Maritime Transport Access to Trade and Cabotage (Revocation) (EU Exit) Regulations 2019
(Limited Text - Ministerial Extracts only)
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Baroness Sugg
That the draft Regulations laid before the House on 19 December 2018 be approved.
Relevant document: 14th Report from the Secondary Legislation Scrutiny Committee (Sub-Committee A)
The Parliamentary Under-Secretary of State, Department for Transport (Baroness Sugg) (Con)
My Lords, the draft regulations that we are considering will be made under the European Union (Withdrawal) Act and will be needed in the event of no deal, in which case UK ships will continue to have access to member state ports and the ability to travel between member states. This access is based on OECD common shipping principles.
The regulations we are considering today revoke EU legislation on market access and cabotage that would otherwise be retained in UK law by the EU withdrawal Act. For the most part, this legislation would be redundant. It would have no effect after we leave the EU. For example, Council Regulation 4058/86 is about anti-competitive measures by non-EU countries. It allows member states to ask the European Commission to co-ordinate retaliatory action against such countries. This remedy will not be available to the UK when we are no longer a member state, so it is clearly inappropriate to retain it.
There are some instances where the regulations will revoke legislation that would otherwise retain on the UK statute book statutory rights for EU member states in UK waters that would not necessarily be reciprocated. EU Regulation 3577/92 gives rights to member states to provide maritime cabotage within another member state. Cabotage in this context is the operation of ships between two ports, or trips to and from an offshore site within a single member state. If we do not revoke the regulation, it will be retained by UK law. This would mean that member states would continue to have statutory cabotage rights in UK waters. However, UK vessels would no longer have such rights across EU waters; their rights would be at the discretion of each member state.
The UK has no intention of restricting cabotage by EU vessels in UK waters. By removing the statutory rights provided in the regulation, we are simply putting EU vessels on the same footing as vessels from other countries: that is, they will continue to be able to operate cabotage, but without an express statutory right.
Baroness Sugg
I thank noble Lords for their consideration of these regulations. The noble Baroness, Lady Randerson, and the noble Lord, Lord Rosser, both mentioned the SLSC comments. I agree that the Explanatory Memorandum could have been clearer. I thank the SLSC for its work on this, and other SIs. We took its considerations on board and re-laid the Explanatory Memorandum.
The noble Baroness taught me a bit more history on the Rhine regulation than I knew already. The rules for operating on the Rhine are set through the Rhine convention. We are not planning to rejoin as a country; UK companies could still trade on the Rhine but they would need to ensure that they met the conditions in that convention as well as the relevant EU legislation.
We have consulted with the Welsh and Scottish Governments on Council Regulation 3577/92, which is on public service contracts in respect of island cabotage services. Financial assistance is devolved to the Welsh and Scottish Governments, to differing degrees, so they had a potential interest in this, and Ministers in both devolved Governments have given their consent. It is particularly important for Scotland, where they provide key services between the Highlands and Islands. The Scottish Government are satisfied that they will be able to continue procuring island services through the contracts, so they are content with it.
I attempted to set out in my opening speech why we have taken this approach. Leaving the European Union will mean, obviously, that we are no longer a member state and UK ships will lose their automatic right to cabotage. This SI removes the reciprocal statutory right for EU ships to practise cabotage. Instead, EU member states will be treated as all other countries are. We, the UK, operate a liberal cabotage regime for maritime, which we think is the best way to promote better and efficient services and perhaps—going back to what the Rhine convention originally wanted to do—to promote prosperity across Europe. In practice, all countries’ ships in the UK are permitted to carry out cabotage, so EU ships will be able to do the same. As I said, we have no intention to restrict cabotage.
Of course, this SI deals only with the UK side of legislation and does not cover EU action, and the way to ensure that UK ships can practise cabotage in the EU is to agree a deal. The future agreement, should we reach a deal, notes that the parties,
“should also make appropriate arrangements on market access for international maritime transport services”,
and EU trade deals always include provisions on maritime transport. It is a Commission competence, so we are not able to have bilateral conversations with separate member states, but EU trade deals usually have a separate chapter or part of a services chapter, and we expect that the same would apply in a future UK-EU agreement.
