Committee: 4th sitting (Hansard): House of Lords
Monday 4th February 2019

(5 years, 4 months ago)

Lords Chamber
Trade Bill 2017-19 View all Trade Bill 2017-19 Debates Read Hansard Text Amendment Paper: HL Bill 127-IV Fourth marshalled list for Committee (PDF) - (31 Jan 2019)
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe (Con)
- Hansard - - - Excerpts

My Lords, 80% of the UK economy—in fact, I think the figure is 85%—comprises services. I support the noble Lords, Lord Stevenson and Lord Purvis, in bringing forward this probing amendment although, for the reasons given by my noble friend Lord Lansley, I am not convinced that we should change the Bill and make ourselves rule-takers on services. If noble Lords will allow, I would like to keep the issue of the free movement of people separate. The question is: do we lose as much from losing the single market on services? It is not very well developed at all. I know this because I tried to cut down barriers on services within the EU when I led the presidency work in BEIS in 2016.

Last week the Chancellor spoke at the UK Finance dinner, which I attended. I was sorry as a result of that—the timing was unhelpful—to miss the last group of amendments, of which mine formed part. The Chancellor talked about liberalising trade in services—a sort of WTO services round—going forward. Of course, this would also extend to the European Union if it were to happen.

I have two questions about services for my noble friend the Minister, the answers to which will help me when we consider the Bill on Report. First, can he elaborate on the Chancellor’s idea, or emerging Treasury ideas, of doing something on services beyond the European Union, which would help us in the European Union as well? Secondly, can he confirm that the Government’s proposed deal—the withdrawal agreement or the political declaration—would not get in the way of bilateral deals with third countries on services, given that the multilateralism that I love is very hard going? In other words, would we be able to conclude a deal with the US—again, very tough—or, perhaps more realistically, with the emerging and already emerged countries of Asia, where we are now selling a lot of services and where it seems that aligning some of the rules on services could be extremely valuable?

Lord Bates Portrait The Minister of State, Department for International Development (Lord Bates) (Con)
- Hansard - - - Excerpts

My Lords, on behalf of all those who have spoken, I thank the noble Lords, Lord Stevenson and Lord Purvis, for bringing forward Amendment 45, the purpose of which is to provide an opportunity for the Government to put some remarks on the record about our approach to services which, as we all agree, is of crucial importance. So, before coming to some of the specific questions that have been raised during this short debate, I will take advantage of that opportunity to set out the Government’s position as it now stands.

As my noble friends Lady McIntosh and Lady Neville-Rolfe, and indeed the noble Lord, Lord Stevenson, said, the UK’s services economy is a global success story. Our internationally competitive industries play host to world-leading firms as well as thriving small and medium-sized enterprises, and we have undertaken significant engagement with the sector on issues related to EU exit.

I would like to reassure the House that the Government are seeking arrangements for services and investment that cover all modes of service supply—my noble friend Lord Lansley correctly referred to the variations; that provide substantial sectoral coverage, including measures on professional business services, which my noble friend Lady McIntosh referred to; that go well beyond both sides’ WTO commitments as set out in the General Agreement on Trade in Services, which my noble friend Lord Lansley also mentioned; and that build on the provisions in existing EU agreements.

Moreover, through the political declaration we have secured a commitment from the EU 27 that our future trading relationship will be ambitious, comprehensive and balanced, and will include market access commitments to ensure that service suppliers and investors do not face quantitative restrictions such as monopolies, economic needs tests or joint venture requirements, which my noble friend Lord Hamilton expressed concern about; national treatment commitments, to ensure that UK service suppliers and investors are not discriminated against by the EU 27 and vice versa, as my noble friend Lady McIntosh referred to; new arrangements on financial services, grounded in economic partnership, providing greater co-operation and consultation than is possible under existing third country frameworks; appropriate measures on the recognition of qualifications, as referred to by the noble Lord, Lord Purvis, to support UK professionals practising in the EU 27 and vice versa; arrangements that allow for temporary entry and stay in each other’s territories for business purposes, including visa-free travel for short-term visits, as the noble Lord, Lord Liddle, rightly identified from his extensive work examining the internal market as a member of the Select Committee; and mechanisms to promote voluntary regulatory co-operation to guard against the introduction of unnecessary barriers to services, trade and investment, to which my noble friend Lady Neville-Rolfe referred. I pay tribute to the work that she did at BEIS in seeking to remove those barriers.

We have also been clear that after we leave the EU, the UK will have an independent trade policy covering all aspects of goods and services. To deliver that objective, it will be important to retain regulatory freedom where it matters most for the UK’s services-based economy.

I turn to some of the points that have been raised.

Lord Davies of Stamford Portrait Lord Davies of Stamford
- Hansard - - - Excerpts

Before the Minister moves on to detailed points, perhaps this might be a good moment for him to tell the Committee, out of all the countries with which we would like to have our own free trade agreements after we leave the EU—if we leave it—how many have indicated that they wish in principle to negotiate and sign such an agreement with this country; how many have said that they would do so on terms identical to their existing free trade agreement with the EU; and how many have indicated that they would not want to pursue such a negotiation at all?

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

The noble Lord will remember from day three of Committee last week that one of the questions asked was whether we could provide the Committee with some running status on where we are with all those free trade agreements. That is a perfectly reasonable approach and it is something that my noble friend Lady Fairhead agreed to take back to look at and come back on ahead of Report. Rather than using this opportunity to rehearse that, I will say that it is something that we are looking at. Specifically on the EU and Japan, I was going to come to that topic and say that there is a working group with Japan to seek to replicate its effect as part of the continuity arrangements.

Lord Liddle Portrait Lord Liddle
- Hansard - - - Excerpts

My Lords, on the point about freedom of movement, I have two specific questions for the Minister. I accept what he has said, but I would like to quote a personal example and declare an interest. For a period, my wife was chief executive of the English National Ballet. It was a requirement for the success of the English National Ballet that ballet dancers from all over the world were able to join, but the ENB had great difficulty with ballet dancers from outside the EU because they do not earn anything like the money that is put down in the Immigration Rules to justify easy entry. Are the Government prepared to be flexible on the earnings requirement to enable cultural organisations, which are very important to the British economy, to easily access talent from the EU, where people’s salaries will not initially be that high?

Secondly, if you are a small business in services and trying to expand by getting jobs, projects and contracts on the continent, one of the obvious business strategies you would pursue is recruiting young people from the countries in which you hope to do business. You take them into your consultancy, or whatever, and that gives you language and personal links into the markets you are trying to target. Again, there is no guarantee that, under the immigration policy outlined by the Home Secretary, young people coming from European countries would be able to get jobs in that kind of situation. We asked for a clear statement of the Government’s trade policy. The Government have to be clear on these issues before we can proceed on the Bill.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I am happy to do that, and perhaps get some notes—I know we have a group coming up on the mobility framework, to which those points will perhaps be pertinent. I will, if I can, address them there. I also draw the noble Lord’s attention to section 9 of the political declaration, paragraphs 50 to 59 inclusive, which sets out the Government’s position on that.

The noble Lord, Lord Stevenson, and my noble friend Lord Hamilton pointed to or asked a very important question on bilateral services-only trade agreements. There is no precedent for a bilateral services-only trade agreement. Where service agreements exist, they are notified to the WTO alongside a wider agreement that also covers goods. We are leaving the customs union so that we can set our own tariffs and have an independent trade policy tailored to the strengths and requirements of our economy, which therefore includes—by implication and explicitly—the importance of services to our economy. The political declaration sets out a plan for a UK-EU free trade area for goods, including no tariffs, with ambitious customs agreements. This will be the first such agreement between an advanced economy and the EU.

The noble Lord, Lord Purvis, referred to the situation in relation to Northern Ireland. Without wanting to revisit that whole area in this group, the situation is that in Northern Ireland, under the common travel area, the rights to work, study and access social security and public services will be preserved on a reciprocal basis for UK and Irish nationals in the other state.

I turn to the questions raised by my noble friend Lady McIntosh and, in particular, the two questions raised by my noble friend Lady Neville-Rolfe. My noble friend referred to the Chancellor’s speech on liberalising services and looking for a more ambitious way forward. I am sure that is at the core of government policy, otherwise the Chancellor would not have said it. I do not have the text in front of me, so I cannot comment on its full meaning, but I will write to my noble friend on that point. My noble friend Lady McIntosh also asked a three-pronged question. For a company setting up in the UK, what would its situation be in the event of no deal on day one; in the event of the implementation period; and at the conclusion of a future economic framework? Some of those outcomes will depend on the extent of the negotiation, which we have set out in the heads of agreement in the political declaration. Between Committee and Report, I will write on my noble friend’s specific point relating to that. Again, I thank the noble Lord for giving us an opportunity to raise this very important issue.

Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe
- Hansard - - - Excerpts

Can my noble friend clarify the point about services and goods? I asked whether we would be able to continue to do deals on services if we had a tight agreement—a customs union or whatever —with the EU. He was saying that goods and services tend to be linked in trade agreements and are never separate. Would that mean that we could not have services agreements, assuming we got something quite tight on goods? That would obviously be a problem. I know that they are linked—often, the service for your car and the computer in it are as important as the car itself—but I had seen them as distinct in the WTO. If my noble friend could write to me on that, I would be very interested.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I will be glad to do so. In a lot of such agreements, especially for the major manufacturers, the bulk of the value of the trade or the deal is the service package and the support provided thereafter. I will be very happy to write to my noble friend ahead of Report.

Lord Kerr of Kinlochard Portrait Lord Kerr of Kinlochard (CB)
- Hansard - - - Excerpts

In the early part of his speech, the Minister read out an impressive list of points that had been achieved or secured before he moved on to his brilliant ex tempore dealing with the questions raised in debate. I confess that I did not recognise those points. I cannot remember seeing them in the withdrawal agreement. Was he perhaps referring to the relevant part of the political declaration, in which case surely those points have not been secured or achieved and what has been agreed is that all these things may be discussed over the next three, four or five years as the long-term relationship is considered?

