Considered in Grand Committee
My Lords, these draft regulations were laid before the House on 8 November 2020. As I am sure noble Lords will recognise, it is important that we have full sovereignty over our regulatory regime for goods at the end of the transition period. This SI will help ensure that we are not challenged if we choose to diverge from EU regulations by removing retained EU treaty rights.
At the end of the transition period, EU treaty rights on the movement of goods stemming from Articles 34 to 36 of the Treaty on the Functioning of the European Union will be retained in UK law unless they are removed by this SI. The rights flowing from these EU treaty articles prohibit the imposition of quantitative restrictions or equivalent measures, such as regulatory requirements, on imports and exports by member states, unless justified under Article 36. This is to encourage the free movement of goods within the single market.
The UK will have its own regulatory regimes after the end of the transition period and the EU will not be treating UK goods as it would goods from a member state. Therefore, these provisions are no longer appropriate to retain, and could impede our ability to diverge from EU goods regulation in future. This is because the provisions prohibit quantitative restrictions or equivalent measures on imports and exports, meaning that divergence from EU regulatory requirements could result in a challenge from a business or importer if it resulted in being a barrier to placing its goods on the market in Great Britain.
Of course, I understand that there is a lot of interest in precisely what these new regulatory arrangements will be. First, I cannot emphasise enough to noble Lords that this instrument does not introduce any of these new regulatory arrangements or any divergence. Any measures relating to specific regulatory arrangements are being dealt with in separate regulations; nor does this instrument deal with other matters, such as the Northern Ireland protocol or the UK internal market, which I know are also of great interest to noble Lords.
I will, however, say a few words on the new regulatory arrangements. Different goods are currently subject to different regulatory regimes. Cosmetics, food products, machinery, et cetera, are all dealt with in their own way, and that will continue to be the case. So I cannot give a detailed overview here, especially as these matters are not themselves the subject of the regulations before the Committee. What I can say is that by and large the regulatory requirements for goods as of 1 January 2020 will remain largely the same as they are now.
The main changes for the end of the transition period are to reflect the fact that we are no longer part of the single market; for example, the CE marking, which denotes compliance with EU rules, will be replaced by the UKCA marking, which shows that a good meets UK rules and was tested, where needed, by a UK-recognised body. This Committee debated that SI a week or so ago. Of course, any further regulatory changes will be a matter for future consultation and future legislation as appropriate.
The Government have published detailed guidance on these new regulatory arrangements and published guidance on the movement of goods between Northern Ireland and the UK. While many of the new arrangements will not apply in Northern Ireland from 1 January next year due to the Northern Ireland protocol, the Government have been categorical in our commitment to unfettered access to the rest of the UK market for Northern Ireland goods. But, again, I stress that these are matters that fall outside the scope of the regulations before your Lordships.
I return to what this SI does. It will remove the aforementioned EU treaty rights so that they no longer apply in England, Scotland or Wales. As some areas of goods fall under devolved competence, my officials have engaged regularly with officials from the Welsh and Scottish Governments. The Government have written to counterparts in Wales and Scotland to formally seek their consent to lay this SI, which they have confirmed. This SI does not cover Northern Ireland as the treaty rights in question will continue to apply in Northern Ireland as of 1 January 2021 by virtue of the protocol.
As I have already mentioned, these regulations will not result in any changes for businesses. However, they will give businesses greater certainty that when UK rules change they will not be rolled back after legal challenges based on treaty articles that no longer make sense once we have left the EU. A stable statute book is clearly in the best interests of businesses.
To be clear, this SI is not a pre-condition for divergence. As of 1 January, Parliament will have the ability to introduce new regulations—or not, as the case may be. Instead, is it about removing potential grounds for legal challenge based on retained treaty articles that have no place in our statute book once we have regained our full independence.
In conclusion, this SI will remove the rights flowing from Articles 34 to 36 of the Treaty on the Functioning of the European Union—reciprocal rights between member states that no longer have a place in a post-exit independent UK. This will protect our ability to regulate goods as we see fit and ensure that potential challenges do not require us to keep in line with EU regulations.
I reassure noble Lords that we have engaged with the devolved Administrations in Scotland and Wales on the changes that this SI makes, have ensured that they have been kept informed of its progress and have obtained their consent.
The safety of individuals, families and communities is a top priority for the Government. As I am sure noble Lords will recognise, it is essential that the UK is able to protect its sovereignty and that we can make our own rules to protect consumers and to prevent unsafe and non-compliant products entering the UK market. I commend these regulations to the Committee. I beg to move.
My Lords, I thank the Minister for his explanation of these regulations. I declare my interest as a member of the Common Frameworks Scrutiny Committee of your Lordships’ House.
I understand that this very technical statutory instrument, which deals with England, Scotland and Wales, is to end the application of directly effective rights that flow from EU treaty provisions that prohibit the imposition of quantitative restrictions, such as administrative or regulatory requirements, which restrict free movement of non-harmonised goods within the EU or between the EU and Switzerland or the EU and Turkey.
At the end of the transition period, from 1 January 2021, GB will have its own regulatory regime for goods and the intention of this instrument is apparently to ensure that there is no barrier to diverging from EU rules should GB seek to do so after the end of the transition period. As I understand it, it is a protective instrument.
