chair]

Trade Bill

Clause 2

Implementation of international trade agreements

Amendment proposed (this day): 8, in clause 2, page 2, line 9, at end insert—

“(4A) Regulations may only be made under section 2(1) if—

(a) the provisions of the international trade agreement to which they relate are consistent with standards for food safety and quality as set and administered by—

(i) the Department of Health;

(ii) the Food Standards Agency; and

(iii) any other public authority specified in regulations made by the Secretary of State;

(b) the Secretary of State is satisfied that mechanisms and bodies charged with enforcement of standards for food safety and quality have the capacity to absorb any extra requirement which may arise from the implementation of the agreement;

(c) the provisions of the international trade agreement to which they relate are consistent with policy to achieve reduction in the risk of disease or contamination as set and administered by—

(i) the Department of Health;

(ii) the Food Standards Agency; and

(iii) any other public authority specified in regulations made by the Secretary of State;

(d) the provisions of the international trade agreement to which they relate are consistent with achieving improvements in public health through any food policy priorities set and administered by—

(i) the Department of Health;

(ii) the Food Standards Agency; and

(iii) any other public authority specified in regulations made by the Secretary of State;

(e) the provisions of the international trade agreement to which they relate are compliant with policy to achieve targets for farm antibiotic reduction set by the Veterinary Medicines Directorate;

(f) the provisions of the international trade agreement to which they relate are compliant with retained EU law relating to food standards and the impact of food production upon the environment; and

(g) any food or food products to which the provisions of the international trade agreement apply meet standards of labelling, indication of provenance, and packaging specified by the Food Standards Agency.

(4B) A statutory instrument containing regulations of the Secretary of State under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”.—(Judith Cummins.)

This would ensure that international trade agreements maintain or enhance food safety standards in the UK.

Question again proposed, That the amendment be made.

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May I start by welcoming you to the Chair, Mr Davies?

The Government have already made it clear that we will not use the necessary and indeed pertinent exercise of continuing the effects of our existing agreements as a back-door way to reduce standards, including food safety standards. As the Prime Minister said in Florence in September, we are

“committed not only to protecting high standards, but strengthening them…we will always be a country whose pitch to the world is high standards at home.”

I am happy to reaffirm the Prime Minister’s commitment to the Committee. We are committed to upholding and strengthening our high standards in public health and safety, product performance and protecting the environment.

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How does the Minister plan to prevent a race to the bottom on food safety standards in the UK and to protect British consumers if he is not prepared to accept the amendment?

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The Government have always been clear that we will maintain our very high standards on food and animal welfare, and for protection in that space. There will be no race to the bottom. Nothing in free trade agreements precludes a Government from regulating in the domestic environment. I hope that that is enough reassurance for the hon. Gentleman. On protecting the environment, high standards and high quality are what our domestic and global consumers demand, and that is what we should provide.

To be clear, nothing in the Bill would allow us to do a free trade agreement with the United States because, as we know, the United States does not have a free trade agreement with the European Union. While the hon. Member for Bradford South gave an interesting speech of some length about what may or may not happen in any future trade agreement with the United States, it is worth mentioning that the Bill does not cover free trade agreements with the United States. Any future free trade agreement with the United States must work for UK farmers, businesses and consumers, and uphold food safety and animal welfare standards. However, that is a matter for a future day; it is not relevant to the Bill before us.

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Surely the Minister appreciates that the examples of the USA were given in order to clearly illustrate the principles. At no point was it suggested that those examples were a necessary follow on. However, they illustrated the principles, and the Minister must appreciate that and take it seriously, in terms of the amendment.

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We take incredibly seriously food safety standards, animal welfare and so on. If the hon. Gentleman is suggesting that he has serious concerns in those spaces in respect of any of the 40-plus current EU trade agreements that we are seeking to move into UK law, perhaps he could let me know.