--- Later in debate ---
Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

Yes, except that the political declaration was of course part of the withdrawal agreement negotiated with the EU 27, so one hopes that it will form the basis of our future economic partnership.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed
- Hansard - - - Excerpts

The noble Lord, Lord Lansley, and I have referred to the WTO. My understanding is that there have been objections to the UK’s submission of services schedules to the WTO and therefore they are unlikely to be certified if we leave at the end of March. We can still trade on them, but they are likely to be uncertified. Can the Minister give a little context about what concessions we might make or what discussions we would have with those countries that have lodged their objections? Clearly, they feel that we will not provide the same kind of market access to UK services as under the existing agreements. We could be starting from a situation that is much worse than simply carrying on with where we are at the moment at the WTO. If the Minister cannot respond at the moment, perhaps he could write.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I am very happy to give further detail on that in the general update between Committee and Report, but, as the noble Lord knows, the schedules were tabled in December followed by a 90-day consultation period. There can be a variety of perspectives on them before they are finally adopted. I will get an update as to where we are on that before Report.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering
- Hansard - - - Excerpts

To clarify, my concern is about British companies establishing their services in what will be a third country, another EU country. I would be happy for my noble friend to write to me.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I am grateful for that clarification. I shall make sure that that is what is addressed.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

My Lords, it sounds as if we are starting off a new train of activity or various letters. I suspect that it might also be helpful if we had a short meeting on some of the issues just to draw them together. Like the noble Lord, Lord Kerr, I was entranced by the detailed nature of the early part of the Minister’s response and I got a bit lost—I think it was on the fourth point the second time round. We will need to read him and understand not only what he was saying but where these points are to be found in more detail. The chance to be able to do that in the context of the very rich debate we have had would be helpful.

That is not to say that I think there is that much between us: with friends like the noble Lord, Lord Hamilton, how can I complain? We are on the same side here, most unusually and extraordinarily, agreeing on points of some substance. There is some progress, it has not always been easy going and I think the noble Lord, Lord Lansley, was right to point out that this is partly because we are centring on an agreement which is brokered by the WTO through the GATS system. He is correct—his background in the chambers of commerce means that he reads these documents carefully and understands their provenance—that the wording of the amendment is indeed taken from the four pillars, but I was unable to get the fourth pillar in; the clerks would not accept that. The noble Lord, Lord Fox, managed to get it into the next amendment but one, so we will have that debate shortly. That complication sets us off in slightly the wrong direction: we are not trying to change that structure in essence, because that is the overarching world system and we have to be careful we do not try to take on too many battles at the same time.

The political declaration is not the same as the agreement and of course all that gets wrapped up into some form of yet-to-be-understood free trade agreement which may or may not include both customs elements and services agreements. I think the noble Baroness is right to pick up the question of how all that melds together: will we be able to trade off some aspects of our services in order to achieve a better tariff arrangement, or is it better to keep them separate and deal with the different arrangements? I do not think we have a clear answer to that, but I do not think we are very far apart on it. We want this to be the best for Britain. We have done pretty well, against all the odds. Why change it if it is not certain that the changes are going to be beneficial to us?

Having said that, the question from my noble friend Lord Davies is right: what is the point of this amendment if it does not improve where we are? That is where the test has to be. We must look carefully at the responses and make sure we have the right view. There may be some argument for having something, either in this Bill or in the non-continuity Bill yet to come, if that is the Government’s intention. However, at this stage we are unable to say that, so with that in mind, but with thanks to all who have contributed to a very rich debate, I beg leave to withdraw the amendment.

--- Later in debate ---
Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

My Lords, I thank my noble friend Lord Lansley for moving this amendment. He has managed to get on to prime time in this territory. I once represented a seat on Teesside, which is very close to my heart. The idea has been advocated by the excellent mayor there, Ben Houchen, and by some of the local MPs, such as Simon Clarke and Rishi Sunak.

To reassure my noble friend, the Customs and Excise Management Act 1979—CEMA—allows for the designation of free zones, as he mentioned. The Taxation (Cross-border Trade) Act, which the Government passed through your Lordships’ House last September, allows HMRC to make regulations regarding goods kept in a free zone. Under CEMA, operators are free to apply to become a free zone. The Government are open to any ideas that might deliver economic advantages for the UK and will continue to examine the role that free zones may play as part of this. Assuming that we will have an independent trade policy, we will be able to have these types of examinations and innovations.

Existing customs facilitations in the UK offer the same benefits as free zones, but are not geographically limited and can be accessed anywhere across the country, thereby potentially having more widespread benefits for the UK as a whole. For example, a manufacturer could import materials for its products and store them in a customs warehouse anywhere else in the country, without duties being paid on them. The manufacturer or its supply chain could then use those materials in its manufacturing process under inward processing relief and could export the finished goods without any UK customs duty ever having to be paid. Those existing facilitations, therefore, avoid the distortions to which the noble Lord, Lord Davies, referred, which can arise from free zones where a manufacturer or its supply chain would be required to locate on the same site to benefit.

The UK’s ability to formulate a free zone that diverges from the Union customs code will depend on the future relationship with the European Union. The Government have also been clear that it is a commercial decision for operators to make on whether they want to apply for designation of an area as a free zone, and we will review any applications made. I am not able to be more helpful than that to my noble friend at this point, much as I may wish to be.

Lord Lansley Portrait Lord Lansley
- Hansard - - - Excerpts

Since there is no recent substantial experience of free zones, does my noble friend not think it would be helpful—if we arrive at the point where we exit the Union customs code—for the Government at least to initiate a consultation to look at the criteria that would be applied in examining the designation of free-zone status?

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

My noble friend will be aware that “consultation” has a specific meaning now in legal terms, which is quite an onerous responsibility of the process. We could seek ways to discuss—perhaps with BEIS as part of the industrial strategy—or to engage with others who are interested. He mentioned Humberside, Teesside and others, and I think we could look at ways in which that could be done. I am very happy to take that thought back to the Treasury and write to him further on that.

Lord Lansley Portrait Lord Lansley
- Hansard - - - Excerpts

Once again, I am grateful to my noble friend and that is a very welcome comment. I look forward to further discussion about that but, on that basis, I beg leave to withdraw the amendment.

--- Later in debate ---
Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

My Lords, a powerful case has been made by the party to my left. My sadness is that the framing of the amendment before us deals largely with how any future trade agreement with the EU should have a relaxed approach to the mobility framework and, picking up the point of our earlier debate, tries to insert in some measure the fourth pillar of the GATS process, which allows for individuals to travel in support of goods and services.

The case we heard, and the emotion it raises, are about the much broader ideas of freedom of movement and the ability to transfer skills, particularly in the creative industries. Although it was not specifically mentioned, presumably it seeks to try to loosen the way in which the Government currently treat overseas students. There is a wider, richer, deeper and more important argument about the need for mobility, its importance for any modern nation state and the contribution it can make to our economy and our culture. That needs to be answered, but it is not picked up particularly by this amendment.

We too discovered this problem when tabling amendments. The title of the Bill means that we can not have as broad a discussion as we would wish. However, there is an immigration Bill coming, and others in your Lordships’ House will want to pick up many of the points made here and raise them in the context of a much wider and more appropriate set of immigration conditions and arrangements, which will satisfy much of the discussions we have heard this afternoon.

On the narrow question of where we move, it would be wrong to try to seek a broader solution to the problems identified through a generic approach. There is no doubt that what appeared to be—and it was appearance rather than reality—unbridled immigration was a factor in the referendum that led to the formation of the Brexit arrangements. We would be stupid to ignore that. There are probably answers and solutions that would be satisfactory to all concerned, but not in this amendment. Nevertheless, I will listen carefully to what the Minister says in response to this point. This issue will not go away and we look forward to returning to it at a future stage.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I am grateful to the noble Lord, Lord Fox, for introducing this amendment, which deals with an important area already touched on this afternoon. It will of course be pored over in some detail as the immigration Bill makes its way to your Lordships’ House.

There is no dodging the key line in the political declaration. At paragraph 56, I think, it makes it clear that free movement will end as the UK leaves the EU. The noble Lord is passionate in his advocacy of free movement, and he has expressed his view that it is a stupid idea—I think I quote him correctly—to get rid of it. But, as the noble Lord, Lord Stevenson, identified, this issue is more complex. To use his term, unbridled immigration was an issue, and we would be stupid to ignore that. Therefore, there is a difference of views here but, as the noble Lord invites me to set out the Government’s position, I will put it on the record if I can.

I appreciate the desire to ensure that businesses and individuals who trade in services and goods between the UK and the EU will have the ability to move across borders to do so. The Government are committed to securing the best deal for UK businesses. We have set out a clear proposal for an ambitious future relationship with the European Union, including a reciprocal framework for mobility. This was reflected in the political declaration on our future relationship. The detail will be discussed in the next phase of our negotiations.

--- Later in debate ---
Earl of Clancarty Portrait The Earl of Clancarty (CB)
- Hansard - - - Excerpts

My Lords, earlier the Minister mentioned crossing borders. Would that include onward movement, which is a particular concern of not only individuals and self-employed people in this country but British people living in Europe? Time and again, I have heard that that is a particular concern.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I may not be able to get a categorical answer on that, but I am happy to undertake to write to the noble Earl ahead of Report to clarify that point.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed
- Hansard - - - Excerpts

The Minister said that perhaps this amendment would be better placed elsewhere, but I wondered why, in the sequence of events, the UK did not agree a temporary arrangement with Switzerland on continuity, for example, in the case that I raised earlier in Committee. Instead, the Government have agreed a permanent relationship arrangement with the Swiss for free movement of people for three months a year if they are providing services. Clearly, the Government thought it was not sufficient to wait until we debated the Immigration Bill, when we could have considered that aspect of our relationship with Switzerland and others. But the Government have made a decision. So as my noble friend Lord Fox indicated, it is right that we press the Government much more. Why did the Government make a case for giving Swiss nationals a permanent right of visa-free travel and work for three months a year, but are taking a distinct approach to other countries, including our EU partners?

