Report on proposed free trade agreement

Trade Bill – in the House of Commons at 2:17 pm on 17th July 2018.

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“(1) This section applies (subject to subsection (2)) where the United Kingdom has authenticated a free trade agreement (‘the proposed agreement’), if—

(a) the other party (or each other party) and the European Union were signatories to a free trade agreement immediately before exit day, or

(b) where the proposed agreement is authenticated by the United Kingdom before exit day, the other party (or each other party) and the European Union are signatories to a free trade agreement on the day the proposed agreement is authenticated by the United Kingdom.

(2) This section applies only if the proposed agreement is not binding on the United Kingdom as a matter of international law unless it is ratified by the United Kingdom.

(3) Before the United Kingdom ratifies the proposed agreement, a Minister of the Crown must lay before Parliament a report which gives details of, and explains the reasons for, any significant differences between—

(a) the trade-related provisions of the proposed agreement, and

(b) the trade-related provisions of the existing free trade agreement.

(4) Subsection (3) does not apply if a report in relation to the proposed agreement has been laid before Parliament under section (Report to be laid with regulations under section 2(1))(2).

(5) The duty imposed by subsection (3) applies only at a time when regulations may be made under section 2(1) (see section 2(8)).

(6) In this section a reference to authenticating a free trade agreement is a reference to doing an act which establishes the text of the agreement as authentic and definitive as a matter of international law.

(7) In this section—

‘the existing free trade agreement’ means the free trade agreement referred to in subsection (1)(a) or (b);

the ‘trade-related provisions’ of a free trade agreement are the provisions of the agreement that mainly relate to trade.”—(George Hollingbery.)

This new clause requires a Minister to lay a report before Parliament before the UK ratifies a new free trade agreement with a country that (before exit day) had a free trade agreement with the EU. The report must explain any significant differences between the proposed new agreement and the existing agreement with the EU. The duty to lay a report does not apply if a report on the agreement has already been laid under the new clause in amendment NC14. In addition, amendment NC13 provides that the reporting requirement does not apply if a Minister takes the view that, exceptionally, the agreement should be ratified without the reporting requirement being met.

Brought up, and read the First time.

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

In calling the Minister to move the new clause—he is one of the most courteous Members of the House and therefore it may seem almost unnecessary to say this—I simply ask, not least in the light of what the Father of the House has just said, that he recognise that, although of course he must set out the Government’s position, possibly on a miscellany of different matters, we are short of time and that others wish to speak. In all propriety, if this debate is to be meaningful, they must be able to do so.

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

With this it will be convenient to discuss the following:

Government new clause 13.

Government new clause 14.

New clause 3—Free trade agreements: Parliamentary scrutiny and consent—

“(1) The Secretary of State shall not commence negotiations relating to a free trade agreement unless—

(a) a Minister of the Crown has laid before Parliament a sustainability impact assessment conducted by a credible body independent of government following consultation with—

(i) each devolved authority,

(ii) public bodies, businesses, trade unions and non-governmental organisations which, in the opinion of the Minister, have a relevant interest, and

(iii) the public, and the assessment shall include both qualitative and quantitative assessments of the potential impacts of the proposed trade agreement, including social, economic, environmental, gender, human rights, labour, development and regional impacts,

(b) a Minister of the Crown has laid before Parliament a draft of a negotiating mandate relating to the proposed trade agreement, setting out—

(i) all fields and sectors to be included in the proposed negotiations,

(ii) the principles to underpin the proposed negotiations,

(iii) any limits on the proposed negotiations, and

(iv) the desired outcomes from the proposed negotiations, and

(c) the House of Commons has approved by resolution a motion, drafted in terms which permit amendment, setting out a proposed negotiating mandate and authorising the Secretary of State to enter negotiations on the proposed trade agreement on the basis of that mandate, and the House of Lords has approved a resolution in the same terms as that approved by the House of Commons.

(2) The United Kingdom may not become a signatory to a free trade agreement unless—

(a) during the course of the negotiations, the text of the trade agreement as so far agreed or consolidated has been made publicly available within ten working days of the close of each negotiating round,

(b) between each round of negotiations, all documents relating to the negotiations have been made available for scrutiny by select committees in both Houses of Parliament,

(c) upon conclusion of the negotiations, the House of Commons has approved by resolution a motion, drafted in terms which permit amendment, setting out the text of the trade agreement as negotiated and authorising the Secretary of State to sign the proposed agreement, and the House of Lords has approved a resolution in the same terms as that approved by the House of Commons, and

(d) the text of the trade agreement includes provision for a review of the operation and impacts of the agreement no later than ten years after the day on which the agreement comes into force.”

This new clause would ensure that all new free trade agreements are subject to parliamentary scrutiny and consent.

New clause 6—Regulations: Parliamentary procedure—

“(1) If the Secretary of State considers it appropriate to proceed with the making of regulations of a type which fall under section 2(4A)(a) or (b)), he or she must lay before Parliament—

(a) a draft of the regulations, and

(b) an explanatory document.

(2) The explanatory document must—

(a) explain under which power or powers in this Act the provision contained in the regulations is made;

(b) introduce and give reasons for the provision;

(c) identify and give reasons for—

(i) any functions of legislating conferred by the regulations; and

(ii) the procedural requirements attaching to the exercise of those functions;

(d) contain a recommendation by the Secretary of State as to which of the following should apply in relation to the making of regulations pursuant to the draft regulations—

(i) the negative resolution procedure (see subsection (6)) or

(ii) the affirmative resolution procedure (see subsection (7)); and

(e) give a reason for the Secretary of State’s recommendation.

(3) Where the Secretary of State’s recommendation under subsection (2)(d) is that the negative resolution procedure should apply, that procedure shall apply unless, within the 20-day period, either House of Parliament requires that the affirmative resolution procedure shall apply, in which case that procedure shall apply.

(4) For the purposes of this paragraph a House of Parliament shall be taken to have required a procedure within the 20-day period if—

(a) that House resolves within that period that that procedure shall apply; or

(b) in a case not falling within subsection (4)(a), a committee of that House charged with reporting on the draft regulations has recommended within that period that that procedure should apply and the House has not by resolution rejected that recommendation within that period.

(5) In this section the ‘20-day period’ means, for each House of Parliament, the period of 20 days on which that House sits, beginning with the day on which the draft regulations were laid before Parliament under subsection (1).

(6) For the purposes of this section, the ‘negative resolution procedure’ in relation to the making of regulations pursuant to a draft of the regulations laid under subsection (1) is as follows—

(a) the Secretary of State may make regulations in the terms of the draft regulations subject to the following provisions of this subsection;

(b) the Secretary of State may not make regulations in the terms of the draft regulations if either House of Parliament so resolves within the 40-day period;

(c) for the purposes of this paragraph regulations are made in the terms of the draft regulations if they contain no material changes to the provisions of the draft regulations; and

(d) in this subsection the ‘40-day period’ means, for each House of Parliament, the period of 40 days on which that House sits, beginning with the day on which the draft regulations were laid before Parliament under subsection (1).