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I am very happy to adumbrate on that. The particular concerns relating to growth hormones in beef are, of course, of equal importance in the context of any future UK-Canada trade agreement, given that Canadian beef farmers are permitted to use growth hormones in a way that our farmers are not. The EU granted a higher quota to hormone-free Canadian beef exports in the EU-Canada comprehensive economic and trade agreement negotiations. It was only popular pressure that prevented the European Commission from relaxing the ban on imports of hormone beef. We simply want to ensure that Parliament is the place where this country takes decisions on whether to relax or tighten our food standards. We do not want those decisions taken in secret trade negotiations and then imposed on us through the excessive powers in the Bill.

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I am certain that CETA is consistent with our food safety and animal welfare standards. What is more, I think the majority of Labour MPs agree with me. Last February, Labour MPs split 86 in favour of CETA and 68 against, so whatever concerns the hon. Member for Brent North has, I gently suggest that he tries to persuade his own party before coming to see the Government.

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Again, I am happy to take on the Minister on that. He is talking about something that happened before the previous election, and as personnel change, so perhaps does the wish of the members of the parliamentary Labour party. However, that is not really the point. He will also find that those people on the Labour Benches who wanted to support CETA on that occasion seem now to have changed their views about whether CETA—the Canadian model—is a good model for us to pursue in the trade negotiations. Most of them seem to have turned tail and run to the other side.

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The hon. Gentleman is trying to mix up the transitional and existing trade agreements with our future trading relationship with the European Union—which, I remind the Committee, is also not a subject of the Bill. I think he said that his vote against CETA was before the previous election, and if he is suggesting that he might have changed his mind on CETA, I am all ears. When we come to ratification of the treaty, I would personally welcome him as a sinner that repenteth, were he to come into the Lobby with Conservative Members to support the Canadian free trade agreement.

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rose—

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I will not give way. We are getting a little off the point.

We are absolutely clear that all existing commitments on standards and regulations will remain when those agreements are transitioned. That is in line with our clearly articulated principle that our intent is to transition solely the existing effect of the agreements. The amendment is therefore unnecessary and I ask the hon. Member for Bradford South to withdraw it.

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We will not withdraw the amendment and wish to proceed to a vote.

Question put, That the amendment be made.

Division 5

30 January 2018

The Committee divided:

Ayes: 7
Noes: 10

Question accordingly negatived.

View Details

Amendment proposed: 9, in clause 2, page 2, leave out line 33.—(Barry Gardiner.)

This would remove the Henry VIII power allowing for the modification of primary legislation that is retained EU law.

Question put, That the amendment be made.

Division 6

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

View Details

Amendment proposed: 10, in clause 2, page 2, line 40, at end insert–—

“(7A) An ‘international agreement that mainly relates to trade, other than a free trade agreement’ means a strategic partnership agreement or mutual recognition agreement that is ancillary to a free trade agreement as defined in subsection (7).”—(Barry Gardiner.)

This would define international trade agreements that do not fall within the category of a “free trade agreement” as defined under subsection (7).

Question put, That the amendment be made.

Division 7

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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I beg to move amendment 11, in clause 2, page 2, line 41, leave out subsections (8) and (9) and insert—

“(8) No regulations may be made under subsection (1) in relation to an agreement which meets the criteria in subsection (3) or (4) after the end of the period of five years beginning with exit day.”

This would make the sunset clause governing section 2(1) non-renewable.

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With this it will be convenient to discuss the following:

Amendment 12, in clause 2, page 2, line 41, leave out subsections (8) and (9) and insert—

“(8) No regulations may be made under subsection (1) in relation to an agreement which meets the criteria in subsection (3) or (4) after the end of—

(a) the period of five years beginning with exit day (“the initial five year period”), or

(b) such other period as is specified in regulations made by the Secretary of State in accordance with subsection (9).

(9) Regulations under subsection (8)(b) may not extend the initial five year period beyond the day which falls ten years after exit day.”

This would make the sunset clause governing section 2(1) renewable once only.

Amendment 35, in clause 2, page 3, line 3, at end insert—

“(10) No regulations may be made under subsection (8)(b) unless the Secretary of State has consulted with the Scottish Ministers and the Welsh Ministers.”