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

Obviously, those are discussions that will have to be concluded in the future framework. On the specific point about Switzerland, however, the noble Lord suggested that the services elements were additional to the Government’s policy on immigration as set out in the Immigration Bill. That is not correct; it is not inconsistent with the provisions in that Bill.

On the point made by the noble Earl, Lord Clancarty, on onward movement for EU nationals, the UK pushed strongly for the inclusion of onward movement rights during the first phase of negotiations on citizens’ rights in the withdrawal agreement but the EU was not ready to include them at that time. I made that point about reciprocity earlier. We recognise that onward movement opportunities are an important issue for UK nationals in the EU and we remain committed to raising this during detailed discussions on our future relationship. That is the latest position we have at the present.

Lord Stoddart of Swindon Portrait Lord Stoddart of Swindon (Ind Lab)
- Hansard - - - Excerpts

There has been a lot of concern in the past that the position of the Commonwealth, relative to that of the EU, has been bad—that EU citizens and EU goods can come to this country without let or hindrance, whereas people and goods from the Commonwealth are unable to do so and have to take their place with the rest of the world. As I understand it, following our departure from the EU, our Commonwealth will be in the same position as people from the EU, and indeed the rest of the world. Can we be assured that the Government’s future policy in relation to the Commonwealth will ensure that it will have equal access?

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I listened very carefully to the final words that the noble Lord used when he talked about “equal access”, and I draw back from that a little. But on the broad principle, when we talk about the scheme of preferences and economic partnership agreements that we have with Commonwealth countries, if we have an independent trade policy, of course we will be able to take that into account. We would be free to do that. Similarly, if we are not part of free movement within the EU and have our independent immigration policy, we are in a position to set out the terms on which we want to admit people to work in this country. I hope that is helpful to the noble Lord.

Lord Fox Portrait Lord Fox
- Hansard - - - Excerpts

My Lords, I thank noble Lords for the minimal debate that we have had around this. I will look closely at Hansard, but I did not hear the Minister refer to the £30,000 threshold issue and the false dichotomy between skilled and unskilled. Between now and Report, I would like the Minister to come back to that, and I apologise if he did indeed raise it.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

Before the noble Lord sits down—I have always wanted to say that—I did have some notes on that. Perhaps I could intrude on the noble Lord’s wind-up to say that the Government are committed to ensuring that the future immigration system works in the international interests of all the UK. The Migration Advisory Committee advised that the £30,000 salary threshold should still apply. The Home Office is undertaking an extensive programme of engagement on its White Paper proposals and will discuss with business and a variety of other sectors, including the creative industries, what a suitable threshold should be. If a skilled job is considered to be in shortage in the UK, a lower threshold is likely apply. I hope that helps the Committee and the noble Lord.

Lord Fox Portrait Lord Fox
- Hansard - - - Excerpts

It helps somewhat, and I urge the Government to consult extensively with the care and food service sectors. Hygiene skills, for example, benefit the food sector a lot. I am sure most employees there earn less than the scheduled threshold. There is also the issue of freelancers and self-employed people. I will not get the Minister up again but I will be looking for a response on that. I also did not hear from Her Majesty’s loyal Opposition anything other than what I would call a very weak response. It was, frankly, disappointing. With that proviso, I beg leave to withdraw.

--- Later in debate ---
Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

I hesitate to become too involved in this debate, which seems rather above the level at which I am accustomed to operating, but one or two things came to mind. As the noble Lord, Lord Lea, explained to me and as came through in his address, the purpose of the amendment is to make sure that we explore all possible options before coming to a conclusion on the many difficult issues before us today. He has done that clearly and it will be interesting to hear what the Minister has to say in response.

It would probably defeat any prospect for active negotiation to play the card that has been played in this amendment at this point, but it is worth bearing in mind the issues that it raises and the much broader point that the noble Lord, Lord Finkelstein, was keen to explore: so many strands to our positioning are being coalesced into a single deal/no deal debate, squeezing out our opportunities for further, richer and more flexible solutions to the long-term problems that we have all recognised and debated today. At this point, it would be best to hear from the Minister what the official line is and then see whether there are issues that we need to come back to on Report.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I thank the noble Lord, Lord Lea, for setting out the rationale for his amendment. He was sincere in his attempt to persuade us and very thorough, as I would expect of a distinguished economist, in setting out in some detail his thoughts on where this option might go. Whether it is plan B, C, D or E, the reality is that it is a proposal that the Government take seriously and I want to respond to it in that manner.

As my noble friends Lord Finkelstein and Lord Trenchard have mentioned, the very topic of EEA membership was debated in another place in relation to the EU withdrawal Act on 13 June last year and again in relation to this Bill on 17 July. The outcome was clear: the EEA is not the right model for the UK.

Membership of EFTA and the EEA would mean accepting the continued free movement of people, which both Conservative and Labour manifestos pledged to end at the last election—which I suspect is why the noble Lord, Lord Stevenson, suggested that this might be a debate that the Labour Front Bench wished to sidestep; of course, on the Government Bench we do not have that luxury.

--- Later in debate ---
Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb (GP)
- Hansard - - - Excerpts

My Lords, I shall try to keep this brief, so I will not read out my amendment. We have heard a lot about the WTO over recent months; it is becoming the lazy answer to a lot of complex questions about how we withdraw from the EU. Some people are using the phrase “WTO terms” as if they are magic words that will solve all our problems. I was relieved to see the International Trade Secretary pouring cold water on those fantasies this weekend and I hope the Minister will take this opportunity to reinforce these statements in her response to my amendment.

For people such as me, who have spent most of their lives extremely sceptical of unaccountable, international governance structures, WTO terms are not the answer to our problems—they never have been. In fact, they are part of a global giant which undermines democracy and restricts the sovereignty of nations to implement their own policies. I find it hard to comprehend how anyone can complain about the EU being undemocratic and then champion the WTO as our saviour, using WTO terms to justify the most destructive and damaging route out of our current political stalemate. Many Greens, environmentalists and social justice campaigners have rallied against the WTO for decades and my amendment asks our Government to work towards adding some accountability to the WTO for reasons I will outline.

After the Second World War, there were two parallel, somewhat competing, initiatives which sought to establish an international system of rules and norms. One of these strands of thought gave rise to the United Nations, which has pursued peace, social development, environmental action and anti-colonialism as some of its fundamental aims. The opposing project established the Bretton Woods agreement, birthing the World Bank, the International Monetary Fund, and the General Agreement on Tariffs and Trade, which later became the WTO. This second strand of international co-operation placed the economic interests of the West, particularly the United States, far above the demands of developing countries, which were represented in the United Nations. Empires were dismantled but international institutions continue the exploitation of former colonies and the extraction of their precious resources. It is in this context that the WTO and the UN can be seen as somewhat at odds with one another.

More recently, the WTO has protected international economic management and trade from the environmental and social initiatives of the UN. I do not want to overstate the point because there are some WTO rules that allow environmental and other pressing needs to be addressed, but the WTO’s overarching purpose remains promoting international trade and eliminating barriers to trade. There are a number of examples of WTO rulings that interfere with environmental initiatives. The WTO intervened in an initiative of the Indian Government to rapidly increase the country’s production of solar panels and create a strong climate policy. Other WTO decisions have prevented companies adopting conservation rules that would protect endangered and declining species, such as dolphins, sea turtles and tuna.

There are many more examples of the WTO interfering with national sovereignty and international co-operation. The WTO has recognised that there are conflicts between itself and multilateral environmental treaties. It has identified 20 international environmental treaties that it considers could affect trade, such as banning trade in certain species or products—perhaps ivory, for example. The WTO notes on its website that no formal trade disputes have been brought with regard to these multilateral treaties, but I suggest that it is only a matter of time and must be playing on policymakers’ minds when making decisions.

The unique and complex problems posed by climate change, environmental damage and species loss, are not restricted to national borders. These issues are more important than trade. We know that there are now only—I was going to say 12 years—11 years and eight months to make fundamental changes to our economies if we are to have any hope of avoiding catastrophic climate change and ecological collapse. The fact that the WTO itself recognises that there is conflict between its rules and the multilateral treaties designed to avoid environmental disaster is proof that urgent reform is needed.

Our Government talk a good talk on the environment, but at some point they must deliver. That is why, with my amendment, I am asking the Government to negotiate to ensure that UN treaties are given priority and not undermined by the WTO. I hope that this amendment will be supported by everyone who recognises the urgency of the issues facing our planet and the need to reform global governance in response. I beg to move.

Baroness Fairhead Portrait The Minister of State, Department for International Trade (Baroness Fairhead) (Con)
- Hansard - - - Excerpts

My Lords, I thank the noble Baroness, Lady Jones, for providing this opportunity to discuss these issues by tabling her amendment.

With regard to the World Trade Organization, we operate under WTO terms if we are not in a free trade agreement—that is, if we are not a part of the EU or currently part of an FTA. For example, WTO terms operate for most of our current trade with the US. On the noble Baroness’s point about how we do not wish to leave without a deal and move exclusively on to WTO terms, that is the subject of a future amendment, to be discussed later this evening. I stress once more that that is not the Government’s priority, which is to secure a deal.

I will touch on the reform of the WTO. This is a key global priority, which was highlighted in recent meetings of the G20 and mini-ministerial summits held in Canada last year, and at the annual meeting of the World Economic Forum in Davos. I agree with the noble Baroness that WTO reform is essential to address the functioning of the organisation, including the strengthening of its negotiating arm. Indeed, when I attended the OECD Ministerial Council Meeting in Paris last year as the UK Government’s representative, I emphasised the importance of, and the UK’s commitment to, advancing WTO reform discussions.

