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Public Procurement (International Trade Agreements) (Amendment) Regulations 2021

Volume 812: debated on Tuesday 15 June 2021

Considered in Grand Committee

Moved by

That the Grand Committee do consider the Public Procurement (International Trade Agreements) (Amendment) Regulations 2021.

My Lords, this instrument will ensure domestic public procurement regulations give legal effect to the UK’s international procurement obligations, specifically those covered in the UK third party international trade agreements signed with non-EU countries that had an agreement with the EU before exit day on 31 January 2020. Therefore, when contracting authorities carry out public procurements, this could be covered by an international agreement. If so, suppliers from those countries are required to be treated no less favourably than suppliers in the United Kingdom. It also means that UK businesses will continue to benefit from access to public procurement markets overseas.

We have agreement with the devolved Administrations that this instrument will be laid on behalf of Wales, Scotland and Northern Ireland. This will ensure legislative efficiency and consistency across the four nations.

We are implementing this change because the UK Government, following our exit from the EU, have, as far as possible, committed to providing continuity in existing trade and investment relationships with our existing international partners. We have already helped to ensure a continuation of global procurement through the World Trade Organization’s Agreement on Government Procurement, following the UK’s accession to the agreement as an independent member, and we have laid separate legislation to implement that.

Without this instrument, the United Kingdom would not be able to implement its international procurement obligations in trade agreements with third countries. This would leave the UK Government open to legal challenge and damage our reputation as an international trading partner.

This instrument will be made using powers set out in Section 2 of the Trade Act. The instrument will create a new schedule within existing procurement regulations, listing the international agreements signed by the United Kingdom. It will be limited to UK trade agreements with countries that had a preceding agreement with the EU before exit day. Of those agreements in effect, those with substantive procurement provisions to be listed in the schedule are Albania, the Andean countries, Canada, the CARIFORUM states, central America, Chile, Georgia, Israel, Japan, Kosovo, Mexico, Moldova, North Macedonia, the Republic of Korea, Serbia, Singapore, the Swiss Confederation, Ukraine and Vietnam.

The instrument is, I believe, uncontroversial, each of those agreements having already been scrutinised via the procedure set out in the Constitutional Reform and Governance Act 2010. Furthermore, parliamentary reports have been voluntarily laid alongside each continuity trade agreement. They explain our approach to delivering continuity with each partner as the United Kingdom left the EU. If we have made any significant changes to the trade-related provisions of our existing agreements through entering into the new ones, we have explained them in those reports.

Moving forward, further affirmative statutory instruments will need to be laid, using the powers in Section 2 of the Trade Act, each time the UK signs a new trade agreement with a third country or any of the agreements mentioned here are updated, to give them legal effect. Future trade agreements with countries where there was no free trade agreement with the EU before exit day—which could include Australia and New Zealand—are not covered in the Trade Act and will require separate legislation.

I commend the regulations to the Committee and beg to move.

My Lords, this is a difficult time. We are faced with difficult political, social and economic problems, including the pandemic, Brexit, climate change and a sense that the economy is failing many people. We keep hearing from the Government about their ambition to build a better future by building in more resilience so as not to return to the same world as we knew it. They can do this through legislation. I would have thought that this is so pressing that no legislative opportunity would be lost. After all, it is actions that count, not words. In this regard, the Government have a big chasm to cross.

It seems to me that, with these regulations, the Government have an opportunity to act. Admittedly, the regulations deal only with public procurement, but it is a start. They deal with our place in the world of public procurement after Brexit and confirm that we will stick to the same rules as we did when we were members of the European Union regarding transparency, non-discrimination and the equal treatment of all suppliers and contractors in countries that, like us, are members of the Agreement on Government Procurement.

When we were members of the European Union, we did well in winning contracts for public procurement but, as with the rest of our European business, we are being disadvantaged by increased bureaucracy. Could we not use these regulations to help us win public procurement contracts in Europe with the same minimal bureaucracy as we had when we were members? After all, we are agreeing to the same rules as we had before we left. This would be one small step towards cutting bureaucracy when dealing with our European neighbours.

Could we not do better? Could we not introduce an element of sustainability in these public procurement deals? This element is being introduced more and more. It is becoming a feature of financial markets with ESG investment and the Bank of England is monitoring the record of our banks and major companies on sustainability by having them report on responsible investment. This is all part of the developing relationship between business and government to achieve social objectives by arguing for resilience over efficiency. Indeed, this was mentioned at the CBI climate conference yesterday.