This amendment would ensure that there must be consultation with the Scottish Ministers or Welsh Ministers before any extension of the powers in Clause 2.

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I, too, am pleased to welcome you back to the Chair, Mr Davies. How do you know when a Minister feels guilty? It is when he or she introduces a sunset clause. The Government know they are pulling a fast one in the Bill and clause 2 includes the Henry VIII power for Government to amend primary legislation by fiat. The provisions in the rest of clause 2 and its accompanying schedules reduce hon. Members of this House to little more than bystanders at a royal pageant.

The Government try to mitigate their power grab by making the offending powers in clause 2(1) subject to a five-year sunset clause. The Secretary of State is on record as saying:

“I hear people saying, ‘Oh, we won’t have any before we leave’. Well, believe me, we’ll have up to 40 ready for one second after midnight in March 2019. All these faint hearts saying we cannot do it—it’s absolute rubbish”.

Let us for a moment take the Secretary of State at his word and believe him when he tells us that we will have all these shiny new agreements ready and waiting by the end of March 2019. The five-year sunset clause that the Bill gives the Government is surely, therefore, the sort of defeatist nonsense that the faint-hearted would say they need. According to the Secretary of State, a half-hour sunset clause would be more than enough—perhaps half a day to pick up the stragglers or half a week to pick up the rank outsiders, the real laggards in the case. What is this nonsense?

There is a serious issue, because these agreements are supposed to provide British businesses with the certainty they desperately need so as to plan their operations and their investments in respect of trade with those countries with which we already have agreements by virtue of our membership of the EU.

Yes, the Secretary of State for Exiting the European Union has confirmed that the UK will be unable to implement any of the new trade agreements until the end of a two-year transition period that we will negotiate with the EU, but that only buys the Government until the end of 2020 to come up with the 40 new trade agreements the Secretary of State promised would be ready by March 2019. The end of 2020 is the terminus proposed by the EU for our transition period, as was confirmed in the negotiating directives that it adopted yesterday.

So how can the Government say that they need longer than the five years that the Bill already grants them? The Bill will allow the Government until March 2024—more than three years after the extended deadline that has just been granted in the transition period after we leave the EU. Surely we cannot really be telling businesses that they will be hanging on by their fingernails to the cliff edge for more than six years from now.

I am not suggesting that we should rush the negotiation of any of the new trade agreements that will replace those that we have enjoyed with third countries by virtue of our membership of the EU—far from it. We need to get them right. What I am saying is that we should have a proper process of consultation and parliamentary scrutiny by which to debate and vote on what comes out of those negotiations.

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Does my hon. Friend agree that, without limits on the renewability of the sunset clause and against the backdrop of a Government failure to commit to a second trade Bill, this Bill will certainly be seen by many as a potential Trojan horse for the Government to introduce future deals with minimum levels of scrutiny?

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My hon. Friend is absolutely right to be sceptical. The Minister has made much of the arguments that, first, there is a need for speed and, secondly, this is only a temporary Bill that puts in place temporary provisions to roll over the existing agreements. In fact, the powers—certainly the ones relating to the agreement on government procurement—are not temporary; they last longer.

Here, in the provisions of the sunset clause, we have not just one sunset period but the possibility of indefinite roll-overs of the sunset clause itself: five years, followed by five years, followed by five years. If the Minister is absolutely confident that the Bill is a temporary necessity, one must wonder why he wants the sunset clause to continue indefinitely into the future at the Government’s will, when it enables the Government to take on a Henry VIII power.

When I say that there should be a proper process of consultation and scrutiny by which to debate the negotiations, I am only replicating what Anastassia Beliakova of the British Chambers of Commerce demanded in her oral evidence during our final witness session last Tuesday, when she said that provision needs to be made not only for “appropriate scrutiny in Parliament” but for a proper process of “stakeholder engagement for business” and “civil society” in order to scrutinise any changes that might arise as a result of the negotiations.