This is important, given that trade discussions relevant to some of the most critical global issues, such as climate change—which the noble Baroness so passionately commented on—are currently stalled. This House discussed the current state of the WTO’s environmental goods agreement in Committee the week before last. I restate that we are strongly in favour of seeing these negotiations restart and of playing a key role in them, given the important contribution this agreement would make to tackling climate change, which is a key priority for the Government and this country.

However, the UK cannot require the WTO to modify its procedures in a way that secures the supremacy of international treaties that were arrived at under the auspices of the UN over trade agreements that were not. The WTO and the UN, I am informed by our lawyers, are two distinct independent organisations, with two distinct bodies of international law. The WTO is not part of the UN system and exists independently in international law. That position is combined with the fact that there is an established principle of international law that there is no hierarchy of sources of international law. Reform of the WTO therefore requires reform of the WTO’s own treaties, which has nothing to do with UN law, nor can it. Trade agreements, too, whether they seek to reform the WTO, or are secured bilaterally, must comply with the relevant law, which is WTO law. They exist outside UN law. I hope I have provided clarity on the legal situation in this area.

Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb
- Hansard - - - Excerpts

Does the Minister accept that climate risk has to be part of any sort of trade negotiations, in that it could disrupt all sorts of mechanisms worldwide—not only weather patterns but movement of peoples and so on?

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

My Lords, I think I have reiterated just how important climate change is to the Government’s priorities. The question is: what is the appropriate and most effective way to discuss climate change and to get rules put in place? There are differences of view over the most effective mechanisms, and many would say that trade agreements are not the right place. Others are more effective on that point. However, as we have tried to do and as the noble Baroness will have seen with our most recent trade agreements, such as CETA, we also include references to environmental standards.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

I am trying to help both sides come to an arrangement. I do not think that the noble Baroness whose amendment we are talking about is trying to set out a route map for the Government—if she is, she is doing it in a very gentle and responsive way. I think she is struggling, as we all are, with the question: if you want to make changes—which she so evidently does, and which a lot of us would support—what is the best way of doing that? Obviously, the noble Baroness has made it clear that you can do it on three levels. You can do it on a case-by-case basis as trade agreements come up, inserting the points you want to make. Alternatively, you can go through the United Nations, which is separate but still obviously influential as regards the wider tone and context in which these matters operate. But the central point, as the noble Baroness said, is that the WTO itself is in some difficulty. It may be all we have and the only way we can do it, but is the Minister seized of the arguments being made that the status quo is not satisfactory in so many ways that there needs to be some sort of movement around the whole issue, but presumably focusing on the WTO, and does she support that?

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

I thank the noble Lord for his intervention. Absolutely; I hope I restated that the WTO needs reform in areas such as digital, speed of processing and a number of others. We will continue to be an active participant in those discussions. Therefore, I can say yes to reform. On the particular area of climate change, we also have a clear objective: the Government want to improve the culture of climate change and the approach to it. It is about what is the best way to achieve that, and that is what we are focusing on. With those clarifications, I ask the noble Baroness to consider withdrawing her amendment.

Baroness Jones of Moulsecoomb Portrait Baroness Jones of Moulsecoomb
- Hansard - - - Excerpts

I thank the Minister for her answer and I thank the noble Lord, Lord Stevenson, for suggesting that I am in any way gentle; that is not a word normally applied to me, so I feel flattered.

I disagree so strongly with the government line that trade agreements are not the place to discuss, promote or encourage any sort of climate change mitigation measures. We cannot ignore any option for ameliorating what will be a climate crisis in a very short time. Therefore I very strongly disagree on that but, having made that disagreement clear, I beg leave to withdraw the amendment.

--- Later in debate ---
Lord Kerr of Kinlochard Portrait Lord Kerr of Kinlochard
- Hansard - - - Excerpts

My Lords, I support Amendment 77 for the reason that the noble Lord, Lord Lansley, has just given, and I strongly support Amendment 80, for the reason that my noble friend Lord Hannay gave.

Amendment 78, however, is very strange. I support it, but we are in Alice in Wonderland territory here. It is an entirely academic interest, because it seems to me implausible that Mr Barclay and Mr Paterson, and their high-powered alternative arrangements group, would come back to this alternative arrangement—the Chequers proposal—given that they ambushed the Government to take it out by their amendment to the taxation Bill.

It was always rather a fanciful idea anyway. In its brief life, it had several forms. First, it was proposed as a reciprocal arrangement. The foreigners would have to clog up Rotterdam, Antwerp, Hamburg and Bremen collecting our tariffs and operating our quotas, segregating our goods from goods going to the EU, which would be charged EU tariffs and subject to EU quotas. Once segregated, in some magic way, our goods would then proceed to the United Kingdom, having paid UK tariffs at their first European port of entry. That was never going to happen.

The second form, once noises from Brussels had been heard, was that we would do it for EU goods but the EU would not be required to do it for our imports at its ports. It was that, I think, which provoked the ire of the ERG: why should we collect foreign tax? But there was no possibility of the EU at any stage agreeing that we should collect its tariffs at our ports.

There are several degrees of lunacy here, and we have this very strange prohibition on the statute book. I think that the statute book should not contain nonsenses, and so I support the amendment. However, it does not matter. The EU would never agree this proposal in any of its incarnations. Mr Paterson, Mr Barclay and these other trade experts are not going to come up with it as an idea in the alternative arrangements committee, because they were dead against it. Therefore, although I support the amendment, I do not think one need spend a lot of time on it.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

My Lords, I rise more in hope than expectation of being able to persuade your Lordships. I pick up the sense from the Committee that this is probably something that your Lordships will want to return to in more depth on Report. Perhaps the best service I can offer at this stage is to put on record the Government’s position, respond to some of the precise points and then await further developments as they may unfold between now and Report.

Amendments 77, 78, 79 and 80 relate to changes passed in the other place during the passage of the Taxation (Cross-border Trade) Act 2018. This Act is important legislation as the UK leaves the EU. It enables the Government to create a stand-alone customs regime by ensuring that the UK can charge customs duty on goods, set and vary the rates of custom duty, and suspend or relieve duty in certain circumstances.

I turn now to the substance of the original amendments to the Act, which these amendments seek to remove. Amendment 77 relates to Section 31(5), which requires further parliamentary scrutiny in the event that the power under Section 31(4) is used to implement a customs union with the EU. The Government support the principle of further parliamentary scrutiny in this case. My noble friend Lord Lansley suggested that this was perhaps reflective of the politics of the movement. As a distinguished former Leader of the House in another place, he will be very familiar with how that side of things works. However, as this House is aware, the Government have made it clear that they are not seeking to be in a customs union with the EU as part of our future economic partnership—I say that without wishing to reopen the many debates we have had on “a” and “the”.

It is important to reflect why the Government have taken this view and to consider what leaving the EU means. It means the ability to strike out on our own to forge new trade deals. In order to do this, one important element is to have the ability to set our own tariffs. Being in a customs union would deny the UK this ability and fundamentally undermine our capacity to negotiate new trade deals with old friends and new partners.

The noble Lord kindly outlined, as he saw it, the way in which Amendment 78 arrived, referencing first the Bill and then the amendment. The Government have been clear in their White Paper that the arrangement they are seeking will ensure that both the UK and the EU get their fair share of the revenues from the rest of world trade. Section 54 of the Taxation (Cross-border Trade) Act is in line with the proposals that the Government set out with a view to achieving just that.

Turning to Amendment 79, Section 55 of the Taxation (Cross-border Trade) Act 2018 requires a single UK customs territory. This is a statement of government policy and ensures that the Government will not act incompatibly with the commitments made in the joint report of December 2017, where they committed to protect the constitutional integrity of the UK.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed
- Hansard - - - Excerpts

I apologise for interrupting the Minister. I want to add perhaps another degree of lunacy to the several mentioned by the noble Lord, Lord Kerr. New Section 31 of the taxation Act, which Amendment 77 seeks to rectify, contains the following phrase:

“In the case of a customs union between the United Kingdom and the European Union”.


The Government said that that would not apply because the customs territory they are seeking to have will not be a customs union. So even if just to make the legislation neater, it should be taken out.

On defining the scope of the single customs territory, which we are seeking to do, the Government’s Legal Position on the Withdrawal Agreement, command paper 9747, says it is that,

“under which the UK aligns itself with the Union’s external tariff and there can be no tariffs or quantitative restrictions on imports and exports between the UK and the EU. The single customs territory therefore constitutes a customs union for the purposes of GATT19, but it is not the EU’s customs union as defined in Article 28 TFEU”.

It can either be one thing or the other, but the Government’s own document on the legal position says that the customs territory will be a customs union.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I will make some progress, but I will come back to that point—when inspiration arrives.

No UK Government, regardless of their political leanings, could ever accept such a carving up of the United Kingdom—I am referring here of course to the division between Northern Ireland and the Republic of Ireland. Indeed, on 15 October, in another place, the Prime Minister said:

“We have been clear that we cannot agree to anything that threatens the integrity of our United Kingdom, and I am sure that the whole House shares the Government’s view on this. Indeed, the House of Commons set out its view when agreeing unanimously to section 55 in … the Taxation (Cross-border Trade) Act 2018 on a single United Kingdom customs territory, which states: ‘It shall be unlawful for Her Majesty’s Government to enter into arrangements under which Northern Ireland forms part of a separate customs territory to Great Britain.’ So the message is clear not just from this Government but from the whole House”.—[Official Report, Commons, 15/10/18; col. 410.]


Turning to Amendment 80—before I come to some of the points raised during the debate—the Government’s position is that they will not seek to be in a customs union with the EU. We have debated this issue in this House and in the other place throughout the passage of this Bill—leaving aside the very clear response that is on its way to the noble Lord; he should be prepared for that. As has already been highlighted to the House, at Report stage in the Commons, MPs rejected an amendment seeking to keep the UK in a customs union with the EU.