In a way, we have set a precedent for this with British Standard 95009, which was introduced in 2019. This standard, which is becoming more and more widely used, specifies how an organisation can demonstrate that it is a suitable provider for the public sector. Could we not extend this standard to the UK’s legal obligations under the Agreement on Government Procurement so as to include sustainability and other social and economic objectives?

I understand from what the Minister said that further regulations are being drafted to give effect to our procurement obligations under WTO rules. If it is too late to include these points in these regulations, can they be considered for those in preparation? The Government have come in for a lot of criticism recently, being accused of bias in the awarding of public contracts. Enlarging these regulations in this way could be a way of deflecting that criticism.

My Lords, I am glad to follow the noble Lord, Lord Haskel, although, unlike his interesting and wide-ranging remarks, I am afraid that that I am going to be very specific and quite pedantic. This is not in any particular spirit of criticism of these regulations; in introducing them, my noble friend was clear about their purposes. They are indeed entirely noncontroversial and, to a large extent, much anticipated and much welcomed to implement the continuity agreement so far as government procurement and access to public procurement in the United Kingdom is concerned.

I want to make two points. The first is for those who are often prone to saying that it is our Government’s intention to expose the National Health Service to competition pressures. Whether or not they think that is detrimental, I will not argue; the point is that, here, as in other public procurement measures, the Government have taken the opportunity to make specific exemptions for clinical healthcare services, which indeed they did in the EU-UK Trade and Cooperation Agreement. So those who talk about the exposure of the NHS to competition should look at that and recognise that the Government have, if anything, moved in the opposite direction.

The pedantic point I want to make is that, in introducing the instrument, my noble friend reflected what is said at paragraph 7.2 of the Explanatory Memorandum, which may have been the intention when it was written:

“This instrument will only affect trade agreements that have already been scrutinised via the procedure set out in the Constitutional Reform and Governance Act”—

that is, CRaG. This is almost entirely true, but it is not true in relation to the agreement with Serbia. The Serbia agreement was signed on 16 April using powers under Section 2 of the Trade Act, which was given Royal Assent on 29 April. This statutory instrument was created and laid on 13 May. The Serbia agreement was laid under CRaG on 11 May and, I understand, was provisionally applied on 20 May; the Secondary Legislation Scrutiny Committee and the Joint Committee on Statutory Instruments looked at it on 25 and 26 May. It might have been anticipated that the CRaG scrutiny period would have ended by now but it has not because the Whit Recess intervened and the CRaG scrutiny period expires on 23 June. The International Agreements Committee, of which I am a member, will examine the UK agreement with Serbia tomorrow. So there is an exception to this point.

Does it matter? I think the short answer is that it does not. The provisional application is in place, as one would expect in order to minimise any discontinuity in our trading relationship with Serbia because we have been operating on quasi-WTO rules since the turn of the year and the provisional application was quite right. So it does not matter but there is a point here: if instruments are laid with Explanatory Notes, the timing and sequencing need to be very clear. In this case there is, I think, no controversy, but if there were controversy, and if we were in a position where the House was being asked to put in place implementing legislation in circumstances where the CRaG scrutiny had not concluded, that would be regrettable. I just want to note this because we are all finding our way with all these processes but I hope that care will be taken to understand the sequencing for future occasions.

My Lords, I am grateful to my noble friend for the opportunity to debate these regulations, which I presume are the first that we are looking at under the Trade Act 2021. I welcome that agreements have been reached with such a wide range of countries—I particularly note Vietnam, Japan and Singapore. Could my noble friend again confirm the limit to the public procurement under the global procurement strategy to which he referred—it was the equivalent of €100,000 or $100,000? Like my noble friend Lord Lansley, I welcome the fact that we have not gone down the path of opening up competition to the National Health Service.

As my noble friend Lord True will recall, when we debated these issues earlier, my one regret was I had hoped that, now that we have left the European Union, our farmers and producers in particular would benefit from selling their produce—meat, fruit or vegetables—and being a source of more domestically grown produce for our public institutions, such as hospitals, schools and others. That being the case, and given the fact that the cost of exporting to many of these countries, and the carbon footprint, would be quite large, does my noble friend envisage that there may be opportunities for our agricultural producers and horticulturalists to export to some of the countries covered by this agreement?