In that regard, will the Minister spell out the nature and the number of meetings and discussions with the devolved Administrations in Scotland and Wales? Can he advise what preparations have been made and what further support funding will be provided for businesses? They have probably been ravaged this year by Covid and because of the uncertainty as we advance towards the end of the transition period. They need help, because many of them are competing with Amazon and the online businesses of the UK.
Furthermore, will common standards for trading be agreed via the common frameworks process and will that be put on a statutory basis? I know there is no reference to that within the statutory instrument, but I appreciate that that could be a direct, or maybe indirect, consequence of this.
Furthermore, I understand that EU rights will continue to apply in Northern Ireland by virtue of the protocol. On that, I am pleased that a “deal” was reached in the joint committee about a couple of hours ago on Northern Ireland border checks that will provide a solution for businesses and, I hope, result in the withdrawal of those controversial clauses in the United Kingdom Internal Market Bill. If the Minister is not able to provide detail and clarity on that today—I suppose that it does not relate directly to this statutory instrument—perhaps he could do so in writing. I hope it will be possible to achieve a free trade agreement that prevents customs friction and provides an implementation period, because that is a vital to all businesses in Northern Ireland or Great Britain.
Obviously, I have read the House of Commons debate on this issue and what was said in your Lordships’ Secondary Legislation Scrutiny Committee, which referred to how the statutory instrument could impact on the flow of goods between Northern Ireland and GB. The Minister and the noble Lord, Lord True, have insisted throughout this process and during debates on the United Kingdom Internal Market Bill that there will be unfettered access for goods between Northern Ireland and Britain. The Bill makes provision for that unfettered access for qualifying goods and for the application of market access principles of mutual recognition and non-discrimination. Can the Minister define those qualifying goods? What are they? Businesses trading in Britain, and those trading in Northern Ireland, would like to know what that definition is. What are the qualifying goods in that regard?
It is interesting that an amendment was tabled on Report on the Trade Bill, which should have been reached last night but was not, that sought to ensure that there would be no discrimination in respect of goods and services coming from Northern Ireland into Great Britain. I want assurances from the Minister: will this draft statutory instrument, which deals specifically with England, Scotland and Wales, ensure that there will be no discrimination of goods and that there will be unfettered access for goods and services from Northern Ireland to GB? Maybe he could go a little further and explain the processes involved in that.
We do not want to see a threat to existing supplies of any type of goods within England, Scotland and Wales. The same applies to Northern Ireland. I hope the statutory instrument provides the pathway to do just that. I realise it is highly technical and simply protects the market to allow divergence from EU rules to take place, but in so doing it is important that businesses are protected and that there is no diminution of any type of rights, or any type of damage to businesses, in the short and long term.
My Lords, I ought to make it clear from the outset that we do not oppose the statutory instrument because we recognise that it is a natural consequence of leaving the EU at the end of the transition period. The instrument was debated some two weeks ago in the House of Commons, when the shadow Minister said that businesses were being left “completely blind” about how to prepare for the end of the transition and that:
“We are no further down the road with a deal, and they have no idea of the terms under which they are going to be trading in a few weeks’ time.”—[Official Report, Commons, 24/11/20; col. 735.]
Two of those weeks have now passed, yet what is so worrying is that those words still bear repeating. Perhaps with the exception of the Northern Ireland protocol issue, which appears to have been resolved today, we are still very much in the dark about what comes next.
The issue with this instrument, as with so much that we in both Houses are being asked to consider, is that it leaves as many questions as answers, as we still do not know what will replace the aspects of the current EU framework that we are disapplying. The Government’s argument for getting these instruments on to the statute book without certainty as to what will replace them appears to be that time is running out to pass all the necessary legislation before the end of the transition. We of course appreciate those circumstances, but do the Government not understand that the same pressures apply to businesses in every corner of the country? They also need time to prepare before the Christmas period arrives. This intense uncertainty comes after a year of hardship, closure and uncertainty due to the Covid panic. It is up to the Government not to continue to add to that burden.
I am grateful to the Minister for his explanation, but the statutory instrument will end the application in England, Wales and Scotland of the rights derived from Articles 34 to 36 of the Treaty on the Functioning of the European Union. The removal of these provisions is to ensure that there is no barrier to divergence from EU rules should the Government choose to diverge from them. What update can the Minister give us on what rights and protections will be in place for EU-UK trade before the end of the transition period? When will businesses have those details?
The statutory instrument does not in itself create divergence, but it is part of paving the way for it. Is the Minister therefore able to update the Committee on where he believes we might seek to diverge from the EU’s standards and requirements? What work is being done to ensure that any divergence is beneficial to British and Northern Irish businesses, and does not create new costs and barriers to trade?
What is crucial is that this issue relates not just to UK-EU trade but to the requirements for a new framework for UK-wide trade, because current treaty provisions also govern trade in goods across the UK. We have shown our commitment, not only on the Labour Benches but across the whole House, on the United Kingdom Internal Market Bill to ensuring that there is a strong internal market for the UK, working with the devolved Administrations through common frameworks on a statutory footing. However, yesterday the Government saw fit to overturn all the amendments to strengthen the role of the devolved Administrations that this House sent back to the Commons. In our way of thinking, that does not show a Government who are working to respect the devolved settlements and build a strong internal market for the future.