(7) For the purposes of this section the ‘affirmative resolution procedure’ in relation to the making of regulations pursuant to a draft of the regulations being laid under subsection (1) is as follows—

(a) the Secretary of State must have regard to—

(i) any representations;

(ii) any resolution of either House of Parliament; and

(iii) any recommendations of a committee of either House of Parliament charged with reporting on the draft regulations, made during the 40-day period with regard to the draft regulations;

(b) if, after the expiry of the 40-day period, the Secretary of State wishes to make regulations in the terms of the draft, he must lay before Parliament a statement—

(i) stating whether any representations were made under subsection (7)(a)(i); and

(ii) if any representations were so made, giving details of them;

(c) the Secretary of State may after the laying of such a statement make regulations in the terms of the draft if they are approved by a resolution of each House of Parliament;

(d) if, after the expiry of the 40-day period, the Secretary of State wishes to make regulations consisting of a version of the draft regulations with material changes, he must lay before Parliament—

(i) revised draft regulations; and

(ii) a statement giving details of—

(a) any representations made under subsection (7)(a)(i); and

(b) the revisions proposed;

(e) the Secretary of State may, after laying revised draft regulations and a statement under sub-paragraph (d), make regulations in the terms of the revised draft if they are approved by a resolution of each House of Parliament;

(f) for the purposes of sub-paragraph (e) regulations are made in the terms of the draft regulations if they contain no material changes to the provisions of the draft regulations; and

(g) in this paragraph the ‘40-day period’ has the meaning given by subsection (6)(d).

(8) The provisions of this section shall apply to all agreements for which regulations would be of a type which falls under section 2(4A)(a) or (b)), notwithstanding that they constitute retained EU law and may be governed by the provisions of the European Union (Withdrawal) Act 2018 or any other legislation with regard to Parliamentary scrutiny of regulations under this Act.”

This new clause would set up a triage and scrutiny system under the control of Parliament for determining how Orders under Clause 2 will be dealt with, in circumstances when the new UK FTA or international trade agreement is not in the same terms as the existing EU FTA or international trade agreement.

New clause 16—Transparency in trade negotiations—

“(1) The Secretary of State shall not make regulations under section 2(1) of this Act for the implementation of an international trade agreement (subject to sections 2(3) and 2(4)) unless the condition in subsection (2) of this section has been complied with.

(2) The condition is that the Secretary of State has provided to Members of both Houses of Parliament any information specified in subsection (3) relating to the agreement, within seven days of any meeting to which subsection (3)(a) applies.

(3) The information is—

(a) minutes of any meeting, whether formal or informal, between a representative of the United Kingdom and a representative of any other signatory state to discuss the agreement;

(b) any points of divergence between the terms of the proposed agreement between the United Kingdom and the other signatory (or each other signatory) and the terms of the agreement in place before exit day between the European Union and the other signatory (or each other signatory), that were discussed at the meeting; and

(c) measures that the Secretary of State considers will be necessary in consequence of any points of divergence under paragraph (b) of this subsection.

(4) The Secretary of State may specify conditions under which the information shall be made available under subsection (2).”

This new clause would require the Secretary of State to give MPs and Peers access to details of negotiations towards trade agreements with third countries if and when third countries seek changes to existing bilateral trade deals which the UK currently has through the EU.

New clause 20—Approval of negotiating mandates (devolved authorities)—

“(1) No negotiation towards an agreement that falls within section 2(2) shall take place unless—

(a) a draft negotiating mandate in respect of that agreement has been laid before—

(i) a committee including representatives from each devolved authority and constituted for the purpose of considering the draft, and

(ii) each devolved legislature, and

(b) the draft negotiating mandate has been approved by resolution of—

(i) the committee constituted under (1)(a)(i) and

(ii) each devolved legislature.

(2) The committee in (1) shall be called the ‘Joint Ministerial Committee on Trade’ (‘JMCT’) and—

(a) may not approve a draft mandate other than by consensus,

(b) shall have the power to make its own standing orders,

(c) may include a Minister of the Crown or representative thereof,

(d) may be consulted on a draft mandate before it is finalised (but in such a case must also approve the finalised version), and

(e) shall only include a representative of a devolved authority if that representative has been appointed by the relevant devolved executive.

(3) The ‘devolved legislatures’ are—

(a) the Scottish Parliament,

(b) the Welsh Assembly, and

(c) the Northern Ireland Assembly.

(4) The devolved legislatures shall approve the draft mandate according to their own standing orders.

(5) If the negotiating mandate changes substantively during the process of negotiations then negotiations shall not proceed until the revised mandate has been approved by the JMCT.

(6) Each person who is—

(a) a member of the JMCT, or

(b) a Minister of the Crown must co-operate with every other person who is within subsection (a), or (b) in any activity that relates to the drafting of a negotiating mandate as referred to in subsection (1).

(7) In particular, the duty imposed by subsection (6) requires a person—

(a) to engage constructively, actively, and on an ongoing basis in any process by means of which a negotiating mandate as referred to in subsection (1) is prepared; and

(b) to have regard to representations by any member of the JMCT or of a devolved executive in any process by means of which a negotiating mandate as referred to in subsection (1) is prepared.

(8) The ‘devolved executives’ are—

(a) the Scottish Government,

(b) the Welsh Government, and

(c) the Northern Ireland Executive.”

This new clause would ensure that any negotiating mandate is first approved by the devolved legislatures and creates a joint ministerial committee to encourage co-operation between the devolved administrations and the UK Government in drafting the negotiating mandates. It imposes a duty of co-operation on all parties in the preparation of the negotiating mandate.

New clause 22—Right of devolved legislatures to scrutinise trade negotiations—

“(1) A Minister of the Crown shall provide a devolved authority with such information relating to an agreement falling within section 2(2) as is reasonably necessary for the purpose of subjecting that agreement to scrutiny in relation to—

(a) all areas of that devolved authority’s competence; and

(b) anything falling outside an area of that devolved authority’s competence but having an impact within the territory over which that devolved authority presides.

(2) The information in (1)—

(a) shall be provided at the request of a devolved authority;

(b) may relate to international trade agreements at any stage of development including—

(i) before negotiations begin,

(ii) during negotiations,

(iii) after negotiations have been completed.

(3) An appropriate authority shall not rely on Part II of the Freedom of Information Act 2000 in relation to a request made under this section.

(4) If information requested by a devolved authority would fall within Part II of the Freedom of Information Act 2000, a Minister of the Crown may provide it exclusively to a committee of the relevant devolved legislature.

(5) A Minister of the Crown shall adhere to any reasonable time limit placed by a devolved authority on the provision of information under this section.”

This new clause would ensure that the devolved legislatures will have sufficient information to effectively scrutinise trade agreements and negotiations, without compromising negotiations or sensitive information.

New clause 23—Devolved consent—

“(1) No agreement that falls within section 2(2) shall be ratified without the consent of the devolved legislatures to any parts of that agreement that fall within subsection (3) of this section.