Paragraph 7.2 of the Explanatory Memorandum says that the instrument specifically does not apply to future trade agreements, as my noble friend set out so eloquently—he specifically mentioned Australia and New Zealand—and that separate legislation will be required. I understand that we are only entering into the finer details of our negotiations with Australia, but when does my noble friend expect that legislation to come before the House in that regard?

I will follow up the point that my noble friend Lord Lansley raised about the CRaG procedure. Obviously, there is an issue that the Select Committee should have the earliest possible opportunity to consider the detail of future trade agreements. I add to that my concern: my understanding is that the Trade and Agriculture Commission has not yet been appointed as a new body —it has no chairman or members—yet we are proceeding apace with existing rollover continuity agreements and proceeding to negotiate new ones. Does my noble friend have an idea of, and timetable for the appointment of its new chairman and members?

I reiterate the point made by the Trade and Agriculture Commission’s outgoing chairman, Tim Smith, in the report that it submitted: he specifically states that the timing is absolutely key and that, in exactly the same way as the Select Committees on international agreements of both Houses, the Trade and Agriculture Commission should have the earliest possible opportunity to look at these agreements. Will my noble friend confirm that the new Trade and Agriculture Commission will not be presented with a fait accompli in the case of a trade agreement with Australia, New Zealand or the United States, but rather that it will be able to do the work that we are asking it to do and will—if it will not be consulted on the negotiating mandate, which I would prefer—have the earliest possible notice or sight of it?

My noble friend will be all too familiar with the fact that, in part 1 of the National Food Strategy report, the government adviser Henry Dimbleby and all those who served in producing it made these points very eloquently and forcefully. I understand that, regrettably, the Government have responded privately to part 1, and it would be helpful if we could all see the contents of that reply. With those few remarks, I welcome the opportunity to have debated these agreements, and I look forward to reviewing further ones.

I have one final question. Paragraph 6.2 of the Explanatory Memorandum states:

“The section 2 power is in place for five years from IP completion day, and can be extended for a further five-year period by Parliament, subject to the agreement of both Houses.”

If it were to be extended, would we have the opportunity to look at these regulations again, or is this a one-off? I also note that paragraph 10.1 states:

“There has been no consultation on this instrument.”

From what my noble friend Lord True said at the outset in so ably moving these regulations, I understood that the Government have the authority to work on behalf of the devolved Administrations of Wales, Scotland and Northern Ireland. What was the forum giving that consent?

With those few remarks, I am delighted to support these regulations.

I thank the Minister for his introduction, but I am afraid the main question I would like to put to him—to which I fear I cannot expect a reply—is whether all those arch- Brexiteers really did all that campaigning just to spend time on a sunny summer afternoon on SIs which simply put in place exactly the same rules that we had before exit day? I do not expect him to answer that.

However, that is what this looks like, as a result of rolling over EU agreements, some large, some small, as the Minister mentioned, with Chile, Switzerland, Israel, the CARIFORUM states, Colombia, Ecuador, Peru, central America, Singapore, Korea, Georgia, Kosovo, Ukraine, Japan, North Macedonia, Canada, Mexico, Vietnam, Albania and Serbia—I look forward to the Minister’s response to the noble Lord, Lord Lansley, on that one, given that it does not appear to have gone through CRaG. These regulations simply seem to retain our public procurement rules, in line with those the EU already has with these countries and which therefore applied to us before we left. We are going through all this just to maintain what was there beforehand.

As the Minister said, the Trade Act 2021, which authorises these regulations, covers deals with countries which have trade agreements with the EU—in other words, the ones they are rolling over—so we just continue as before. As he rightly says, we have to agree this to honour the existing deals we have chosen to continue to operate, and to ensure that any UK relevant public authority treats the suppliers of services or economic operators in the countries listed no less favourably than home competitors.

We are where we are, and we are just continuing it. But the interesting question—to which I would prefer an answer over my tease at the start—is that posed by my noble friend Lord Haskel: if, as we keep hearing, the whole point of Brexit was to give us the freedom to sign our own deals, why not add into these a requirement that all public procurement from domestic or overseas suppliers includes sustainability clauses, fairness to SMEs, worker protection and consumer rights?

