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European Union (Approvals) Bill

Volume 785: debated on Wednesday 25 October 2017

Second Reading

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The purpose of this Bill is to approve four draft decisions of the Council of the European Union. All four draft decisions rely on Article 352 of the Treaty on the Functioning of the EU. This allows the EU to take action to attain the objectives set out in the EU treaties, for which there is no specific power given. This can be done only with the approval of the European Parliament and the unanimous support of all EU member states.

Before the UK can agree these draft decisions at the Council, Parliament must first give its approval. Section 8 of the European Union Act 2011 provides that a Minister may vote in favour of an Article 352 decision only where the draft decision is approved by an Act of Parliament. The measures in the Bill have already been approved in another place, and I am pleased that noble Lords will also have the opportunity to scrutinise and decide whether to approve them.

The UK is leaving the EU and, until that process has concluded, the UK remains a full member of the EU and all the rights and obligations of EU membership remain in force. This includes exercising the UK’s vote in the Council of the European Union on these four draft decisions. Keeping that in mind, we are content that all four decisions are reasonable, proportionate, in keeping with our best interests and will not result in any additional financial burdens on the UK.

As I have said, Article 352 decisions must be agreed by all EU member states unanimously. When all member states are in a position to vote on the decision, the European Council will schedule a meeting of the Council of the European Union. If all member states vote to approve the draft decisions at that meeting, the European Parliament will be asked in turn to approve the draft decisions. If it does so, the decisions are adopted into EU law. All other member states, apart from the UK, have agreed the decisions. We do not believe that any of these draft decisions should be considered contentious in any way.

The first two decisions will enable two countries, the Republic of Albania and the Republic of Serbia, to be granted observer status in the EU’s Fundamental Rights Agency. The Fundamental Rights Agency was set up to support the European institutions and EU member states by improving the knowledge and awareness of fundamental rights issues in the EU, with a view to ensuring respect for fundamental rights. The agency does this through the collection and analysis of information and data. It can also formulate opinions on specific topics, either on its own initiative or at the request of EU institutions. It also has a role in communicating and raising awareness of fundamental rights, but it cannot hear individual complaints.

EU accession candidate countries can be given observer status at the Fundamental Rights Agency. This allows the agency to collect and analyse fundamental rights data from those countries, but does not allow them the right to vote in decisions as part of the agency’s management board. Albania was granted EU candidate status in June 2014. The UK supported the awarding of EU candidate status on the condition that Albania redoubled its reform efforts, with particular focus on justice and home affairs, especially tackling organised crime, corruption and illegal migration. The UK welcomed Albania’s progress in adopting legislation towards a judicial reform package in July 2016. Albania must now fully implement the judicial reform package as soon as possible so that this can underpin other reforms.

Serbia was granted EU candidate status in 2012 and accession negotiations were launched in January 2014, with the first four negotiating chapters opened during 2016. The UK continues to support Serbia on its reform path, including through funding projects in Serbia. Serbia has more work to do on anti-discrimination policies, to improve the situation of vulnerable people and to ensure freedom of expression. Observer status at the Fundamental Rights Agency should help Albania and Serbia to reform in the areas I have mentioned. Albania and Serbia should also be allowed to benefit from instances of good practice and evidence from other EU member states in relation to human rights. The Government are therefore satisfied of the need to support these two decisions.

The third and fourth decisions are necessary to implement a co-operation agreement between the EU and Canada on competition enforcement. The decisions will allow the agreement to be signed and allow conclusion of the agreement after it has been approved by the European Parliament. This competition co-operation agreement will replace an existing agreement that has been in place since 1999. It replicates and builds upon the provisions in the earlier agreement by allowing the European Commission and the Canadian Competition Bureau to exchange evidence obtained during investigations, including confidential information and personal data. The existing co-operation agreement with Canada dates from June 1999 and, at that time, the exchange of evidence between the parties was not regarded as needed. In the meantime, the bilateral co-operation between the European Commission and the Canadian Competition Bureau has become more frequent and deeper as concerns substance.