On the specific points relating to import VAT, it is clear that the Government are highly cognisant of the concerns raised. I will deal with that point now because the noble Lord asked some very good questions on VAT treatment, and it is good to have an opportunity to put the position on the record. Goods from third countries are treated as imports, with VAT due accounted for on import or by the 15th of the following month as duty of customs. This means that, unlike acquisitions, there is a cash-flow impact because traders have to pay the import VAT and potentially recover it later when they submit their VAT returns. It also means that there needs to be an option to pay import VAT on the border, as not all businesses have the necessary guarantee to defer payment until the following month. Generally, import VAT is paid sooner on goods from non-EU countries than on goods from EU countries. This provides a cash-flow benefit to companies importing goods from the EU compared to businesses that import from non-EU countries. Without an UK-EU agreement to retain this treatment, goods entering the UK from the EU would be treated as imports and would be subject to the same rules as businesses moving goods from non-EU countries. This would mean businesses paying VAT on imports from the EU sooner, affecting their cash flow. The Government published a series of technical notices in August 2018 to help businesses prepare for the unlikely event of a no-deal scenario. The VAT technical notice, “VAT for businesses if there’s no Brexit deal”, announced that the Government will introduce postponed accounting for import VAT on goods brought into the UK.

The noble Lord, Lord Stevenson, asked why we accepted Section 54—originally New Clause 36—of the Taxation (Cross-border Trade) Act 2018. The Government did so because it was consistent with our position. It requires the Government to negotiate a reciprocal arrangement for the collection and remittance of VAT, customs and excise duties. The Government have been clear that both the UK and EU should agree a mechanism for the remittance of relevant revenue. The Government set out in their July White Paper that they propose a revenue formula that takes into account goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.

The noble Lord, Lord Purvis, asked whether the customs territory is a customs union under GATT, and he deserves a full answer to his detailed question, so I commit to writing to him. That should be very clear to the noble Lord and all Members of the House—well worth waiting for.

Lord Berkeley of Knighton Portrait Lord Berkeley of Knighton (CB)
- Hansard - - - Excerpts

I ask this question as someone who is not a politician and who therefore sometimes gets quite confused about the repetition of entrenched views, which have led us to the undoubted stalemate that we are in. This really concerns the point made by the noble Lord, Lord Lansley. I heard the Minister’s response, but it seems to me that everything I hear about Brexit suggests that the Northern Ireland backstop is a real sticking point. Is it not conceivable that, to get around that problem, the Government might have to consider some form of customs union?

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

It is a challenge when someone with the noble Lord’s intellect begins a sentence by apologising for not being a politician and then asks for clarity at the present time. We are discussing this legislation, but we all know that we are in one of the most fast-moving, dynamic episodes of negotiation that this country has ever entered into. We are gradually working our way through. The White Paper was published at a moment when we were seeking to flesh out exactly what the Government’s position was in response to the Commission saying, “We don’t know what the UK’s position is; we don’t know what they want”. Therefore, the White Paper was introduced at that point. Then there was the clamour for clarity for business—what it would do in the event of no deal—so the technical notices were issued. Then, we got to the position where we reached an outline agreement with the European Commission in December, against many people’s expectations, along with heads of terms for what a future economic partnership might be. That was then presented to the other place and roundly rejected. Therefore, we have now begun another process, so I readily accept that if one wants to score points by stopping the clock at various stages along the process and pointing to certain inconsistencies in it, the Government are pretty easy fare for that.

Lord Kerr of Kinlochard Portrait Lord Kerr of Kinlochard
- Hansard - - - Excerpts

The Minister is making a very gallant effort and I applaud it. I enjoyed many of the things he said, particularly when he referred to a no-Brexit deal. I thought that was a very encouraging concept. I really cannot let him get away with where he is now, in this fast-moving situation he describes. Put yourself in the place of the EU 27: what are they supposed to think when the Prime Minister scuttles her own fleet? She orders her party to vote down the backstop in the treaty. The backstop is 21 articles, 10 annexes and 172 pages. The Prime Minister’s officials have negotiated that line by line, month by month and it is there because we asked for it. Then she decides that the best thing to do with it is to replace it with alternative arrangements, which are now being devised by Mr Owen Paterson and Mr Stephen Barclay. The Minister tells us that this is a fast-moving situation and it is quite hard to keep up with it, but there is nothing happening in Brussels but sheer astonishment at the failure of our system.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

That is the noble Lord’s position on this: the reality is that the Prime Minister is seeking an agreement that can command a majority in the other place and that requires compromise. That is what the agreement represents. The House made its view on the withdrawal agreement clear; she is now seeing whether that can be addressed with the Commission. Personally, I wish her well and every possible success, as opposed to my own mis-speaking. Lest it be on the record, I am sure that Sigmund Freud would have observed that perhaps I had momentarily let slip an inner feeling, which, of course, has nothing to do with the position of Her Majesty’s Government, which I consistently seek to put forward from this Dispatch Box and proudly support.

The noble Lord, Lord Purvis, asked about support for government amendments that preclude the facilitated customs arrangements. We would argue that there is nothing about the amendments made to the Taxation (Cross-border Trade) Act in the other place that is inconsistent with the draft political declaration that will inform the future relationship. On the point made by the noble Lords, Lord Hannay and Lord Stevenson, about insufficient focus on VAT implications, the Government have been clear that we are aware of the potential impact on businesses of any move away from the concept of acquisition VAT, but we have also set out that in any scenario we are seeking to avoid any adverse effects. Amendment 80 does not affect that in our view.

Lord Fox Portrait Lord Fox
- Hansard - - - Excerpts

On that last point, we keep talking about 29 March, but of course sales are already being made and shipping has already been arranged that may well arrive in this country or continental Europe after 29 March. The business decisions to invest, to make things and try to sell them have already been made, so minimising the impact is not possible. The impact has already started.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

Yes, there is a reason why we have brought back the agreement—to resolve the situation.

As for whether the amendments have been considered in the other place, the other place voted for two of the original amendments and had the opportunity to vote on another two but decided not to do so, so the other place made its view clear on that point.

Lord Hannay of Chiswick Portrait Lord Hannay of Chiswick
- Hansard - - - Excerpts

On this point about VAT, I hope the Minister will forgive me for saying that he and I are probably slightly out of our depth on the detail of how this will work. From what he just said and from the guidance that he read out at some stage, it sounds as though the Government and HMRC understand that potential friction will come into our trade with the EU if we do not ensure that something like the present arrangements continue. Back in the 1980s, when I was involved in the matter, we avoided a perfectly appalling idea by Lord Cockfield of having a clearing house in Brussels into which everyone would pay all this VAT. We have a frictionless system and it sounds as though the Government understand that that should be preserved. But I rather doubt that that is consistent with the Taxation (Cross-border Trade) Act, because of the amendment on VAT that was put in by the ERG.

The best thing that we could ask of the Minister this evening is to go back and consider very carefully whether the Government should either accept Amendment 80 or give some fairly lengthy explanation of what they will do and how that is—if it is—consistent with the Act now on the statute book. That would be best. Then, when we return to this on Report, we will all have probably learned quite a lot.

Lord Bates Portrait Lord Bates
- Hansard - - - Excerpts

I am very happy to give an undertaking to the noble Lord that I will reflect with colleagues, particularly my noble friend Lady Fairhead, on the comments made on these amendments, notwithstanding the points that I have put on the record about the Government’s position. We can return to these on Report and I will seek to give some further information in the gap in between Committee and Report. I hope, in the meantime, that the noble Lord will feel able to withdraw his amendment.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

That was an interesting and enlivening evening. I have come up with a brilliant title for my forthcoming novel—Seven Degrees of Lunacy, or could it be eight? That might be easier, although I doubt it. I have speculated at length about whether we are in Alice in Wonderland, as was suggested, but my favourite suggestion is that we are in Gormenghast, because we seem to be trapped in structures not of our own making, with a design that is not of our wish and with an outcome that is very uncertain and probably leads to madness. But enough of that.

One unifying thought was summed up neatly by the Minister in his last remarks when he said that we needed to think a little harder about what the problem is. Everyone who has spoken, other than the Minister, took the view that these issues had a common theme—the reasons may be different but the theme is that they all have the potential to derail us later down the track. The Government should think about that issue rather than the particularities of these issues. If it is going to be problematic to get an agreement in both Houses on a Motion for an extension of a customs union, because of the argument made by the noble Lord, Lord Lansley, about the inherent asymmetry of one set of rules for the US and another for the EU, that may not be helpful. I do not think we are saying any more than that. There is an opportunity here to do something to ease the roadblocks that we can see down the track, whichever track we go down.

Amendment 78 was part of the Chequers arrangements but is now otiose and it is not beyond the wit of others to point out that it still exists in statute and might cause difficulty further down the line. Amendment 79, as my noble friend Lord Hain said, bears directly on the backstop. Is it really sensible to have this power hanging over us in another piece of legislation as we get to the later stages of that, if that is what is going to happen? On VAT, it is not really about the agreement that might be coming but a broader issue about VAT in general, because there might be a better way of collecting VAT that originates outside the UK. It is complicated and a short meeting might be a way to find the common ground that we want to take forward. I am grateful to the noble Lord for wading through that and having the doubtful honour of assigning his name to it in Hansard. It is useful to have it there and we will study it carefully.

I think there is time to have another look at this. Even if we disagree on some of the issues, it cannot be right for Parliament to pass legislation that it knows is not going to be of any use. I think that was the point the noble Lord, Lord Berkeley, was making. If this is where we are, why do we just not do it? We could do it differently and see if we can use the time to clear it up properly. That is the way I would like to see it go forward but it is not in my hands. I beg leave to withdraw the amendment.

--- Later in debate ---
Baroness Neville-Rolfe Portrait Baroness Neville-Rolfe
- Hansard - - - Excerpts

On Amendment 101A, I agree with proposed new subsection 1(c), where you have,

“a chief executive appointed by the Chair with the approval of the Secretary of State or, if the first Chair has not been appointed, by the Secretary of State”.