If the Government are adamant that such a process is to be denied us, rejecting the advice of business and the demands of trade unions and other civil society bodies, it should be denied us for an absolute maximum of five years, with no renewal of the sunset clause, as provided for in clause 2(8) and (9). Every day longer that the Government have those powers is another day for which parliamentary democracy is put on hold. The first of our amendments says that five years is enough. We believe that it is five years too many, given the unmerited powers that the Bill grants to the Government and the rights that it strips away from Parliament, but certainly five years should be enough. If the Government still have not managed to roll over their agreements by March 2024, that power should disappear along with the expiry date.

I really wonder whether Government Members themselves believe that an indefinite use of a roll-over to give an unending Henry VIII power to the Government is a sensible power that this Committee should grant.

Let us say that the Government persist in getting rid of amendment 11. Amendment 12 would allow the Government one renewal only. That is, the Government would be allowed to ask Parliament for permission to renew the sunset clause for one extension, but no more. That would allow the Government the unmerited powers in the Bill right up to the end of March 2029. Can the Minister really demand, with any sense of integrity, that this Committee afford him and the Government greater power than that?

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It is a pleasure to serve under your chairmanship again, Mr Davies.

First, I reiterate that Opposition Members do not see the Bill as fit for purpose. We accept the need for clause 2: the Government will need to manage the handover of trade deals that are currently accessed through the EU. However, clause 2 is deficient and we are still to hear what the Government will to do to improve it and to improve the Bill. They have voted down every amendment that has been proposed so far, so it would be good to hear the Minister’s plan. Again, that is particularly important regarding the Government’s attitude to the devolved Administrations.

Just this morning, BBC Radio Scotland led its headline news with a report on the European Union (Withdrawal) Bill, which is now moving to the House of Lords, and the fact that the House of Lords will have to make amendments to clause 11—amendments that were originally promised by the UK Government but were not brought forward. It did not paint the UK Government in a good light, especially when the UK Government could not even put up any spokesperson; it is plain why that was the case.

I say to the Minister that, given that the Scottish and Welsh Governments have both said that they will withhold a legislative consent motion unless there are amendments to this Bill, it would be prudent for him not to fall into that trap. Failing to make amendments once looks incompetent, but if proper amendments are not made to this Bill that satisfy the devolved Administrations, it will look a bit more sinister than mere incompetence.

I remind the Committee that it is not just politicians from the Scottish National party who are saying this; clearly, the Welsh Government are in agreement with the SNP. In the evidence sessions, which the Minister was at, we heard from different witnesses. Chris Southworth from the International Chamber of Commerce UK said:

“Overall...I would be concerned if I were in the devolved Administrations. There is specifically no opportunity for the devolved Administrations…to feed into decisions on trade. I would be very concerned about that, particularly in the devolved Administrations”.––[Official Report, Trade Public Bill Committee, 23 January 2018; c. 35, Q80.]

Michael Clancy from the Law Society of Scotland said:

“There is clearly an issue about how the Sewel convention or legislative consent convention is interpreted in respect of that…any proposals in UK Parliament legislation that seek to alter the legislative competence of the Parliament or of Scottish Ministers require the consent of the Parliament.”––[Official Report, Trade Public Bill Committee, 23 January 2018; c. 56, Q107.]

Professor Winters from the UK Trade Policy Observatory said:

“Parliament and the devolved Administrations need to have an important role in setting mandates, and there need to be consultation and information during the process.”––[Official Report, Trade Public Bill Committee, 23 January 2018; c. 58, Q111.]

In written evidence, the Fairtrade Foundation, Trade Justice Movement, Global Justice Now and Traidcraft all clearly expressed the need for the devolved Administrations and Chambers to be given a role in the UK’s future trade policy.

Unfortunately, despite all that evidence the position of the hon. Member for Brent North appears to be that if the devolved nations do not have the powers at present, they should not look at getting them in the future. His phrase earlier was that they “shouldn’t be looking upwards”. To me, that sounds a wee bit like, “Don’t get ideas above your station”.