The absence of the possibility of exchanging information with the Canadian competition authority is regarded as a major impediment to effective co-operation. The proposed changes to the existing agreement will allow the European Commission and the Canadian Competition Bureau to exchange evidence which both sides have obtained in their investigations. This will, in particular, be useful in all cases where the alleged anti-competitive behaviour affects transatlantic or world markets. Many worldwide or transatlantic cartels include Canada, and, via Canada, the Commission will get a good opportunity to have access to additional information concerning these cartels.

Co-operation with third-country competition authorities is now standard practice in international competition investigations. In addition to the agreement with Canada, the European Union has concluded dedicated co-operation agreements with the US, Japan, Korea and Switzerland. The most advanced agreement is the one with Switzerland, which already contains provisions on the exchange of evidence, and the proposed update would bring the agreement with Canada to the same level as the one concluded with Switzerland.

I am sure that noble Lords will agree that the ability to share information for effective and efficient international competition enforcement is increasingly important. Access to information from other jurisdictions can be important in reaching a robust enforcement decision. Co-operation and information-sharing between jurisdictions can help ensure that enforcement bodies do not reach different decisions based on different sets of information.

The agreement contains general safeguards for the transfer of information and additional safeguards for the transfer of personal data. Personal data can be shared only with the express written consent of the person or company to which it relates. In the absence of consent, personal data can be shared only where both competition authorities are investigating the same related conduct or transaction. Furthermore, the transfer of personal data will be subject to independent oversight.

The agreement also contains safeguards for information provided by a company under the EU cartel immunity or leniency programme. This information cannot be shared without the express written consent of the individual or company that provided that information.

As I have noted, there are no financial implications for the UK from these decisions. I confirm that I do not consider that any of the Bill’s provisions engage the rights set out in the European Convention on Human Rights, so no issues arise about the Bill’s compatibility with those rights. It is intended that the Bill will come into force on the day of Royal Assent. For the reasons I have outlined, I commend the Bill to the House. I beg to move.

My Lords, I thank the Minister for introducing this small but, I am sure, perfectly formed Bill. It is mildly bizarre that these relatively limited matters require primary legislation because of the European Union Act 2011. I was not allowed to be active in the House at that time as I was an MEP, but I imagine that the idea was to prevent big new federalist projects slipping into UK law through the European Communities Act. I am not sure that rather modest matters such as this were envisaged as needing primary legislation.

As the Minister said, Article 352 allows the EU to adopt an Act necessary for the attainment of treaty objectives when there is no specific legal basis available in the treaties. I am not the world’s expert on the treaties, but I am quite surprised that there were no other specific articles in the treaties that would have allowed Serbian and Albanian accession to the Fundamental Rights Agency and competition co-operation enforcement with Canada. If the Minister has any information on why there was not—there are plenty of articles in the treaty—perhaps he could enlighten us.

Clearly, it is a good thing to enable Serbia and Albania to become observers in the Fundamental Rights Agency. This highlights the way that human rights commitments underpin European peace and development. I had some experience of those two countries in my early years in the European Parliament, when I was on the European Parliament delegation for south-east Europe, as it was then called, when the countries were all lumped together. There has been progress towards candidate status for accession to the EU. I am sure the Minister would agree that, even with Brexit—if Brexit takes place—the UK is supportive of the accession ambitions of the western Balkan countries.

In moving the Motion on the Bill—I cannot remember whether the Minister repeated these words—the Minister in the other place, Margot James, highlighted that the mandate of the Fundamental Rights Agency is to improve knowledge and awareness of fundamental rights issues, so observer status for Serbia and Albania would help them benefit from the experience of good practice and evidence from EU member states on human rights. It is somewhat ironic that we are approving this decision to help Serbia and Albania in their progress towards accession to the EU, as we in the UK —on current plans—are moving away. It is also ironic that, in doing so, we are acknowledging the vital role that fundamental rights play in European co-operation. While we seek to leave the Fundamental Rights Agency and the EU Charter of Fundamental Rights, I would submit that those instruments are as important to the UK as they are to Serbia and Albania.

On the EU-Canada competition enforcement agreement, I have not seen any response from the Government to the question raised in the other place as to whether the UK would seek to participate in that agreement after Brexit. That might have to be preceded by the question of whether the UK will seek a competition enforcement co-operation agreement with the EU itself. As the Minister has pointed out, post Brexit, UK firms which do business in the EU 27 will be affected by this agreement. It would seem very unhelpful if the UK itself were not part of these arrangements, both between the UK and the EU and with third countries such as Canada. Could the Minister therefore let us know the state of play on those two dimensions, with the EU and regarding participation in the Canada agreement?