The latter has already happened, so, as the noble Lord said, that becomes redundant. However, I am not convinced that all the executive members should be appointed by the chair without reference to Ministers. I have been involved in lots of appointments in different bodies over time, and the fact of the matter is that normally appointments are put forward and are approved ministerially, and this helps make the appointments sensible, enduring and independent.

For the same reason, I do not agree with the suggestion of the noble Baroness, Lady Brown, that we should require representatives of different groups. I can see exactly what she is trying to achieve, which is to have good, sensible people who would care about economics, people and devolved Administrations. However, my own experience is that if you restrain yourself in this way, you find that you are looking for somebody who has to be in a specific category, maybe there is nobody of quality at that time—especially as the pay rates in quangos are quite low compared with other opportunities for these people—and you get yourself into difficulty. I would favour simplicity, and independence achieved by having a separate agency, whatever my views may be on that.

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

My Lords, I thank all noble Lords for their contributions to this debate. In particular, I thank my noble friend Lady McIntosh for the first grouping, and the noble Lord, Lord McNicol, for the second. I confess that I was grateful to the noble Lord, Lord Stevenson, for helping me merge these two groupings, but I was probably even more grateful to the noble Baroness, Lady Brown, for saying that she would not extend that to the next grouping as well.

I will try to address these as best I can, given the significant number of elements that were raised. Clearly, a key priority of the Government is to help businesses expand their global presence. However, while we work to help increase exports, we must ensure—I hear complete agreement on this around the Committee—that our domestic industries are shielded from the damaging effects of unfair trading practices and unexpected surges in imports. That is exactly why the Government are setting up the new Trade Remedies Authority—TRA—to give that safety net to businesses, which is provided for by Clause 9 and Schedules 4 and 5.

My noble friend Lady McIntosh of Pickering asked how this related to the Constitution Committee’s report. I can confirm that the Government have responded to that report. The main functions and powers of the TRA are set out in the Taxation (Cross-border Trade) Act, and setting up the body, as we are doing in this Trade Bill, is normal practice.

Free trade does not mean trade without rules. The WTO allows its members to provide a safety net, which we are doing. This safety net usually takes the form of an increase of duty on imports of specific goods following an investigation. Trade remedies, as these increased duties are known, are vital to level the playing field and restore our competitive balance. That is critical in areas such as ceramics, steel, and a number of other sectors. Failing to put the trade remedy function in place would have a damaging effect on those industries and the UK economy more widely, and we cannot let that happen.

As several noble Lords have mentioned, this is currently an EU competence. Investigations, decisions and monitoring are carried out by the EU Commission on behalf of EU member states. Once the UK leaves the EU, the European Commission will no longer perform those functions. That is why we are creating the TRA. This will ensure that we can continue to provide that safety net and help protect the 2.5 million people who work in the ceramics industry, for example. The framework for our trade remedy system is set out in the Taxation (Cross-border Trade) Act 2018. My officials worked with UK industry, including the ceramics and steel industries, during the development of that framework.

My noble friend Lady McIntosh asked about secondary legislation on injury calculations. The detail of the technical assessments of the TRA will be set out in secondary legislation under the Taxation (Cross-border Trade) Act. This has already been passed by the other place, which agreed that the negative procedure is the appropriate scrutiny mechanism.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering
- Hansard - - - Excerpts

This is a new procedure, but presumably it is open to an individual Member of your Lordships’ House to intervene to say that they do not agree with the negative procedure and switch it to the affirmative if they made the right case to do so.

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

I confess that I am unaware of the protocol in this regard. It is a ways and supplies Act and was deemed by the Speaker to be such, but I will leave that point to those who are more au fait with protocol.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

I am not sure that this will help very much, but a negative procedure is a negative procedure. It can be questioned, but the way to do so is by tabling an amendment within the requisite period after the order has been laid that would be fatal to it. That is normally described as the nuclear option, which suggests that it does not happen very often—in fact, it has happened only once in the past five years, I think; and we on this side of the House are certainly chary about doing it. The affirmative procedure is actually not that much more effective: you still need the nuclear option, but at least there is a requirement on the Government to bring it to the House, so it will be debated, irrespective of their wishes.

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

I thank the noble Lord for that clarification.

My noble friend also raised the economic interest and public interest tests and how they would be interpreted by the courts. The economic interest test will be based on the list of economic criteria set out in the Taxation (Cross-border Trade) Act—I think I will call it the TCBTA for brevity. The TRA must take all of those into account, and so must the courts. With regard to the public interest, as part of the final decision-making, the Secretary of State will have an opportunity to intervene where there are circumstances in which the imposition of trade remedy measures are not, in his or her view, in the public interest. This could include national security considerations, for instance, but other examples may arise in individual cases, so it is important that the Secretary of State has a degree of discretion in this area such that all wider public interest considerations are taken into account. The ability of Ministers to undertake a final sense check in this way is a common feature in many comparable regimes, such as Australia and Canada.

Stakeholders have expressed their support for the establishment of the TRA. The CBI said that it strongly supported the initiative to set it up, and the British Ceramic Confederation called for the Government to prioritise the TRA to ensure that it will be fully operational by the March 2019 deadline, and this must include appointing the board.

The final area raised by my noble friend was about whether poor social and environmental standards would be taken into account. We recognise that the EU has recently introduced reform to take poor social and environmental standards into account. The UK plays an active role in upholding labour and environmental standards across the world both as a member of the ILO and by actively promoting human rights. However, our view is that trade remedy cases are not an appropriate vehicle for such issues, and these factors are not referred to in the WTO. We want to ensure that economic growth, development and environmental protection go hand in hand. We are exploring all options in the design of future plurilateral and bilateral trade and investment agreements, including with regard to human rights and environmental and labour protections. In practice, any cost advantages enjoyed by an exporting country as a result of low labour or environmental standards or costs will be reflected in its export prices and hence will already be taken into account when calculating the injury margin.

I turn now to Amendment 82, tabled by the noble Lord, Lord Purvis, and Amendment 83, tabled by the noble Lord, Lord Stevenson. I assure the Committee that Clause 10(1)(b) already allows the Secretary of State to seek,

“advice, support and assistance … in connection with the … functions of the Secretary of State relating to trade”.

This could include the conduct of trade within a customs union and the impact of third-country trade remedy measures on UK consumers. Were we to accept this amendment, it could undermine the intended non-exhaustive nature of the current drafting and potentially make it less effective.

On Amendment 84, tabled by the noble Lord, Lord McNicol, we appreciate the need for the TRA’s activities to be transparent. Paragraph 31 of Schedule 4 already requires the TRA to report annually on the exercise of its functions. We would therefore expect the TRA to record any requests from the Secretary of State for advice, support and assistance in its annual report. This is because this would be considered part of the TRA’s statutory functions. We therefore do not feel that this amendment is required.

Turning to Amendments 101A and 103B, tabled by the noble Baroness, Lady Brown, whom I met last week, I confirm that we are committed to supporting UK manufacturers and producers. That is why we have engaged so extensively with industry during the establishment of the TRA. However, we do not believe that representatives of any specific organisation should be on the TRA board. It is vital that it is, and is seen to be, wholly impartial, and for the membership to be based on securing the right blend of skills and expertise. That said, I assure the Committee that the TRA chair job description makes it clear that they will be expected to maintain effective relationships with stakeholders—including manufacturers, trade unions and the devolved Administrations—and to incorporate their perspective into board discussions where appropriate. We will also ensure that the appropriate terms on working with stakeholders are included in the terms of the TRA chair’s contract. Some of the TRA’s wider senior leadership, including its non-executives, may have experience in a particular sector, devolved nation or region. However, that alone must not be why they were chosen. The noble Baroness, Lady Brown, also asked whether we could have specific representatives. We believe that could possibly undermine the TRA’s independence and impartiality, and we want to make sure that the TRA’s expertise is complete by allowing the board members to be appointed not on the basis of where they are from but because they have the right skills and expertise for the blend of skills required on the TRA.

On Amendment 102, I assure the Committee that we are committed to ensuring the independence, impartiality and expertise of the board. That is why the Secretary of State has requested that the Commissioner for Public Appointments regulates all public appointments to the TRA.

My noble friend Lady Neville-Rolfe asked why we were setting up a new body rather than just exercising the function within government. I agree entirely that the important thing is that the board has to be independently minded. Decisions on these cases can have a profound impact on the markets. That is why we need an objective and independent investigation process that businesses can trust. The TRA will be responsible for carrying out detailed technical investigations and delivering impartial recommendations on trade remedies to the Secretary of State. The Secretary of State will then be responsible for making a final determination on whether to accept or reject recommendations to impose measures.

We have also been asked—again, by my noble friends Lady Neville-Rolfe and Lord Lansley—why we have not established the TRA as an executive agency. We looked at best-practice comparable agencies across the world, and we are trying to ensure the right balance between independent, impartial, objective investigations that our businesses and trading partners can trust and accountability. That is the critical thing that we looked at.

The Commissioner for Public Appointments will be responsible for providing independent assurance that the Secretary of State follows the Governance Code on Public Appointments when appointing TRA non-executives. He or she will be required to comply with the governance code, which outlines rules around term lengths and renewing the appointments of non-executive members. Executive members will be TRA public servant staff, whose recruitment will be made in compliance with the usual public sector rules. The governance code makes it clear that:

“The ultimate responsibility for appointments … rests with Ministers”.


It states that there is an important role for Parliament in ensuring Ministers are held,

“accountable … for their decisions and actions”.

However, this scrutiny should not extend to approving or vetoing their appointments. This would be an expansion of standard Select Committee powers.

Amendment 103, tabled by the noble Baroness, Lady Jones, concerns maintaining safety and public confidence in the food we eat. She is not here, so all I can do is confirm that this Government will remain committed to environmental protection standards once we have left the EU.