(2) The ‘devolved legislatures’ are—

(a) the Scottish Parliament,

(b) the Welsh Assembly, and

(c) the Northern Ireland Assembly.

(3) The parts of an agreement to which the devolved legislatures must consent are—

(a) any part concerning an issue that falls within the competence of a relevant devolved authority as defined in paragraph 7 of Schedule 1, and

(b) any part concerning an issue not falling within subsection (3)(a) but having an impact within the territory over which the relevant devolved authority presides.”

This new clause would create a right for the devolved legislatures to approve those aspects of an ITA that fall within their competence.

New clause 24—Review of international trade agreements (devolved authorities)—

“(1) No agreement that falls within section 2(2) of this Act shall be ratified unless it complies with subsection (2) of this section.

(2) An agreement that falls within section 2(2) shall include a clause which provides for that agreement to be—

(a) submitted for review by the appropriate bodies after five years from the date of ratification,

(b) submitted for review by the appropriate bodies every five years after the first review, and

(c) ended or amended based on the outcome of the reviews in subsections (2)(a) or (2)(b), without sanction under the agreement.

(3) For the purposes of (2) the ‘appropriate bodies’ are—

(a) the UK Parliament,

(b) the Scottish Parliament,

(c) the Welsh Assembly, and

(d) the Northern Ireland Assembly.

(4) The appropriate bodies shall determine the procedure for the review in subsection (2) according to their own standing orders.

(5) Each international trade agreement shall be submitted to a review by the appropriate bodies according to the terms in subsection (2).

(6) A Minister of the Crown shall have regard to any representations made by an appropriate body resulting from a review undertaken under this section.”

This new clause would provide for Parliament and the devolved legislatures to review a trade agreement every five years and for the UK to bring an end to that trade agreement based on the outcome of those reviews without sanction under the agreement.

Government amendments 36 and 37.

Amendment 6, in clause 2, page 2, line 20, at end insert “, and”.

This amendment would provide that the Henry VIII provisions in Clause 2 may only be used when a new UK free trade agreement is in the same terms as an existing EU free trade agreement.

Government amendments 38 and 39.

Amendment 7, in clause 2, page 2, line 29, at end insert “, and”.

This amendment would provide that the Henry VIII provisions in Clause 2 may only be used when a new UK international trade agreement is in the same terms as an existing EU international trade agreement.

Amendment 8, in clause 2, page 2, line 29, at end insert—

“(4A) In circumstances where—

(a) a free trade agreement in respect of which regulations are to be made does not make the same provision, subject only to necessary changes in terminology, as a free trade agreement referred to in subsection (3)(a) or (b); or

(b) an international trade agreement in respect of which regulations are to be made does not make the same provision, subject only to necessary changes in terminology, as an international trade agreement referred to in subsection (4)(a) or (b); an appropriate authority must not make regulations under subsection (1) unless the requirements of section [Regulations: Parliamentary procedure] have been met.”

Government amendment 42.

Amendment 19, in clause 2, page 2, line 40, at end insert—

“(a) No regulations may be made under subsection (1) in respect of a free trade agreement unless the text of that agreement has been subject to consultation prior to its ratification by Parliament, in line with any guidance or code of practice on consultations issued by Her Majesty’s Government.

(a) A consultation under paragraph (a) shall actively seek the views of—

(i) Scottish Ministers,

(ii) Welsh Ministers,

(iii) a Northern Ireland department,

(iv) representatives of businesses and trade unions in sectors which, in the opinion of the Secretary of State, are likely to be affected by the proposed free trade agreement, and

(v) any other person or organisation which appears to the Secretary of State to be representative of interests affected by the proposed free trade agreement, including local authorities.”

This amendment would require the Government to have published the text of each UK free trade agreement and opened it to consultation with business, trade unions, the devolved administrations and other parties prior to its ratification.

Government amendment 4.

Amendment 9, in schedule 2, page 12, line 5, after “2(1)” insert

“(unless the regulations are of a type which fall under section 2(4A)(a) or (b))”.

This amendment is consequential on NC6.

Amendment 2, in schedule 2, page 12, line 6, at end insert—

“(1A) A statutory instrument containing regulations of a Minister of the Crown under section 2(1) may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

Government amendments 71 to 74.

Amendment 10, in schedule 2, page 12, line 20, at end insert

“(unless the regulations are of a type which fall under section 2(4A)(a) or (b))”.

This amendment is consequential on NC6.

Government amendments 75 and 79.

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

I am delighted to tell you, Mr Speaker, that I can accord with your wishes and those of my right hon. and learned Friend Mr Clarke.

The Government have been consistently clear that the priority for the UK’s existing trade relationships as we leave the EU is continuity. Our partner countries are clear on that, too, and this Bill is about continuity. Specifically, clause 2 creates a power to help with the implementation of obligations of the trade agreements that we are seeking to transition into UK-only agreements as we leave the EU. I recognise that Members are seeking reassurance that the Government will be transparent about the content of these transitioned agreements and about what might need to change to deliver this continuity, which we have championed for so long.

Indeed, I understand the purpose of the new clause 6 and the associated amendments, tabled in the names of my hon. Friends the Members for Huntingdon (Mr Djanogly), for Wimbledon (Stephen Hammond) and for Bromley and Chislehurst (Robert Neill). My predecessor, my right hon. Friend Greg Hands, and I held constructive discussions with my hon. Friend the Member for Huntingdon to ascertain how best we could help that transparency. As a result, the Government have tabled new clauses 12 to 14 and amendments 4, 36 to 39, 42, 71 to 75 and 79. I will now explain them in a little detail.

New clause 12 and the associated Government amendments will place a duty on Ministers to lay a report in both Houses of Parliament. This report will explain any changes made to the continuity agreements when compared with the existing EU third country agreements. The report will be laid in Parliament before the continuity agreements are ratified or at least 10 Commons sitting days before any implementing regulations are laid under clause 2, whichever comes first. We want these reports to be as helpful as possible. That is why they will signpost any significant changes being made, to ensure that existing trade agreements can function effectively in the UK-only context. Implementing regulations made under the clause 2 will also now be subject to the affirmative resolution process, which will further enhance parliamentary scrutiny. I have also committed that, for each statutory instrument made under the clause 2 power, the accompanying explanatory memorandum will be explicit in referencing which of the changes identified in the report it plays a part in implementing.

With amendments 44 to 47, we are reducing from five years to three years the length of the period for which the implementing power can be used. The period will be renewable by agreement in both Houses of Parliament.

I hope that my hon. Friend the Member for Huntingdon agrees that these amendments address the spirit of the issues he was seeking clarity on and provide enhanced parliamentary scrutiny.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

We raised concerns in Committee about the Government’s power grab in the Bill. For 40 years, we have subcontracted our responsibility for trade agreements to the EU, while scrutiny has been delivered through the European Parliament and by our own European Scrutiny Committee, yet the Government are not proposing any equivalent scrutiny processes for agreements that will replace those we currently have through our membership of the EU. This lack of scrutiny is a major issue, and we raised the concerns of business, trade unions, civil society, consumers and many more in Committee.