Could the Minister also amplify a little on what data protection safeguards are in the Canada agreement? He mentioned independent oversight. We will discuss on Monday, in Committee on the Data Protection Bill, the relevance of fundamental rights to data exchange. The Government do not plan to incorporate the Charter of Fundamental Rights, so there is an issue about the underpinning of fundamental rights on data protection in this country. That could, therefore, affect an adequacy decision by the European Commission on data transfers between the UK and the EU. Could he tell us whether, in the assessment of the Government, that matter has a relationship, as I would contend that it does, in situations such as this where data is going to be transferred, potentially between the CMA and the European Commission and then with third countries such as Canada? It seems to me that there are quite a few interlocking issues here, but particularly concentrated on the exchange and flows of data.

Is the UK going to seek an agreement with the EU on competition enforcement co-operation? Is it going to seek to participate in the EU-Canada agreement? Will a necessary prelude to both those instruments potentially mean that the UK has to secure an adequacy decision from the Commission on data transfers? I would be grateful if the Minister could answer those specific questions, either now or later. However, it will not surprise him to hear that, broadly, we on these Benches welcome the content of the Bill.

My Lords, I thank the Minister for his introduction to this Bill and for his affirmation that it is the Government’s assessment that the fiscal impact and merits are proportionate. As has been explained, this Bill fulfils the provision in Section 8 of the European Union Act 2011, which requires Parliament to approve draft decisions made under Article 352 of the Treaty on the Functioning of the European Union. Parliamentary approval will enable the United Kingdom to vote in favour of the draft decisions. This is a short Bill with limited financial and significant legal implications, and one for which there is a consensus in favour. We on these Benches lend our support to it today.

While we remain a member of the European Union, we should of course remain committed to ensuring that we fulfil our responsibilities as a member state until the time of withdrawal, and continue to scrutinise EU matters before Parliament.

I welcome the opportunity provided by the Bill to pave the way for Albania and Serbia to become observers in the work of the EU’s Fundamental Rights Agency. This is a provision afforded to nations like Albania and Serbia, which are not full EU members but have EU candidate status. We agree with the Government’s assessment that gaining observer status of the Fundamental Rights Agency will assist both those countries towards potential accession to the EU, if that is their will, subject to the EU’s policy of “firm but fair conditionality”. Monitoring fundamental rights issues covered by the Fundamental Rights Agency will enable Albania and Serbia to adapt their domestic legislation appropriately and further embed a commitment to human rights in their national politics. This is an outcome I think we can all support. Observing the work of the Fundamental Rights Agency further marks an important step in the progression of Albania and Serbia— subject of course to the provisions that the Minister outlined in his speech—towards a deeper embrace of democracy, individual rights and anti-discrimination.

The Fundamental Rights Agency provides EU institutions and member states with independent, evidence-based advice on fundamental rights. Its mission is:

“Helping to make fundamental rights a reality for everyone in the European Union”.

Its areas of work will be familiar to many in this House and include supporting access to justice, children’s rights, the integration of migrants and tackling racism, xenophobia and related intolerance or discrimination. These have remained the core values of Europe—ones which we hold dear and have been strong advocates for in Europe. It is very important that this move towards ever-greater co-operation with Albania and Serbia takes the form of participation in the Fundamental Rights Agency. While the Bill does not immediately confer observer status on Albania and Serbia, it paves the way for the EU-Albania and EU-Serbia Stabilisation and Association Councils to determine the terms of their observation, and is therefore an important step towards that outcome.

However, I would like to ask the Minister whether the transition deal they are seeking with the EU would include membership of the Fundamental Rights Agency. Will it include a continued say in the potential accession of other countries to the EU, while we are under those arrangements? The European Commission President Jean-Claude Juncker has said there will be no further EU enlargement before the end of his term in office on 1 November 2019. However, under the Government’s plans, we may at that point still be a member of various EU institutions. What are the Government’s thoughts at this stage about whether, under a transitional Brexit arrangement, the UK will seek to support EU expansion to western Balkan countries?