We have not tabled any amendments to schedule 1, which imposes limitations on the devolved Administrations. I would argue that that in itself shows that the Scottish Government and the Welsh Government have taken a rational approach to the Bill in respect of the various amendments that have been tabled. We are not trying to create some form of awkward veto, as has been suggested elsewhere. Our simple intention is to make sure that the devolved Administrations are not ridden over roughshod. That means that there needs to be co-operation, consultation and consent.

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I want to reassure the hon. Gentleman that we are absolutely at one with him in wanting to ensure that the Bill does not make provision for Westminster Ministers to overreach themselves into devolved competences in any of the devolved Assemblies of the nations of our United Kingdom. We are equally concerned about that.

I have tried to present amendments in as open a way as possible, so that we can get the best wisdom from the Government and from the devolved Administrations, to ensure that nothing is done that would make it difficult, or indeed impossible, for a UK Government to honour any aspects of their international obligations under an international trade treaty. That is my only concern, and I am sure we can get to the right place with good will all round. It is a constitutional question, because these powers have not previously been possessed by the UK Government; they were held at EU level. It is therefore important that we give the matter the scrutiny that it deserves.

On amendment 35, which we are about to move on to, we are probably at one.

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Order. I remind hon. Members that interventions are meant to be briefer than the leeway I allowed the hon. Gentleman.

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Thank you, Mr Davies, and I thank the hon. Gentleman for his intervention. I welcome his opening remarks, and I might have an opportunity to show how much when other amendments go to a vote. I also welcome his support for amendment 35. He talked about the wisdom of co-operation and of working with Government, and the wisdom of devolved Administrations. It is maybe a pity that the wisdom of the devolved Administrations is coming through me rather than directly, but we will just have to deal with that.

Amendment 35 is very modest. All we are asking is that, if the UK Government propose to extend the sunset clause, they must consult the Scottish and Welsh Governments. That does not seem to be too big an ask to me. It is also more pertinent given the five-year period proposed in the Bill. Given that the Bill, as I keep hearing, is to do only with the UK’s access to existing EU trade deals and bringing those deals into UK legislation, it makes me wonder why we would ever need a period beyond five years. We are dealing with legislation that should be coming forward quickly, given the date for leaving the EU, and given that the International Trade Secretary has said that these negotiations will be the easiest in human history. Why we would need Henry VIII powers beyond five years is a mystery. We are just asking for the courtesy that the Scottish and Welsh Governments are consulted if that is the case.

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We have had a wide-ranging and interesting mini debate, full of historical references and colourful metaphors. We have had Henry VIII, plenty of sunsets and royal pageants. The hon. Member for Warrington South even introduced a Trojan horse. It has been a helpful debate.

Let me try to explain why we have included the sunset clause for this power, because once I have explained, all will become clearer. It is so that Parliament can have the chance to review its merits once again five years after exit date. However, since this power may be required to ensure the operability of transition agreements beyond the five-year period, potentially indefinitely, it is important that the Government have the option to extend the use of the clause 2 power. That will, of course, be subject to the approval of both Houses.

For example, the power might be needed so that we can make technical changes to agreements after exit day to ensure that they remain operable on a longer-term basis. To give a specific example, in the case of a transitioned mutual recognition agreement, we may need to change secondary legislation to update the names of awarding bodies in third countries so that UK businesses can continue to use such bodies legally. Alternatively, where our trade agreements refer to international standards—we debated environmental and labour protection earlier, for example—we may need the power to update those references in domestic legislation to ensure that we remain compliant with our international agreements. Removing the possibility of extension would compromise the purpose of the power in ensuring the continuity and future operability of our current trading arrangements, risking disruption for UK businesses in the future.

Applying the affirmative procedure to the sunset clause means that the instrument that extends the power must be approved by resolutions of both Houses. The Secondary Legislation Scrutiny Committee would have the role of scrutinising the policy intention behind the regulations and, through its reports, drawing to the attention of the other place any that may be interesting, flawed or inadequately explained by the Government. In short, that means that Parliament would have significant oversight of the necessary legislation should the Government seek to extend the clause 2 power.