Amendments 103A and 107A were tabled by my noble friend Lord Lansley. I reassure noble Lords that this power is intended simply as an operational contingency measure in the TRA. As such, it can be used only before the first chair has been appointed. My noble friend and other noble Lords asked whether that still makes sense given we now have a chair-designate. I will definitely reflect on that, because it is a good point. On appointing the chair, as I said, the chief executive will be a public servant and, as my noble friend Lord Lansley agreed, it would not be appropriate for a Select Committee to be involved in their recruitment. I assure the Committee that the chief executive-designate has been recruited on merit following a fair and open competition, in line with the Civil Service Commission Recruitment Principles. All future TRA chief executives will be appointed on the same principles.

My noble friend Lord Lansley and the noble Lord, Lord McNicol, asked whether the ITC should conduct pre-appointment scrutiny. It is the view of officials in the department that the TRA chair role does not meet the Cabinet Office’s criteria for determining whether public appointments should be subject to Select Committee pre-appointment scrutiny. However, we are committed to ensuring that appointments are conducted in the right way, consistent with standard practice across government. The governance code states:

“Ministers when making appointments should act solely in terms of the public interest”,


and, likewise:

“All public appointments should be governed by the principle of appointment on merit”.


We therefore feel that there is already sufficient oversight and scrutiny of that process in place.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

I will intervene before the noble Lord, Lord Lansley, does—I am sure he was just about to. I do not want to extend this, but the noble Baroness has just spent slightly longer than three or four minutes playing up how important this role is and how crucial the new body will be to the future of our trading policy. She explained, in some detail, the difficult position, the reason it is independent and everything else. She cannot also then argue that it does not fulfil the very clear lines given by the noble Lord, Lord Lansley, on the important need for independence and for it to be seen to have the trust of all concerned, including Parliament. Will she take that back?

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

I am happy to take that back. I have heard the point. I asked whether there was a practice and was advised that this was the view we had arrived at, but I will certainly reflect on what the noble Lord said and take it back for further consideration.

On Amendment 104, tabled by the noble Lord, Lord McNicol, it is important that the Secretary of State has the ability to ensure that the TRA has the right leadership in place. Again, I reassure the noble Lord that the practices and procedures will be followed.

My noble friend Lord Lansley speculated on whether we could use an existing arm’s-length body rather than create a new one. There are two reasons why we believe we need to create a new non-departmental public body. First, no existing NDPB possesses the required pool of talent and expertise, or, secondly, offers the right balance of independence and ministerial oversight, to deliver the trade remedies framework as set out in the TCBT Act. I can confirm that we reached that decision following a thorough review of the arm’s-length bodies landscape.

Amendments 105 and 106 refer to the Secretary of State, rather than the chair, appointing executive members of the TRA board, and would therefore expand the Secretary of State’s appointment powers. We believe that might undermine the TRA’s independence. It would also be undesirable to include a statutory requirement to have regard to this set of criteria, as it might be unnecessarily restrictive. My noble friend Lady Neville-Rolfe has great expertise in this area. As she knows, it is important to have the right skills and the right blend on a board. For example, it may be important for some executive members to have HR or finance experience to ensure the TRA’s smooth operation. This would be a decision for the TRA chair.

Turning to Amendment 107, under paragraphs 9 and 10 of Schedule 4, the TRA chair is able to remove an executive member of the TRA board, and the Secretary of State a non-executive member, if they consider that person,

“unable or unfit to carry out the functions of the office”.

This already allows the TRA chair and the Secretary of State to determine whether to remove board members in the event that they become insolvent, receive a criminal conviction or are otherwise deemed unsuitable. We therefore do not believe that this amendment is necessary. In addition, all members of the TRA will be required to comply with the Cabinet Office’s Code of Conduct for Board Members of Public Bodies, which sets out the seven principles of public life that should govern the behaviour of public officeholders.

Turning to Amendment 108, let me assure noble Lords that the TRA will be required to follow the relevant provisions in Managing Public Money, which sets out that arm’s-length bodies must maintain a register of gifts. We would also expect the TRA to record in its annual report any gifts it receives.

I thank the noble Lord, Lord Stevenson, for tabling Amendment 109. We welcome the devolved Administrations’ interest in the TRA and understand the need to ensure that they are able to engage with it in the right way. I can confirm that the Secretary of State has committed to sharing the TRA’s annual report with the devolved Administrations once he has received it. I can also confirm that we have been in contact with, and will shortly be writing to, the devolved Administrations setting out further commitments.

On Amendment 110, tabled by the noble Lord, Lord McNicol, there are certain situations where the Secretary of State will need to issue guidance to the TRA. That is why it would not be appropriate to set out certain detail in legislation. Issuing guidance instead of legislation would give the TRA the operational flexibility it needs to be able to decide how to deal with matters on a case-by-case basis. However, to protect the TRA’s independence, and to ensure that this power is used only in appropriate circumstances, we have placed clear statutory restrictions on the Secretary of State’s ability to issue that guidance.

I am aware that I possibly have not fully answered the question from the noble Baroness, Lady Brown of Cambridge. We recognise the critical role played by producers and manufacturers: that is exactly why we have put a system in place and engaged extensively. We look forward to continuing to do so.

My noble friend Lady McIntosh suggested that it was not adequate that the Secretary of State was required only to have regard to the independence, impartiality and expertise of the TRA. The imposition of a duty on the Secretary of State is a common approach and can be found in other relevant legislation. For example, the Higher Education and Research Act 2017 requires the Secretary of State to have regard to the need to protect the institutional autonomy of English higher education providers when issuing guidance to the Office for Students. These are statutory requirements and cannot be ignored.

Lord Purvis of Tweed Portrait Lord Purvis of Tweed
- Hansard - - - Excerpts

I do not wish to make a glib point, but the Minister has referred to the Office for Students. The episode in relation to that office should remind us why we take seriously these aspects about the recruitment of those who will be the most senior in the TRA office. The Office for Students should be a good example for the Government of how an appointment process, while it might be prescribed in legislation, can be conducted very badly in practice. We are trying to avoid a repeat of what happened with the Office for Students.

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

I am grateful for that clarification, but that is one example that was just plucked out and it has a clear statutory requirement.

On the basis of the information I have given and my commitment to take some of these points back for reflection, I ask noble Lords not to press their amendments.

Baroness McIntosh of Pickering Portrait Baroness McIntosh of Pickering
- Hansard - - - Excerpts

I am most grateful to the Minister for her full response. Picking up the mood of the Committee, I think there are a number of issues here on all sides that were reflected in the other place. We do not wish to delay the debate this evening, but we will return to this issue on Report. That is no reflection on my noble friend’s views, but perhaps on the intransigence of her department.

--- Later in debate ---
Lord Lansley Portrait Lord Lansley
- Hansard - - - Excerpts

The noble Lord, Lord Stevenson, is absolutely right that the economic interest test is present in both Schedules 4 and 5 to the Taxation (Cross-border Trade) Act. As set out there, the test seems to me to be capable of being, and is required under the legislation to be, taken down to the level of individual industries, looking specifically at affected industries and consumers and the likely impact on particular geographic areas or particular groups. It seems to me that the economic interest test is already capable of being disaggregated in the ways that the noble Lord is calling for.

The noble Lord and I have joined together on the issue of the public interest test in the past. I am not sure that you can define it in advance—that is the difficulty with it. Trying to write down what public interest the Secretary of State has to weigh up seems to be intensely difficult, as distinct from the economic interest test. It might include defence industries and security interests, and we see that coming through in relation to competition. We also see it in broadcasting and competition regimes. There are a range of competition-specific public interests, and I do not think that we are necessarily looking to restrict the test in that way in this legislation. Frankly, we might be better off simply looking at it and, if there are particular public interests that have to be protected as time goes on, we should perhaps have the power to add to them by way of regulation, as is the case with competition legislation.

Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

My Lords, I thank the noble Lords, Lord Stevenson and Lord McNicol, and the noble Baroness, Lady Brown, for tabling these amendments. I take the opportunity to clarify initially that the Trade Bill does not set out the policy framework that the TRA will be responsible for operating. These provisions are already set out in the TCBT Act 2018, including the economic interest test, which places a requirement on the TRA to consider the wider economic impacts of imposing measures on other affected groups, such as downstream users and consumers.

The economic interest test provides continuity from the Union interest test in the current EU system. However, we listened carefully to concerns that the Union interest test is, for example, too opaque and does not set out how different interests are to be considered. Therefore, as my noble friend Lord Lansley correctly stated, the Act specifies the economic factors which must be considered under the test, and that will provide businesses with greater clarity over how the test is applied. That is what business has asked us to do. In terms of the public interest test, I can only endorse what my noble friend Lord Lansley said.

In addition, there is an explicit presumption in the Act that, where injury is caused by dumped or subsidised goods, the TRA will make a recommendation to the Secretary of State for the imposition of measures. The Government amended the legislation during its passage to make that absolutely clear. The burden of proof rests on the TRA to show that measures will be detrimental to the wider economic interest; otherwise it must make a recommendation, and any failure to do so will be subject to appeal. I assure your Lordships—particularly the noble Baroness, Lady Brown, who raised this matter—that this presumption will have the effect of ensuring that special consideration is given to the injury caused to UK industry by imports of dumped or subsidised goods. I wanted to say that explicitly in Committee here because I know of some of the concerns in the ceramics industry.

The Act also places the same presumption for the imposition of measures on the Secretary of State and makes clear that the Secretary of State can only reject the TRA’s recommendations for measures on public interest grounds, or where he determines that the economic interest test is one the TRA could not reasonably have made. Any such decision can be appealed by interested parties and must be explained in a Statement to the other place.

With respect to Amendment 87, tabled by the noble Lord, Lord Stevenson, I remind the Committee that we are committed to ensuring that our industry receives protection. That is why we will transition those EU measures that matter to UK industry, including on steel, ceramics and chemicals, into our system once we have our own, independent trade policy. We will monitor the effectiveness of the trade remedies system and, if we find that it is not working as it should, we will of course make any changes necessary.