The Labour party submitted a series of amendments in Committee that embodied a full process of parliamentary scrutiny and extra-parliamentary consultation. The Government responded by saying that the new UK agreements would just roll over the terms of existing EU agreements and would thus need no process of scrutiny, having already been scrutinised.

Photo of Greg Hands Greg Hands Conservative, Chelsea and Fulham

Does the hon. Gentleman not accept that we are dealing with existing EU agreements that have already been scrutinised in both Houses of Parliament and that in many cases have already been in effect for a long time—in some cases, decades? It is important to have the ability to scrutinise the agreements if they have changed, but in general I think that he is barking up the wrong tree in alleging that this is an attempt to avoid parliamentary scrutiny.

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

The former Minister should have waited, because he anticipated my remarks: the Government’s delegated powers memorandum told a different story. Paragraph 46 noted that the new UK agreements would not just be legally distinct but could include

“substantial amendments, including new obligations”.

In other words, these will not just be roll-overs; they will be new treaties that can introduce wholly new terms of trade between the UK and our trading partners—terms that will be binding on us for years to come.

Government new clause 12 is confirmation that Labour was right to identify the problem here. It will require a report to be laid before Parliament before the ratification of any free trade agreement that will highlight and explain any significant differences between the new agreement and the corresponding EU agreement on which the new agreement is based. It is disappointing, therefore, to see this concession wiped out immediately by Government new clause 13, which will allow them to sidestep the obligation to lay such a report. It will also allow the Government to ratify new agreements without having produced the report in question. Government new clause 14 picks up the same point prior to implementation, but by this time the trade agreement will already have been ratified.

We will support new clause 12, but if the Government really mean what they say, they should withdraw new clause 13. We will also support new clause 3, which pays us the compliment of replicating the amendments that we tabled in Committee and which sets out the scrutiny process that should be adopted for new trade agreements.

The Government have already started work towards new agreements to replace existing EU agreements in their trade working groups. Talks are under way behind closed doors to determine what our new trading arrangements might be, but we have no information whatsoever about what is being discussed or where the new terms might come into play. I commend new clause 16, tabled by my hon. Friend Geraint Davies, which calls on the Government to start providing some information about what is going on in those meetings. The Minister would do well to accept it as a friendly amendment.

Our amendment 19 addresses the lack of proper consultation. The Government’s alienation of the business community has been quite remarkable. Businesses will be relieved that we no longer have a Foreign Secretary whose policy was to “f*** business”, but they remain deeply concerned that we still have an International Trade Secretary who is not prepared to take an informed approach to the development of international trade agreements, on which they and the rest of our country will depend.

Photo of Jim Cunningham Jim Cunningham Labour, Coventry South 2:30 pm, 17th July 2018

My hon. Friend has just raised a serious issue. There is a great deal of concern among businesses and trade union organisations, which fear that the Government are trying to slip things through without proper scrutiny. Does my hon. Friend agree that that is the nub of the problem?

Photo of Bill Esterson Bill Esterson Shadow Minister (Business, Energy and Industrial Strategy), Shadow Minister (International Trade)

My hon. Friend is absolutely right. Following the Committee, six major business organisations —the CBI, the British Chambers of Commerce, the Engineering Employers Federation, the International Chamber of Commerce, the Institute of Directors and the Federation of Small Businesses—took the unprecedented step of issuing a joint statement with the TUC, Unite, the Trade Justice Movement, the Consumers Association, or Which?, and other industry bodies, calling for a proper model of consultation and scrutiny to govern the UK’s policy-making process in future.

The Secretary of State delivered his statement to the House yesterday, telling us about future plans for a more transparent and inclusive UK trade policy, but at the same time reminding us that the future process would not apply to the Bill or the agreements that correspond to our existing EU agreements. That is why our amendment 19 is so important: it provides for proper consultation on any substantive new elements in the 40 trade agreements that we need to replace the EU’s existing trade deals. The involvement of the widest possible group of stakeholders is essential if we are to ensure that the new trade agreements are properly designed to give our businesses, consumers, workers and public services what they need.

We argued in Committee that any regulations made under the Bill should be subject to the affirmative procedure in Parliament, not the negative procedure, as originally stipulated in schedule 2. I am pleased to see that the Government have agreed that we were right to insist on parliamentary accountability, as their amendment 75 provides that any regulations made under clause 2(1) will indeed be subject to the affirmative procedure. That is not the further extension to which the Minister referred; it is entirely new, and it removes the need for the triage and scrutiny system proposed in new clause 6. However, it leaves any regulations to be made under clause 1(1), in relation to the World Trade Organisation’s Government procurement agreement, subject to the negative procedure. The Minister did not explain the logic behind that, and I should like him to do so, especially given that amendment 32 will grant the Government the power to extend the disciplines of the GPA to new bodies if they so choose, not just to renamed or merged Government entities.

Worse still, Government amendment 34 will introduce what is effectively a further Henry VIII clause, in that it will grant the Government the power under clause 1

“to modify retained direct EU legislation” in respect of GPA implementation. Members should note that that is a power in perpetuity, as there is no sunset clause in relation to clause 1. In Committee, we argued for the removal of all Henry VIII powers from the Bill, and we support the further attempt to limit those powers in amendments 6 and 7, tabled by Mr Djanogly.

The Government have told us:

“Retained direct EU legislation will operate in a different way to both primary and secondary legislation”,

with

“unique status within the domestic hierarchy.”

The European Union (Withdrawal) Act 2018 distinguishes between “minor” and “principal” types of retained direct EU legislation precisely so that Parliament can apply more rigorous powers of scrutiny to the more important elements. A modification of principal retained direct EU legislation, as envisaged in amendment 34, could therefore have a constitutional significance analogous to that of modifying primary legislation. Introducing to the Bill what is effectively yet another Henry VIII power, with no sunset clause to limit its future application, is a serious challenge to parliamentary democracy, and the Minister has not explained why the House should countenance such a move.

New clause 23 would give the devolved Administrations the right to veto a trade agreement before ratification. I simply point out that international agreements are a competence of the UK Government under the devolution settlement, which is why we will not support that proposal.

In his statement yesterday, the Secretary of State recognised the problems that are caused when Governments sign off trade deals that do not have public legitimacy. However, he has failed to follow the logic of his own statement in respect of the 40 agreements that we need to replace our existing EU deals. Even given the Government’s concessions, the Bill is still woefully lacking in transparency and scrutiny, and such a democratic deficit needs to be addressed. As the CBI representative asked us during the Committee, “If not now, when?”

Photo of Gillian Keegan Gillian Keegan Conservative, Chichester

Thank you, Mr Speaker, for giving me the opportunity to speak in the debate.

I served on the Committee, and it is clear to me that we should pass the Bill in order to build the legal foundations that we need to support global trade by ensuring that existing trade agreements via the EU can continue, providing access to overseas procurement opportunities—an important market worth £1.3 trillion—and protecting our business from unfair practices via the new Trade Remedies Authority.