On amendment 35, in the name of the Scottish National party, we have been clear that we will continue to engage with the devolved Administrations as we transition our current arrangements.

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I am certain that the right hon. Gentleman is determined, in his approach and plan, to consult the devolved nations. If he is, why not put that in the Bill to ensure that it happens?

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Because I like to keep legislation as brief as possible and, as I shall explain, I do not think it necessary for us to write that obligation into the Bill. Of course, we would continue to engage should we need to extend the clause beyond its sunset five years after exit day.

I was intrigued by the exchange between the hon. Members for Kilmarnock and Loudoun and for Brent North. I am still trying to find out why, on Thursday, the Labour Front-Bench team did not support the amendment promoted by the Welsh Government. I am not sure that the hon. Gentleman properly explained, but perhaps when he responds he can throw a little more light on why he has seemingly jettisoned his colleagues from Wales, one of whom is on this very Committee.

On the requirement for a legislative consent motion, we have been clear that we are seeking such a motion for the Bill. I heard what the hon. Member for Kilmarnock and Loudoun said about that, and I am sure that we will engage further. We are obviously talking to the devolved Administrations so that we can work towards delivering a Bill that will benefit the whole UK. Given that, we do not think that the formal commitments on consultation and engagement in amendment 35 would add substantively to the Bill. I therefore ask hon. Members not to press the amendments.

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We have no intention of withdrawing amendment 11, so we need to press it to a vote.

Question put, That the amendment be made.

Division 8

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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Do you also wish to press amendment 12 to a Division, Mr Gardiner?

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On amendment 12, to respond to what the Minister said, we heard oral evidence from Mr Howarth, who was in fact an adviser to Conservative MPs, that the Henry VIII powers were needed only for minor changes, potentially around the EU agreements—

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Order. May I interrupt the hon. Gentleman? His opportunity to respond to the debate was before the previous Division. I was really just asking whether he wanted to move amendment 12 formally.

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I was simply explaining that, in the light of the Minister’s remarks, we do wish to move the amendment, because it conforms with the suggestions of one of the Government’s own witnesses.

Amendment proposed: 12, in clause 2, page 2, line 41, leave out subsections (8) and (9) and insert—

“(8) No regulations may be made under subsection (1) in relation to an agreement which meets the criteria in subsection (3) or (4) after the end of—

(a) the period of five years beginning with exit day (‘the initial five year period’), or

(b) such other period as is specified in regulations made by the Secretary of State in accordance with subsection (9).

(9) Regulations under subsection (8)(b) may not extend the initial five year period beyond the day which falls ten years after exit day.”—(Barry Gardiner.)

This would make the sunset clause governing section 2(1) renewable once only.

Question put, That the amendment be made.

Division 9

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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Amendment proposed: 35, in clause 2, page 3, line 3, at end insert—

“(10) No regulations may be made under subsection (8)(b) unless the Secretary of State has consulted with the Scottish Ministers and the Welsh Ministers.”—(Alan Brown.)

This amendment would ensure that there must be consultation with the Scottish Ministers or Welsh Ministers before any extension of the powers in Clause 2.

Question put, That the amendment be made.

Division 10

30 January 2018

The Committee divided:

Ayes: 9
Noes: 10

Question accordingly negatived.

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Clause 2 ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Schedule 1

Restrictions on devolved authorities

Amendment proposed: 36, in schedule 1, page 7, line 24, at end insert—

“(4) This paragraph does not apply to regulations made under section 1(1) or 2(1) by the Scottish Ministers or the Welsh Ministers.”—(Alan Brown.)

This amendment would give the Scottish and Welsh Ministers power, by regulation, to amend direct EU legislation that forms part of domestic law on and after exit day in devolved areas.

Question put, That the amendment be made.

Division 11

30 January 2018

The Committee divided:

Ayes: 2
Noes: 10

Question accordingly negatived.