As I mentioned before, I am sure that the Committee will understand that the public interest issue is not something we can review or consult on. What constitutes public interest will change depending on the economic and geopolitical circumstances of the day, and the Government must have the flexibility to respond to such changes. This is a power that we expect to be used in rare cases and, when it is, again the Secretary of State will be required to lay a Statement before the other place justifying its use.

Your Lordships have raised rightful questions on the role of the devolved Administrations in relation to trade remedies. Importantly, the economic interest test mandates that account must be taken of particular geographic areas, as well as other economic matters that may be considered relevant. This will ensure that the impacts of measures on different regions—including Scotland, Wales, Northern Ireland and regions of England—are given due consideration where appropriate and will include any information that is shared, or issues that are raised, by the devolved Administrations.

Further, regarding Amendment 89, tabled by the noble Lord, Lord Stevenson, I reassure the Committee that any party not defined as an interested party may register its interest in a particular case with the TRA and will then become a contributor. This will include the devolved Administrations. Contributors will be invited by the TRA to submit relevant information, which it will be obliged to take into account in the investigation as appropriate. My officials will advise the devolved Administrations when an investigation is opened by the TRA, which will alert them to the need to take a decision on whether or not to register.

Where the TRA terminates an investigation without recommending the imposition of measures, it is required to publish details of its recommendations and decisions. Contributor status will mean that DAs will automatically be notified by the TRA of actions it has taken. But I recognise that they will also—rightly, in their capacity as devolved government—have an interest in the decision made by the Secretary of State, including in having an opportunity to offer views on relevant public interest considerations which he should take into account when arriving at a decision. I can confirm that my officials will work with their colleagues in the devolved Administrations to put appropriate arrangements in place.

I turn now to Amendment 90B and thank the noble Baroness, Lady Brown, for tabling this amendment. As I have explained, the Taxation (Cross-border Trade) Act has already been considered, and passed, by the other place, which has accepted that the negative procedure is the appropriate scrutiny mechanism, as we discussed earlier.

With regards to Amendments 85 and 86, the noble Lord, Lord McNicol, is right that there should be an appeals process; indeed, this is necessary to be compliant with our WTO obligations. We do not support the amendment, but I assure noble Lords that there are already powers in the Taxation (Cross-border Trade) Act to establish an appeals system for the UK’s trade remedies system, and my officials have been working closely with the MoJ to develop a clear, transparent process. I completely accept the point made by the noble Earl, Lord Kinnoull, about how critical this is. I also agree with my noble friend Lady Neville-Rolfe that speed matters to companies too.

There will be an initial consideration when an appeal is raised by the TRA, followed by a right of appeal to the Upper Tribunal. This ensures that basic administrative errors can be resolved more quickly and effectively than moving straight to the tribunal, so limiting those cases to more substantial issues of law. It combines independence, as required by WTO law, with the advantages of a proportionate and efficient system. As the Secretary of State informed the International Trade Select Committee in his letter of 14 January, the judicial route for appeals will be to the tax chamber of the Upper Tribunal. The Tribunal Procedure Committee, the responsible statutory body, has recently completed a consultation on the rule changes required to allow the Upper Tribunal to hear trade remedy cases. Once that process has been fully completed, the necessary appeals statutory instrument will be laid in due course and scrutinised in the normal way.

Our proposed regime draws on international best practice from comparable WTO members. Its measures provide for the assessment of whether there was an error in law based on the evidence that was available to the decision-maker at the time, and some include processes akin to the TRA’s reconsideration.

I hope my responses have provided reassurance to your Lordships and that the noble Lord feels able to withdraw his amendment.

--- Later in debate ---
If Brexit is postponed or rescinded, the treaties of the European Union, including its trade deals with other non-EU countries, will still apply to the UK. However, with a no-deal Brexit, they will all cease to apply on 30 March. That is why it is imperative for Parliament to put safeguards in place now, including passing this amendment. Surely we cannot just watch the country drift rudderless towards the rocks of no-deal isolation while the Government allow the clock to wind down.
Baroness Fairhead Portrait Baroness Fairhead
- Hansard - - - Excerpts

My Lords, I am delighted to allow the noble Lord, Lord Stevenson, to realise his ambition, but I also agree with the noble Lord, Lord Purvis, that this is important. Therefore, no torpidity is allowed, even at this late stage.

As this is the last group of amendments, I hope the Committee will indulge me with a short concluding comment, allowing me to record my appreciation to noble Lords who have taken part in all the debates. The quality and constructive nature of the engagement has been incredibly valuable—not just in the Chamber, but outside in meetings. I particularly thank the noble Lords, Lord Stevenson, Lord McNicol and Lord Purvis. On a personal level, I also thank the Bill team for some tremendous work, and my valiant and true noble friends Lord Bates and Lord Younger.

The Committee has provided us with a valuable opportunity to probe the detail of the Bill. It has also allowed all sides to listen to other noble Lords’ sometimes conflicting points of view. We now have some time in which to reflect on the views we have heard in these debates. We shall be using that time carefully, and I look forward to debating the Bill further on Report.

Before addressing the specifics of the amendment moved by the noble Lord, Lord Stevenson, it is important to outline the Government’s approach to leaving the European Union in the light of recent events in the other place. As this House is aware, the other place rejected the proposed withdrawal agreement and political declaration, with just 202 MPs voting in favour. However, following the debate last week, a majority of MPs have now said they would support a deal with changes to the backstop.

Combined with measures to address concerns over Parliament’s role in the negotiation of the future relationships and commitments on workers’ rights, the Government are now confident that there is a route that can secure a majority in Parliament for leaving the EU with a deal. The Government will now take this mandate forward and seek to obtain legally binding changes to the withdrawal agreement that deal with concerns on the backstop, while guaranteeing no return to a hard border between Northern Ireland and Ireland.

As the Prime Minister said, we acknowledge that there is limited appetite for change in the EU, and negotiating it will not be easy. However, in contrast to a fortnight ago, Parliament has made it clear what it needs to approve the withdrawal agreement. Tuesday’s vote shows that Parliament does not want to leave the EU without a deal, and the Government are therefore working hard to achieve one. The noble Lord, Lord Hain, eloquently talked of the importance of the EU trade deal.

However, simply opposing no deal is not enough to stop it, and the Government must now redouble its efforts to get a deal that Parliament can support. The Prime Minister has agreed to discuss the best way the Government can deliver what I would call the Spelman amendment.

The amendment to the Trade Bill here today would not prevent a no deal. The only ways to prevent a no-deal outcome are either with a deal or by revoking or extending Article 50, which is not government policy. The Trade Bill cannot therefore be used as a sort of proxy to prevent the UK leaving the EU without a deal. This amendment, or other tweaks, will not stop a no deal, but will simply increase the risks of a worse outcome in a no-deal scenario. We are clear that the very best way to leave the EU is with a deal and an implementation period, and that is absolutely the aim of this Government.

I also repeat that, although leaving with a deal which ensures an implementation period is our clear aim, any responsible Government must also develop contingency measures in case of no deal.

I turn to Amendment 98, tabled by the noble Lords, Lord Stevenson, Lord Hannay and Lord Purvis, and my noble friend Lady Altmann. I have welcomed the debate and your Lordships’ scrutiny of the Bill, which really underlines the value of this House. The challenge has been constructive, extremely helpful and underpinned by the genuine knowledge of so many noble Lords. The Government will reflect carefully on the points; we have committed to come back with proposals and will do so before Report. Having gone through Committee, I hope the whole Committee will acknowledge the importance of the provisions in the Trade Bill, and the need for any responsible Government to bring forward these provisions whether or not there is a deal with the EU.

As the Committee will be aware, the Trade Bill covers four important and essential areas to ensure continuity for consumers, businesses and our international trading partners. The purpose, as we said—I was trying to keep the number of repetitions low—is continuity. The Bill provides: powers needed for the UK to implement the GPA, maintaining the access of UK companies to some £1.3 trillion-worth of business, and to ensure that we get the best deal for taxpayers; powers to enable the UK to transition trade agreements that currently exist between the EU and other countries, and to which we are currently a signatory via our membership of the EU to prevent any disruption to UK businesses or our consumers; critical powers to establish a new UK Trade Remedies Authority to provide that critical safety net to protect domestic industries from unfair practices; and powers to collect and share data on trade. This will help us build a richer picture of UK trading patterns to help the Government identify new opportunities, and provide data to support TRA investigations. I hope the Committee will recognise that these are sensible measures and that any reasonable Government would be legislating in these areas in the light of our exit from the EU.

Last week’s vote in the other place shows us that Parliament does not want to leave the EU without a withdrawal agreement and future framework. Although I recognise the position of many in this House is not to leave without a deal, as I said at the start, this mandate from Parliament is not enough on its own to stop no deal. That is why the Government will now redouble their efforts to get a deal that Parliament can support. It is for those reasons that I urge the noble Lord to withdraw his amendment.

Lord Stevenson of Balmacara Portrait Lord Stevenson of Balmacara
- Hansard - - - Excerpts

I am grateful to the Minister for her kind words and the way in which she turned down our hope of a late but well-deserved goal. I always say to my colleagues that they must stop using sporting metaphors because they do not work for half the population of the House but here I am, about to refer to the second half. I am sorry about that.

In her thanks, the Minister should have also recognised herself; I will do it for her because I am sure she is too embarrassed to do it. It is almost impossible to believe that this is the Minister’s first Bill. She has handled us with considerable assurance and a wonderful sense of calm. Every time she rises it is a great balm to those who might otherwise want to cause trouble and do terrible things in a House which is noted for its civility and gentility. I do not know what the word is for sororal approaches—I will probably get in trouble for that as well. It has been a very good experience so far; we look forward to the second half—sorry about that. We think we can work together and there are things here we can work together on, and we should try to hammer out such agreements that we have. There may be differences—quite principled ones which we need to address—but I do not think we should worry about that; the House should be asked for its views on a number of points that we have covered in Committee. It has been a good experience and I am happy to withdraw the amendment.