I do not want the Minister to have given up his nice sunny afternoon in vain, so some thoughts on how the Brexit freedom can be translated into our public procurement would be enlightening. Even as I absolutely signify our acceptance of these uncontroversial regulations, as he called them, it would be interesting to know whether the Government will be a little more ambitious than it appears from this.

I thank all noble Lords and noble Baronesses who have spoken for their general welcome for this measure. Some of it was slightly tempered, but in the docile environment of a statutory instrument Grand Committee upstairs, I shall not let my temper be provoked by it. I simply say that, having been called an arch Brexiteer, I would rather describe myself as an arch musketeer now on behalf of the British interest. That operates come rain or shine. Part of the context which has not been referred to—it was referred to by my noble friend Lady McIntosh of Pickering but not by the noble Baroness, Lady Hayter—is that the sun was certainly shining in Downing Street earlier today, when my right honourable friend the Prime Minister and Mr Scott Morrison announced exactly the kind of way forward to a better future which both the noble Lord, Lord Haskel, and the noble Baroness were asking for. This Government are ambitious on behalf of the national interest and of all those who work and produce in our country. We remain unashamedly of the opinion that free trade is an enormous boon to mankind. Over the decades and centuries, it has contributed to the raising of the condition of the people in nations across the world. That is as far as I will go on the political element of the discussion.

On the specific points on which I was asked, my noble friend Lord Lansley raised an important issue in relation to Serbia. These are not minor points; parliamentary scrutiny is obviously of fundamental importance—I think that we all agree on that. I do not think that there has been any attempt to do anything untoward, but I shall undertake to write to my noble friend on the detailed point that he has raised, if he will accept that as a response.

On the specific point raised by the noble Lord, Lord Haskel, about the WTO—which I referred to— perhaps my remarks were slightly infelicitously set, because I gave the impression that there was a forward-looking element here. As for the WTO, a separate statutory instrument, the Public Procurement (Agreement on Government Procurement) (Amendment) Regulations 2021, was made and laid under the negative procedure on 12 May 2021 using powers in Section 1 of the Trade Act. That has given effect to the UK’s independent membership of the Agreement on Government Procurement, which is a WTO function and institution.

My noble friend Lord Lansley, with his immense experience in this area, reminded us that the Government are not involving the National Health Service. These continuity agreements will ensure that the transition of existing FTAs will not impact on how the UK currently delivers healthcare services or standards of care in the NHS. No trade agreement has ever affected our ability to keep public services public, nor has one ever forced us to open up the NHS to private providers. We have always protected our right to choose how we deliver public services in trade agreements and we will continue to do so. I came armed to give longer reassurances on that point and could expand further, but I think my noble friend picked that out accurately from the documents before us.

I agree with my noble friend Lady McIntosh that there are opportunities for agricultural producers, our own producers, as free trade is extended. I do not think we should always see issues as incoming; there are opportunities outgoing as well. I believe that that will be widely seen and acknowledged in the years ahead. My noble friend asked when specific legislation will come forward in relation to the Australia provision announced today by the Prime Minister and the Secretary of State, Liz Truss, who I believe deserves enormous credit for the extraordinary effort she is making on behalf of the country. I cannot advise specifically on timescales for that, but I can assure my noble friend that there will be full scope for the kind of parliamentary scrutiny she is seeking.

My noble friend also asked about the timing of appointments. I cannot at this point advise her on that, but I will try to give her some better guidance outside this discussion.

I am grateful for what has been said. It is a warm afternoon but the musketeering never stops, and I pay full credit to noble Lords who have taken the trouble to take part in this debate to secure the future of British trade and, yes, steps towards the kind of better future that the noble Lord, Lord Haskel, challenged us to work for in his opening remarks. I must tell him that I have slightly more confidence than he has about the prospects for the future, and we will work to disabuse him of any doubts he has. I was very grateful for his input into the debate and that of all noble Lords.

The Government have committed to providing continuity as far as possible in existing trade—we make no apology for that—and in investment relationships with non-EU countries now we have left the EU. I repeat that, for this reason, we think that, as others have said, the instrument is uncontroversial, allowing for the continuation of current procurement practice. That has been the sense of your Lordships’ committee. I hope I have answered noble Lords’ questions. I have undertaken to respond to a couple which are very detailed. I hope I have clarified the implications of the amended legislation and I trust that noble Lords will, as they said, support the statutory instrument. I am grateful to them for that.

Motion agreed.

Committee adjourned at 5.33 pm.