There is much debate about the shape of the future trading relationship between the European Union and the United Kingdom, but the Bill is required for every situation that our country will face as we leave the EU. It seeks to ensure that we will continue to enjoy the benefits of trade deals that the EU has done with more than 40 countries around the world. There is, however, an inherent assumption that the UK will reach agreement on the terms on which we continue trading with our biggest partner, the European Union. Any “no deal” scenario is likely to have an impact on how rules of origin are calculated in the trade agreements.

This is complex stuff. I think we all understand that we are making big decisions that will have an impact on businesses—both large multinationals and small and medium-sized enterprises—which export to or import from the EU. As someone who has worked in car manufacturing, financial services and technology for nearly 30 years, I am unfortunately burdened with some knowledge of how all this works and of the operating models that have emerged over the last 40 years, making many industries, such as car manufacturing, finally competitive. In the real world there is no such thing as a hard or a soft Brexit; there are just degrees of risk. The Prime Minister is seeking a low-risk Brexit in her Chequers White Paper—one that involves listening to businesses that have built highly integrated supply chains, such as Rolls-Royce in my constituency.

Of course it is possible to find examples of car parts coming from outside the EU without a problem, but the question is one of both scale and financial impact. Only a business will have a truly accurate view on this, but it is safe to assume that introducing costs will have a negative impact on businesses large and small throughout the country. They will want to avoid going back to the days when supply chains were not highly integrated and efficient. They will need to hold stocks in warehouses or lorry parks. I am probably the only person in the House of Commons who has sat in customs waiting to rescue a stranded part while a car production line lay idle. Delays are quite simply the difference between profit and loss. The same applies to agricultural goods. We have a thriving growers’ business in Chichester, and export more than £1 billion of perishable goods to the EU every year. Customs delays and perishable goods are two words that do not belong in the same sentence. That is why I completely support the pragmatic approach to goods set out in the Chequers White Paper and I believe it will also enable us to make future international trade agreements as envisaged in this Bill.

But as well as achieving these outcomes, we have to respect the referendum result. The British people voted to end freedom of movement and to get back control of their borders, laws and money. We can all have views on whether a better deal could be negotiated. These are views, not facts. However, I cannot help thinking that if we had been offered a deal a few years ago that ended free movement, stopped future payments to the EU, continued frictionless trade, and regained control over our fisheries and farming policies with no hard border in Northern Ireland, we would have readily agreed; in fact, we would have bitten the EU’s hand off.

Every successful negotiation requires compromise, and perhaps the Rolling Stones express our current predicament best in one of their greatest songs: “You can’t always get what you want, but sometimes you can get what you need.”

Several hon. Members:

rose—

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. In calling in a moment Caroline Lucas, principally to speak to her new clause and in the knowledge that she is a celebrated and award-winning parliamentarian, I feel that I can say with total confidence that she will require no longer than five minutes to make her case.

Photo of Caroline Lucas Caroline Lucas Co-Leader of the Green Party

Indeed, I do rise to speak to new clause 3, which is in my name and signed by more than 50 Members of the House from four different parties, and I give notice that I would like to move it when it comes to the votes.

This amendment essentially seeks to remedy the Bill’s failure to provide for a proper role for parliamentarians in the scrutiny and approval of trade agreements. At present, trade agreements can be negotiated, or renegotiated as is likely to be the case with many of the existing EU trade deals covered by this Bill, entirely under royal prerogative powers, essentially giving the Government free rein to decide when and with whom to start negotiations, to set their own priorities and objectives, to conduct the negotiations in great secrecy, and to conclude the deal without any meaningful parliamentary scrutiny. That not only sidelines Members of this House, but it also prevents valuable input by civil society organisations and the wider public. This Bill is supposed to help implement an independent trade policy following withdrawal from the EU, but it does nothing to put in place the kind of scrutiny and approval framework that should be required for an accountable trade policy in a modern democratic country. And this is the only legislative opportunity we are likely to have to put such a framework in place.

In his statement yesterday, the Secretary of State for International Trade once again sought to make a distinction between replacements for existing EU trade deals and future trade deals, but the fact is that effective parliamentary scrutiny and approval is needed for both, for it is increasingly clear that, contrary to the hope of Ministers, it is not going to be a simple case of transitioning, or “rolling over,” existing EU trade deals. Some or all of the countries in question are not simply going to be content to continue with the existing arrangements, and Ministers will have little choice but to negotiate a replacement deal. So while yesterday’s statement by the Secretary of State must be welcomed for its clear, if somewhat overdue, recognition of the current democratic deficit in the making of trade deals and the need to correct that if we are to have a modern, transparent and accountable trade policy, it needs to be applied much more fully and more extensively.

Unfortunately, the package of proposals set out yesterday falls well short of what is required, both because it does not apply to the existing EU trade deals covered by this Bill and because it does not go far enough. For example, it is welcome that the Secretary of State proposes a process for Ministers to set out their ambitions before embarking on a new set of negotiations, including scoping assessments, and the commitment to publish impact assessments is also a step forward, but the reality is that recent impact assessments by the Government on trade have focused purely on the impact for exporters, without taking into account at all the wider economic impacts, let alone social, environmental, gender and regional impacts and the effects on workers’ rights. So we need to see a much stronger commitment to transparency.

Most significantly of all, the Secretary of State’s proposals fail to give Parliament meaningful oversight of new trade deals. For that to happen, Members of this House need a guaranteed vote on the deal that emerges from the negotiations. Without that, all the other measures proposed by the Secretary of State yesterday risk being little more than window-dressing.

The Secretary of State contends that the Constitutional Reform and Governance Act 2010 is all that is needed. However, that process is an utterly inadequate rubber stamp: it gives Parliament a right to say whether a new trade deal should or should not be ratified, but does not enable Parliament to propose modifications. Moreover, as we know to our detriment time and again, Ministers can and do simply overrule Parliament and ratify the trade deal despite Parliament’s objections. In contrast, Members of both the European Parliament and the US Congress get an automatic vote. If this issue is about taking back control, why do we not take back some control in this Chamber and make sure we get the same kind of vote that other legislatures with whom we will be negotiating do?

Trade deals are not simply commercial negotiations; they are public policy negotiations and should be treated as such. Transparency, scrutiny and parliamentary approval should be embraced, not treated as a risk.

Photo of Mark Prisk Mark Prisk Conservative, Hertford and Stortford

The hon. Lady’s new clause says the impact assessment should include

“both qualitative and quantitative assessments”.

Can she give an example?

Photo of Caroline Lucas Caroline Lucas Co-Leader of the Green Party 2:45 pm, 17th July 2018

A qualitative impact would be the impact on the environment, for example. We want to know not just the economic quantity of the impacts in terms of how much trade gain we are going to get out of a negotiation, but the qualitative impact on the public policy areas that I am talking about. We cannot quantify necessarily the impact of a trade deal on our own environmental standards, but we can say whether qualitatively those standards are going to be degraded. That is why we need both those terms: we want to know the quantitative and the qualitative impacts. They are separate, and it is not that difficult to see the difference.