The second aspect of this Bill is the EU-Canada competition enforcement co-operation agreement. The purpose is to give approval for the revision of the agreement of 1999. The new agreement would expand the scope of information exchange between the European Commission and the Canadian Competition Bureau for the important purpose of anti-trust and merger investigations. The proposed new agreement would strengthen the hand of regulators in ensuring fair competition, tackling anti-competitive behaviour and pushing back against monopolising activity. That is a task that demands extensive international collaboration—increasingly so as the global economy transforms. The sharing of data, evidence and other information and working closely with international partners is ever more central to an effective competition regime. International collaboration is crucial for effectively identifying and investigating anti-competitive behaviour and for preventing cartels, mergers that distort the market and other damaging business practices.

While we remain an EU member state, a better-informed European Commission also means a better-informed UK Competition and Markets Authority. However, will the Government clarify their plans to ensure continued exchange of information related to competition investigations between the UK and Canada, and between the UK and the EU, after Brexit? It does not seem at all clear what competition regime arrangements we are heading towards in either a transitional arrangement or a final agreement. Indeed, the proposed changes for which this Bill seeks approval, and which we support, none the less highlight the risk that the EU may after Brexit share information about EU-based UK companies with Canada but not with the UK. Will the Minister provide some reassurance on that point and clarify whether the exact same level of information exchange will continue unabated on day 1 after Brexit? It is vital that we avoid any cliff edges, so that our competition regime is not suddenly isolated or disadvantaged in its duties, even temporarily.

The two distinct aims of this Bill have the potential to contribute significantly in their own way towards a more prosperous and peaceful Europe. That is very clearly in our interests, whether we are a member of the EU or not. A stable, democratic south-eastern Europe and a strong, flexible international competition regime are important ambitions, and to that end this Bill marks a welcome step forward.

I thank the noble Baroness, Lady Ludford, and the noble Lord, Lord Mendelsohn, for their broad support for the Bill. I suspect that the noble Baroness knows more about the history of those treaties than I do. I do not know why we require primary legislation: she may have a better guess than I do. But I am glad that she agrees with the substance of the Bill, at any rate. I note the ironies to which she referred in her speech. I more than note them, but I will resist the temptation to respond to them, if she does not mind.

Both the noble Baroness and the noble Lord raised issues about the Competition and Markets Authority post Brexit. The CMA is not a party to the agreement, so the agreement cannot simply be transitioned without amendment. Any future competition co-operation between the UK and Canada will have to be negotiated and agreed with the Government of Canada, and I suspect that the same has to be true about the relationship between the CMA and the EU post Brexit. That will have to be part of the negotiation. I of course entirely agree with the noble Lord that that will have to be negotiated during the transition period so that there is no cliff edge in that respect.

As far as data is concerned, the agreement contains general safeguards for the transfer of information and additional safeguards for the transfer of personal data. Personal data can be shared only with the express written consent of the person or company to whom it relates. I hope that that is enough on data for the noble Baroness today. If she would like me to write to her in more detail, she can let me know and I will do so, but I hope I have given her enough reassurance in that regard.

I think I have responded to the points raised by both the noble Lord and the noble Baroness. On that basis, I commend the Bill to your Lordships and ask that it has a Second Reading.

My Lords, I apologise for not intervening earlier, but I have a very brief question. The country called Kosovo is very dear in our hearts. It is situated between Albania and Serbia. Has the Minister’s department or the Foreign Office conducted any impact assessment? There will inevitably be consequences for Kosovo, which has a special status, as the noble Lord knows, because it is not fully recognised by all members of the European Union.

I cannot answer that question today; I will write to the noble Earl. Is the question about the impact on Kosovo of Albania and Serbia joining the EU at some future point?

I will write to the noble Earl.

The noble Lord, Lord Mendelsohn, asked what our view would be if, between now and our leaving the EU, perhaps during the transition period, the EU decided it wanted to expand to cover, for example, Serbia, Albania and other countries. I think that our response is that we would not want to stand in the EU’s way in such circumstances. I am sure that if it wanted to go ahead, it would be curmudgeonly for us to stand in its way.

Bill read a second time and committed to a Committee of the Whole House.