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Amendment proposed: 37, in schedule 1, page 8, line 5, at end insert—

“(4) This paragraph does not apply to regulations made under section 1(1) or 2(1) by the Scottish Ministers or the Welsh Ministers.

Requirement for consultation in certain circumstances

3A (1) No regulations may be made by the Scottish Ministers or the Welsh Ministers acting alone under section 1(1) or 2(1) so far as the regulations are to come into force before exit day unless the regulations are, to that extent, made after consulting with a Minister of the Crown.

(2) No regulations may be made by the Scottish Ministers or the Welsh Ministers acting alone under section 2(1) so far as the regulations make provision about any quota arrangements or are incompatible with any such arrangements unless the regulations are, to that extent, made after consulting with a Minister of the Crown.

(3) In sub-paragraph (2) “quota arrangements” has the same meaning as in paragraph 3.”—(Hannah Bardell.)

This amendment would replace the requirement for the Scottish and Welsh Ministers to obtain the consent of the UK Government when acting alone under section 1(1) or 2(1) with the need to consult before making such regulations.

Question put, That the amendment be made.

Division 12

30 January 2018

The Committee divided:

Ayes: 2
Noes: 10

Question accordingly negatived.

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Schedule 1 agreed to.

Schedule 2

Regulations under Part 1

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I beg to move amendment 13, in schedule 2, page 12, line 5, leave out from “section 1(1)” to the end of line 6 and insert

“may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

This would require regulations implementing the Agreement on Government Procurement to be subject to the affirmative resolution procedure.

This amendment is a simple but vital first attempt to restore democracy to the Trade Bill. It is simple because it replaces the negative resolution procedure the Government wish to use for future regulations under paragraph 2(1) of schedule 2 with an affirmative resolution procedure. It is vital because, without that, the Government have carte blanche to introduce regulations to implement the obligations arising from our independent membership of the GPA without the slightest hint of anything resembling parliamentary scrutiny. While the UK is a member of the World Trade Organisation in its own right and will continue to be so after Brexit, we are a member of the WTO’s plurilateral government procurement agreement only by virtue of our EU membership. We know that the Government will have to initiate a separate parliamentary procedure under the Constitutional Reform and Governance Act 2010 to prepare for the UK to rejoin the GPA in its own right. I am pleased the Minister made the commitment in our first line-by-line session last Thursday that there will be a vote in Parliament to decide on the terms under which we rejoin the GPA.

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I thank the hon. Gentleman for giving way. That is not a correct assessment of what I said on Thursday. I said we would allow the power for Parliament to bring forward a vote under the Act. It is clearly stated in Hansard.

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Good Lord, Mr Davies, it’s a jolly good job I have an extract from the Hansard here. I will press on and then quote from it.

CRAGA does not require there to be a debate or a vote on any treaty laid before Parliament under its terms, as has been repeatedly confirmed by the House of Commons Library via an expert witness from the Hansard Society and by everybody else who has read the Act or knows what it says. Yet, it certainly leaves the possibility open for Government to hold that vote if they are prepared to do so. Again, I am pleased the Minister reaffirmed last week not only that it is possible under CRAGA for the Government to bring forward a vote on the UK’s terms of entry into the GPA, but that

“the terms on which the UK enters the GPA in our own right will be subject to a separate vote in Parliament.”—[Official Report, Trade Public Bill Committee, 25 January 2018; c. 131.]

Those are the words the Minister actually used. I am surprised he wants to cavil about them now. As he knows, our dissatisfaction with CRAGA is that it includes no requirement for a debate or a vote on a treaty laid before Parliament under its provisions. We are dependent on the good will of the Government as to whether Parliament is granted or denied the opportunity for a vote.

In this instance, I thought the Government had confirmed that there will be a vote, not that there might be, depending on the Labour party, so we look forward to the Government introducing that debate in Government time. However, that in no way deals with the broader issue of why Parliament should be dependent on the Government’s good will to have the opportunity to exercise its rights to due democratic process.