New clause 3 sets out the kind of framework we need. Before commencing the negotiation of a trade agreement, Ministers must bring before Parliament at the very least a sustainability impact assessment conducted by a credible independent body, covering not just the potential economic impacts, but also the social and environmental ones. The devolved authorities, businesses, trade unions and the public must be consulted about the potential agreement, as is required in the US. If the decision is to go ahead, Parliament would be required to give its consent to a mandate for the negotiations, setting guidelines and boundaries, a process based on the Danish model. The Government would conduct negotiations transparently, releasing texts before and after each negotiating round, building upon the procedure in the EU and following practices common in other areas of international negotiation, such as climate talks.

My amendment is a very basic and simple one. It is asking for things that are common in many other countries around the world, and saying that we should do the same.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

We are clearly in a very much better situation now with this Bill’s regulation scrutiny provisions than after the Second Reading in this House, and on that basis my recommendation will be that hon. Members do not vote for my new clause 6 or my amendments 6, 7, 8, 9 and 10, but that they vote for the alternative Government amendments, new clauses 12, 13 and 14 and all their tabled amendments to clause 2. If the Government amendments pass, Henry VIII will have been banished from this Bill and a sensible compromise scrutiny system will have been inserted. The Government have listened and done the right thing and we should support them for that, but there are still issues, so let me explain my thinking.

This Bill applies to around 40 existing EU trade-related agreements involving some 70-plus third countries. This actually also includes some agreements that are concluded but are still due to be implemented, which I shall call collectively FTAs. It is estimated that 10 of the UK’s top 50 export markets are served by these EU FTAs, accounting for 35% of UK trade. I can therefore understand why the Government are keen for the UK to adopt these FTAs post Brexit, or “roll them over” in the terminology used by Ministers. In addition, I understand the practicalities of the situation: the Government have limited negotiating capacity and the idea of dealing with all of these 70 third countries and starting deals from scratch is undoubtedly unrealistic in the immediate term. Indeed, the average time for negotiating an FTA is seven years and the recent Canada deal took more like 15 years. So I understand that there is a lot at stake here for the UK, and I appreciate that the International Trade Department is under a lot of pressure to deliver.

Having said that, I do not think that the Department has covered itself in glory in its handling of these roll-overs. To start, I would make the point that we have been given a wall of silence. The International Trade Committee back in March asked the then Minister to prioritise these negotiations more, to publish a detailed timetable of the work-streams involved, to produce a risk register identifying clearly the agreements concerned and to have contingency plans even for where third countries have only given an assent in principle. It took the Government until 15 May to respond to the Committee report, and to call their response bland and non-committal would be an understatement. In the meantime, various leaks and rumours have been appearing, maintaining that some of the negotiations with third countries have not been going quite according to plan and that the EU has not been as helpful as the Ministers had originally thought it might be. This would include the EU telling us that it will not ask its FTA trade partners to allow the UK to benefit from their existing deals until the UK signs the final legal text of the Brexit deal. That could leave us with only a few months up to next March in which to negotiate the roll-overs.

Given all this, I have some sympathy with new clause 16, tabled by Geraint Davies, which demands further details of the status of these proposed roll-over deals, and the Minister should acknowledge the frustration on this that is shared by everyone outside his own Department. We have received vague assurances from the Department that the roll-over discussions are going according to plan and that everything will be all right on the night. We are also being told that the Government need to have this legislation in place so that they can action the roll-overs, and that they need the regulatory powers to make this happen quickly if need be, including in the situation of our Brexiting with a no-deal scenario.

I am trying to show that the Government have asked for sweeping Henry VIII powers while keeping people pretty much in the dark as to what they might be needed for, and while providing little hard evidence of what has been achieved to date. Of course, UK business has also been crying out to know where we stand as regards these important overseas markets. I hope that the Government are right and that the roll-overs will take place as planned with no or few changes, but that does not mean that it would be acceptable that any material changes to the deals should just be waved through by Ministers without any parliamentary scrutiny. For instance, let us say that one of the EU third countries with whom we wish to roll over a deal says, “Yes, we agree that you can roll over, but let’s face it, you are a market of only 50 million people rather than 500 million, so we’ll agree to roll over, but only on condition that we also get 50,000 visas a year.” Under the Bill, that could be pushed through by Ministers on a negative order with no scrutiny at all. By the way, I do not see this as a remain argument or a leave argument; I see that as simply wrong. If Brexit is about returning power to Parliament, it is surely not about then just giving Ministers sweeping new powers, not least in a scenario where so little information has been given to hon. Members.

The Government have been maintaining that they wish to use these powers to roll over existing EU deals before possibly coming back to renegotiate substantive deals with the same countries, which would be subject to a scrutiny process yet to be proposed. However, I do not see why these same powers should not be capable of being used again after roll-over to make further changes to the same FTA during the five year period—a sunset period which, with a possible further five-year extension, is in my opinion much too long.

All those reasons led me to think that we have a real problem with these provisions and I therefore tabled my amendments, looking for a triage and scrutiny system. However, since tabling the amendments, I have had an ongoing dialogue with Ministers, including my right hon. Friend Greg Hands and more recently the Minister for Trade Policy, my hon. Friend George Hollingbery. Discussions have been courteous and positive, and I am pleased to say that the Government have listened and tabled their own amendments—I think more than 40 of them—to clause 2.

This will mean that the first proposed statutory instruments related to an FTA will need to be laid not less than 10 sitting days after the issuing by a Minister of an explanatory report. The changes proposed in the report will then be cross-referred to in the related SI’s explanatory memorandum. Further, it is now proposed that all related SIs will be subject to the affirmative procedure, however material or immaterial they may be. This effectively takes away any need for sifting provisions. Finally, the sunset period is proposed to be cut from five to three years, plus up to a possible further three years following an affirmative resolution.

Photo of Vicky Ford Vicky Ford Conservative, Chelmsford

I have received many hundreds of emails from my constituents asking me to support my hon. Friend’s amendments in order to bring more transparency to the trade process. Can he confirm that the amendments that the Government have tabled today will meet their requests? I have had four times as many emails on this as I had on the White Paper.

Photo of Jonathan Djanogly Jonathan Djanogly Conservative, Huntingdon

Yes, the approach that has now been adopted is, I believe, a fair one, subject to some ironing out that might need to be done in the other place. Yes, it is a good deal for my hon. Friend’s constituents.

After no little discussion over the last few months, I think that the position is now very much improved. Let us keep in mind that a single FTA might have many SIs attached to it, so to have the report laid 10 sitting days in advance of the first SI, setting out all the changes in the proposed deal that will need to be considered, should be more transparent than just attaching a period for scrutiny to the SIs themselves. Furthermore, attaching the 10 sitting days’ time delay to the report will allow any comments that people wish to make to be made before the SI is laid, which is more effective from a review point of view.