The noble Baroness, Lady Ritchie, as ever, asked a number of important questions on Northern Ireland. This SI implicates goods moving between Northern Ireland and Great Britain. We support unfettered access for Northern Ireland businesses to the rest of the UK market. However, the Minister knows that there are concerns over the temporary definition of qualifying goods. Is he in a position to give us any further update on this issue?
Finally, we should always remind ourselves that at the last election the voters were promised an oven-ready deal with
“no tariffs, fees, charges or quantitative restrictions across all sectors”,
and protections for the environment, our workers’ rights, our customers’ rights and our security. However, we are a matter of days away and people in every region of the UK are still waiting to know how their livelihoods will be affected. I particularly want to mention the Government’s so-called levelling-up agenda. If the Government do not get this deal right, it will be the sectors and areas of the UK that can least afford it that will bear the brunt of that fallout.
This statutory instrument might look like a narrow change, but it raises many vital questions about what comes next. I look forward to the Minister’s reply.
I thank the noble Baroness, Lady Ritchie, and the noble Lord, Lord Bassam, for their consideration of this statutory instrument and their valuable contributions and questions—I shall endeavour to deal with as many of them as possible.
I have set out today the importance of this SI and the importance of having full sovereignty over our regulatory regime for goods at the end of the transition period. I emphasise that this SI is not a precondition for divergence; nor does it introduce any divergence from our current rules. By supporting the SI, we will ensure that we are not faced with legal challenges that seek to keep us in line with EU regulations.
To recap: treaty rights provisions prohibit quantitative restrictions or equivalent measures on imports and exports. Therefore, future divergence from EU regulatory requirements could result in a challenge from a business or importer if it led to a barrier being created to placing their goods on the market in Great Britain. This SI will ensure that we have the freedom to regulate goods in Great Britain as we see fit, along with considering the impact on businesses and consumers, while ensuring that the UK product safety system remains among the strongest in the world.
As advised, these regulations will not result in any changes for businesses. However, they will give businesses greater certainty that, if UK rules change, they will not be rolled back after legal challenges based on treaty articles that no longer make sense once we have left the EU.
The noble Baroness, Lady Ritchie, raised the important subject of working with the devolved Administrations. I repeat what I said in my introduction: my officials have had a number of informal meetings with officials from the Governments of Scotland, Wales and Northern Ireland, all individually, on this SI. Officials have also hosted regular meetings with officials from the devolved Administrations to discuss progress in negotiations and the regulatory requirements for goods at the end of the transition period. I say again that consent to this regulation was given by all the devolved Administrations.
The noble Baroness also asked about goods moving from Northern Ireland to Great Britain. We are laying this legislation to ensure that we do not face challenges from manufacturers or importers if in Great Britain we decide to change our regulation of goods in a way that creates barriers to trade with the EU. This does not mean that there will be barriers for goods flowing from Northern Ireland into Great Britain. We have laid legislation to prevent such barriers, including the United Kingdom Internal Market Bill and the unfettered access legislation. This SI will not undo any of those protections. I shall write to both noble Lords on the definition of Northern Ireland qualifying goods.
The noble Lord, Lord Bassam, asked about the protection of rights. The vast majority of these changes will take place regardless of the agreement that we have reached with the European Union on our future trading relationship so that businesses can be confident that their plans and preparations to date have not been wasted.
We also recognise the impact that the pandemic will have had on industry’s ability to prepare. For that reason, we are taking a pragmatic and flexible approach to using some of our retained powers as a sovereign nation to allow businesses time to adjust.
The noble Lord also asked about legislative time. More than 150 SIs required by the end of the transition period have already been laid. Good progress is being made and we remain confident that all required SIs will be in force by the end of the transition period.
The noble Lord and the noble Baroness, Lady Ritchie, also asked about the important subject of business readiness. We are listening to businesses and recognise that they have faced many challenges, particularly from Covid-19. For goods with the new UKCA marking, we are permitting the use of the CE marking for goods in scope of the SI until 1 January 2022 as long as Great Britain and EU technical requirements remain the same. There are easements allowing the UKCA marking to be affixed to a label on a product or on a document accompanying the product until 31 December 2022, and we are allowing new importers of products from the EEA to set out their details on a document accompanying their products until 31 December 2022. Those are all ways in which we are helping to ease the burden on business.
Since the summer, the Government have also been providing support through an ambitious series of business readiness events. My department has published a range of guidance. However, I stress once again that this SI does not introduce any changes for businesses.
The UK will have its own regulatory regime after the end of the transition period and the EU will not treat UK goods as it would goods from a member state. Therefore, the provisions to which this SI relates are no longer appropriate to retain and could impede our ability to diverge from EU goods regulation in future. I commend the regulations to the Committee.
The Grand Committee stands adjourned until 4.30 pm. I remind Members to sanitise their desks and chairs before leaving the Room.