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It has been widely documented that the use of the negative resolution procedure the Bill proposes affords Members less opportunity for scrutiny in the House than is currently enjoyed by Members of the European Parliament. Indeed, Jude Kirton-Darling MEP told the Committee in no uncertain terms that the Bill is

“an enormous step back in democratic oversight of trade agreements.”—[Official Report, Trade Public Bill Committee, 23 January 2018; c. 43, Q86.]

Does my hon. Friend therefore agree that, for the Government to meet their commitment that the Bill will replicate existing arrangements as closely as possible, they must support the amendment to ensure the opportunity for scrutiny enjoyed by Members is closer to that currently enjoyed by MEPs?

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Indeed—my hon. Friend is right. Many Members on both sides of the House think it a travesty that we are afforded less opportunity to scrutinise things and less transparency than is afforded to our colleagues in the European Parliament.

On the agreement on government procurement, once we have had our opportunity to debate and vote on the terms under which we will rejoin it, the Government will then lodge our annexes with the WTO. The next stage is to issue the regulations that will implement the terms of our accession to the GPA, and then, in the years thereafter, to make changes to our domestic legislation that reflect the accession of new parties to the GPA or the withdrawal of any countries that decide to leave it.

It is important to note that that is not a temporary power covered by a sunset clause, as with the international trade agreements in clause 2. This is a permanent power for the Government to issue regulations implementing the UK’s obligations under the GPA into the indeterminate future—for as long as the WTO remains and the GPA is one of its constituent agreements. When we look at the fine detail of the Bill, we yet again discover that it is not a temporary little Bill about rolling over existing agreements; it actually has permanent, lasting effect. The roll-over powers could give Ministers the powers in perpetuity, under the Henry VIII provision.

We hear that the Bill is small, necessary, timely and time-limited, but in actual fact it is not. Our amendment 13 seeks to replace the negative resolution procedure, which the Government wish to apply to clause 1(1), with the affirmative procedure. I will remind the Committee of what that means so that we have a proper understanding of what we are talking about in this context, because it will also be essential to several later amendments that we will bring forward to other parts of the Bill.

The scrutiny procedure for delegated legislation in the House of Commons has come in for intense criticism in the context of the European Union (Withdrawal) Bill. That criticism is well merited. The Hansard Society’s expert report, “Taking Back Control for Brexit and Beyond”, lifted the veil on just how badly the system is failing to deliver the necessary scrutiny of secondary legislation at precisely the moment we need full confidence in it as we rebuild our system of checks and balances for the post-Brexit future. That report does not make pleasant reading.

The negative resolution procedure the Government propose for regulations under clause 1(1) is the least rigorous of all parliamentary procedures available. Secondary legislation subject to the negative resolution becomes law automatically once it has been laid before Parliament and has remained unchallenged for the requisite number of days—no need for a debate, no call for a vote. MPs may pray against any regulation by means of an early-day motion, but there is no obligation for the Government to schedule parliamentary time to debate that prayer.

The convention is that prayers made by Her Majesty’s official Opposition should receive parliamentary time for a debate, yet even then there is no guarantee that the convention will be respected. In the 2015-16 parliamentary Session, the Leader of the Opposition tabled a dozen prayer motions for debate—five were granted. Of the 585 negative instruments laid before Parliament in that session, only 3% were even debated. In the following parliamentary Session, fewer than one in 100 statutory instruments subject to the negative resolution procedure were debated at all.

The main point of the negative resolution procedure is to allow the Government to have their way without any need to bother parliamentary democracy, and it has been spectacularly successful. The last time a negative instrument was successfully annulled in the House of Commons was the Paraffin (Maximum Retail Prices) (Revocation) Order in 1979. I think that tells the story about what is intended by making these provisions subject to the negative resolution procedure.

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Almost every individual who has appeared before this Committee over the past week, from business leaders to academics, civil activists and lawyers, has told us that more needs to be done by way of parliamentary scrutiny in this Bill. If the Government will not support these amendments, what good reason do they have to ignore the recommendations of these individuals?

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