I am concerned that these powers could be used multiple times on the same FTA—say, if different trading terms were agreed a couple of years after roll-over. I understand that this is not the Government’s intention and I believe that the effect of these Government amendments would be to prevent that, unless the proposed changes came within the scope of the initial report. However, if they did not come within the scope of the report, Ministers should be required to provide a further report. Clarification on this point, perhaps today from the Minister or in the other place, would be appropriate.

I note the insertion of a provision in new clause 13 saying that Ministers should not have to prepare a report on the proposed FTA in exceptional cases. Apparently the Constitutional Reform and Governance Act 2010 contains a similar provision. The Minister has assured me that this provision is unlikely ever to be used, and that if it was, a report would still need to be prepared and there would still be a need for an affirmative resolution. Again, I hope that the Minister will refer to this in his closing remarks.

A further issue is the need to confirm that the scrutiny provisions to be used on these FTAs will be those set out in this Trade Bill and not those in the European Union (Withdrawal) Act 2018. This is provided for in my new clause 6. From discussions with the Minister, I understand that he has been advised that all regulations relating to rolled over EU FTAs will necessarily need to be dealt with under the terms of this Bill, but again, clarification would be helpful.

Yesterday we debated the Taxation (Cross Border Trade) Bill, which itself contains its own powers to make orders. Although other colleagues have been focusing on that Bill, I remain concerned that the scrutiny system in today’s Bill ties in with that Bill. This is relevant because aspects of an FTA, which are customs related, will be dealt with by yesterday’s taxation Bill rather than by today’s Bill. The regulation provisions may therefore need to work in sync.

All hon. Members from both sides of the House have been involved in this, and I thank those who have supported my amendments. The outcome has not been a victory for any Brexit faction; it has been Parliament that has won this debate in upholding its right to review the actions of the Executive. Having said that, I would point out that more than 40 Government amendments were received within the last week. As welcome as they were, and while the principle of them is agreed, the details deserve a review by the other place. I have mentioned the interconnectivity between this Bill and the taxation Bill, and these would be good topics for further review.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Trade)

I should like to speak to new clause 20, which is in my name and those of my hon. Friends. I shall also speak to new clauses 22, 23 and 24 and make brief reference to new clause 21. New clauses 20 to 24 combined are an attempt to provide and further strengthen a comprehensive framework for future trade negotiations. This is to ensure that the devolved nations are respected, consulted and fully engaged in trade deals, and that their voices and national interests are properly reflected in trade deals, from determining the negotiating mandate right through to reviewing progress on deals after ratification and implementation.

That is important because although the UK devolution Acts grant Westminster full power over international trade, the domestic impact of many trade agreements extends beyond the competence of Westminster. The devolved Administrations have responsibility for a broad range of policy issues including health, education, agriculture and the environment, and many modern trade agreements include provisions with the potential to lower environmental standards, open up public services to privatisation, expand intellectual property rights or risk increasing the cost of medicines. Those agreements can encroach on the devolved Administrations’ policy space, restricting their ability to make public policy in those areas. That is something that none of us wants to see.

Photo of Angus MacNeil Angus MacNeil Chair, International Trade Committee

My hon. Friend is making an important point, and he is not asking to reinvent the wheel. In Canada, the International Trade Committee heard evidence from John Weekes, who is an ambassador to the World Trade Organisation and also a Canadian negotiator. He said that squaring off the provinces of Canada, though adding to complexity, made for better trade deals and a more harmonious Canada. Canada is obviously more interested in keeping itself together than the current United Kingdom is.

Photo of Stewart Hosie Stewart Hosie Shadow SNP Spokesperson (Trade)

My hon. Friend the Chair of the International Trade Committee makes an important point. We have already seen the impact of sub-state Parliaments in Europe on previous European trade deal discussions. Indeed, my hon. Friend is right that we have seen the impact of provincial governments in Canada, and we would do well to take that on board here. In a sense, that is what my new clauses are about.

New clause 20 sets the role of the devolved Administrations in helping to approve the negotiating mandate. It suggests that a joint ministerial committee on trade be set up with representatives from all the devolved Administrations, that that committee be required to reach consensus on any draft negotiating mandate, and that it be revisited if the mandate changes during the negotiations. New clause 20 also requires that the consent of the Scottish Parliament and the other devolved Administrations be secured specifically for areas under devolved control that may be affected by a trade deal. That is not a veto, as the Labour Front-Bench team would describe it; it represents responsibility for the areas that the devolved Governments have responsibility for. In short, new clause 20 ensures that any negotiating mandate is first approved by the devolved legislatures and that a joint ministerial committee is created to co-operate and agree the mandate.

New clause 21 lays out the process to include the devolved nations during negotiations, which would happen by ensuring that a negotiator from each of the nations would be on the UK negotiating team for each deal. New clause 22 ensures that Members of the Scottish Parliament and of the other Administrations should be given the legal right to see negotiating texts and scrutinise the negotiations from the perspective of the impact they might have on devolved competencies. I welcome what the Secretary of State for International Trade said yesterday about sharing information, but I got the impression that he would not go as far as new clause 22 seeks. However, the change is necessary so that the devolved Administrations can actually see what the real impact on their competencies might be.

New clause 23 creates a right for the devolved legislatures to approve those aspects of a trade deal that fall within their competence. Again, that is not a veto; it is responsibility for the things that they do. New clause 24 lays out that a trade agreement should be reviewed every five years by the UK Government, who should have the power to propose changes or even withdraw from it if necessary. The devolved Administrations should have an input and be able to propose changes and make recommendations to the UK Government. If we want the public to have confidence in our trade arrangements and if we want them to believe that trade agreements will benefit everyone in all the nations of the UK, we must ensure that proper structures are in place to include, formally and on a statutory basis, representatives from all the Administrations.

I will finish with why we want to make these changes. The Secretary of State said yesterday that he hoped soon to be able to announce the countries with which he wanted to start negotiating. When the dust has settled on Brexit in a year or two, I hope that he can come back to the Dispatch Box and announce a fantastic deal with a new third country. He may well say, “We’re going to sell hundreds of millions of pounds’ worth of new Nissan cars from Sunderland.” Brilliant. However, if the quid pro quo is that the third country wants to sell soft fruit to the UK or have access to UK fishing waters—nothing wrong with that if that is the deal that is cut—even if there is a massive net economic gain to the UK, it would be a good deal for the north-east of England and a bad deal for the north-east of Scotland.

It is not seeking a veto or anything unusual to ask that the devolved Administrations be involved on a statutory basis. It is common sense to have equality and equity so that the devolved Administrations can have an input on a statutory basis throughout the process to ensure that the national interests of Scotland, Wales and Northern Ireland are as protected as the interests of UK as a whole.

I am conscious that time is short. I hope to press new clause 20 to a vote and then we can move on to the other groups of amendments as quickly as possible.