The noble Lord, Lord Rosser, asked about the effect on UK industry—which, as I say, is not part of the SSI, but it is certainly a valid question. Future UK shipping on EU cabotage will depend on a future agreement. If we leave without a deal, the impact on the UK of losing automatic access is estimated to be less than £10 million a year—although that is still £10 million a year—through losing our statutory rights.
The noble Lord asked about the different member states, and he was quite right to point out that it depends on the member state. International law does not require cabotage to be allowed within a state, so that is a matter for negotiation, if member states have not already set out their views. Some EU countries—Belgium, Denmark, Ireland and the Netherlands—do not have cabotage laws, or at least significant cabotage laws, and we would expect activity to continue. However, some EU countries have restrictive cabotage laws: Bulgaria, Croatia, Finland, France, Germany, Greece, Italy, Poland, Portugal, Spain and Sweden. It is worth noting that many of those states already restrict cabotage, despite the EU regulations, so this would not just be a matter of just switching it off—some restrictions are already in place. The EU technical notice on Brexit and maritime transport specifies which countries would allow that, and obviously we meet regularly with ship owners on this. I repeat that we do not want to see the loss of cabotage rights. It is one of the implications of not being a member state any more, which is another reason why we are working to achieve a deal.
The noble Lord, Lord Rosser, asked about anti-competitive action. We will rely on our own competitive competition legislation; the Competition and Markets Authority will take a greater role in enforcing such legislation, and we will be able to take action on trade remedies, if necessary under WTO rules. However, as I said, the maritime sector is global and liberalised, and that is reflected in the principles of the OECD, which most countries sign up to.
We have rarely seen action taken; on anti-dumping legislation, for example, there has been only one incidence in 1987. The Commission has been more interested in overpricing than underpricing, so it has looked at prohibiting liner conference cartels in the container trade and regulating the alliances which have succeeded them. Generally speaking, therefore, this has not been a significant issue. Of course, if the EU takes action in this case, it will cover European shipping, and if a ship is not going to the EU, it is unlikely to come to the UK. However, as I said, we have our own competition legislation in place.
The noble Lord, Lord Rosser, also asked about the effect of Regulation 789/2004 on the transfer of cargo and passengers. We believe that the application will have no effect; we are aware of no instance where the regulation has been used.
The noble Lord also asked about inland waterways. The UK will continue to have a similarly liberal regime in relation to the limited market for cabotage on inland waterways. For geographical reasons, obviously there is no international trade on inland waterways within Great Britain, and it is extremely limited in scope for Northern Ireland and the Republic. There is also very little interest from UK shipping in EU inland waterways.
No formal consultation was done on this instrument, simply because, for the most part, the regulations revoke redundant legislation and do not make any changes that affect the operation of businesses or impose any additional costs. The department has discussed the instrument with shipping industry representatives through the Chamber of Shipping, especially in relation to the proposals to revoke the cabotage regulation. The industry is concerned to avoid those restrictions, which is what we are doing. I am pleased again to set on the record that the Government have no plans to introduce such restrictions.
Officials have also discussed the regulations with the National Union of Rail, Maritime and Transport Workers, and especially the implications of the revocation of the cabotage regulation on Scottish inland services; we do not believe that that revocation has any consequence for such services. Ministers and officials meet regularly and frequently with many maritime stakeholders: for example, the Secretary of State met the Chamber of Shipping earlier this month to discuss Brexit. The RMT is one of the organisations we have regular engagement with; the Maritime Minister Nusrat Ghani met the RMT at the end of last year and will meet the union again in the next few weeks, and the chief executive of the MCA also met the RMT last week.
Therefore, while this SI does not have a direct effect, because it changes very little, obviously the alternative side of it is the effect it will have on UK shipping, and whether it has cabotage rights within the EU. While that is not related to this SI, of course we are discussing it on a regular basis, which is why we are keen to ensure that we achieve a deal that allows us continued access to cabotage within the EU, in the same way as EU member states will continue to have access to cabotage in the UK, even if not on a statutory rights basis; they will have the same access as all third country shipping companies do, and we have no plans to restrict that further.
I hope that I have managed to address the points raised, but, if not, I will provide answers in writing. The aim of this SI is to ensure that legislation continues to work effectively from day one in the event of no deal, and that redundant, inappropriate or unreciprocated provisions are duly removed.