Several hon. Members:

rose—

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Order. We are very constrained for time, and I know that Richard Graham—great diplomat of international renown that he is—will not absorb the House’s attention for more than five minutes, but we will savour those five minutes.

Photo of Richard Graham Richard Graham Conservative, Gloucester

Thank you, Mr Speaker. I welcome the Minister’s announcement that today’s debate is about continuity and transparency, but the truth is that it is laced with a cocktail of amendments with very different agendas. The two most popular agendas represent attempts to lock us into either the or a customs union, as in new clause 5, or to secure a customs union were the negotiations to fail to secure frictionless FTAs, which is in new clause 18. That would be the clearest invitation to the European Union to refuse those negotiations. The third one—[Interruption.] Be patient.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

The hon. Gentleman is referring to new clause 18, which is in the next group. We have limited time and he is talking about the wrong section of the Bill.

Photo of John Bercow John Bercow Speaker of the House of Commons, Chair, Speaker's Committee on the Electoral Commission, Chair, Speaker's Committee for the Independent Parliamentary Standards Authority, Chair, Commons Reference Group on Representation and Inclusion Committee

Forgive me; because I was engaged in discussions at the Chair, I did not notice that. Richard Graham must focus with razorlike precision on the matters in this group. If he does not wish to do so, he must wait until we are discussing another group. If he can find a way of delicately relating his concerns to the group with which we are dealing, rather than one with which we are not, that would be in order.

Photo of Richard Graham Richard Graham Conservative, Gloucester

Thank you, Mr Speaker. If Geraint Davies had waited but two seconds, he would have realised that I was precisely there with my third illustration of today’s agendas: the attempts to avoid free trade agreements altogether, of which new clause 3 is the most striking example, or to scrutinise them to death, as set out in new clause 20.

I wish to linger on new clause 3. It may appear to those outside this House that it contains reasonable requirements. It states that Ministers of the Crown should lay a draft of the negotiating mandate, setting out fields, sectors, principles, limits and desired outcomes of agreements that may well be an exact and absolute rollover of existing agreements that were negotiated decades ago. The truth is that this is the “we do not want any free trade agreements” clause. It would frankly be absurd to pretend that we could ever get anything done, given the requirement to ensure that

“between each round of negotiations” of some 40 agreements

“all documents relating to the negotiations have been made available for scrutiny by select committees”,

unnamed and unnumbered. Those who drafted that new clause would clearly have been against the anti-corn laws of 1832 and against Adam Smith’s “The Wealth of Nations”. They would be against this country actually receiving anything at all in trade, specifically if we manufactured or produced it here in this country. Micro-management would run riot, and it would mean the end of all free trade agreements for all time. I therefore completely reject that approach.

My second point is that what we are talking about tonight ultimately comes down to difficult decisions about what type of nation we want to be when we leave the European Union. It has always been clear to me that if we are to leave the EU, we cannot stay in the or a customs union. It is bizarre that some Opposition Members do not see that our inability to decide our trade preferences, particularly with the poorer nations of the world that are currently disfavoured under the common external tariff regime, could not be significantly improved by having our own free trade agreements.

The next point—Sir Vince Cable is a classic example of this particular school of thought—is that we will not be able to negotiate effective free trade agreements on our own once we have left the European Union and the customs union. I urge all those in this House who believe that to look closely at the potential of the Trans-Pacific Partnership and the warm interest from all those involved in that complicated and important agreement in an area of vital growth to the world. The opportunity for us there is significant. We should not listen to those who put up new clauses that would get rid of free trade agreements forever, and we should seize the opportunities that leaving the customs union will offer us if we are to leave the European Union, which we are.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

I will be brief. The Trade Bill is of course the latest part of the Brexit fantasy built on the illusion that the trade we lose from the EU will be made up by the US and, in particular in this Bill, by the continuation, without any change, of the existing 14% of our trade with third countries. We know from Donald Trump that we cannot rely on the US. This is about whether we can rely on the 70 countries and 40 agreements to deliver the 14% of our trade in the same way, and the simple fact is that, rather than negotiating as team EU, any country now looking to negotiate against the UK alone is bound to want a new agreement, because we are a much weaker party.

That is why, in speaking to new clause 16, I simply ask that MPs have information about the countries that ask for changes in those agreements. The current Minister and previous Ministers have claimed that no one is asking for any changes, but we already know that both Chile and South Korea are asking for such changes. This is about transparency and scrutiny.

As it stands, the Trade Bill gives Ministers the power to amend domestic law to match any new trading arrangements, so we are talking about Ministers having the right, behind closed doors, to change standards, to change tariffs, to change human rights, to enable visas, to change environmental protections, to undermine public health and to change workers’ rights. [Interruption.] There is a bit of heckling, but the reality is that in bilateral trade agreements if Ministers decide there will be different standards, rights and protections, that may be permitted without the scrutiny of this House. Indeed, tribunals and mechanisms like the investor-state dispute system could be introduced behind closed doors. All new clause 16 says is that there should be scrutiny of that.

Photo of Geraint Davies Geraint Davies Labour/Co-operative, Swansea West

There is no time for me to give way. All I am asking with my simple amendment is that we have the power to know in advance when people ask for concessions. The Government should accept the amendment, because they claim that nobody is asking for any changes and that it is business as usual. If they deny the amendment, they will just be illustrating that, behind closed doors and under the cloak of darkness, we could see our protections and rights undermined.

Photo of Jeremy Lefroy Jeremy Lefroy Conservative, Stafford

In speaking to the amendments on the transparency and scrutiny of free trade agreements, I ask the House to lift its eyes beyond the detailed scrutiny that will inevitably and necessarily take place in this House and consider whether we should not also be looking to join others not in the European Union but in free trade associations.

Pretty much every single country in the world is part of some kind of free trade association, whether a very close one or a much more loose-knit one—whether it is Mercosur in South America, the Common Market for Eastern and Southern Africa or the North American free trade agreement. I therefore ask the Government to look at the European Free Trade Association, which is not synonymous with the EEA or with Switzerland. If it will have us, as I very much hope it will, EFTA would provide the ideal vehicle for both the withdrawal agreement and the transition arrangement of 21 months, during which time we will be members of the EEA, and for the association agreement thereafter.

Photo of Angus MacNeil Angus MacNeil Chair, International Trade Committee

The hon. Gentleman is fantastic in making the fundamental point that the rest of the world is in regional trade agreements. He is just about correct. Only five countries are not in regional trade agreements, which is what the UK is heading towards: East Timor, Somalia, South Sudan and, we think, Mauritania—

Photo of Angus MacNeil Angus MacNeil Chair, International Trade Committee

Does Jeremy Lefroy think it is incumbent on the UK to think again about being in that company?

Photo of Chris Leslie Chris Leslie Labour/Co-operative, Nottingham East

This group of amendments is about parliamentary scrutiny, and in a way it is a shame that some on this subject are in later groups. The key thing I want is to ensure that appointments to the trade remedies authority are subject to confirmation by the International Trade Committee in the same way that the Treasury Committee has confirmation hearings on the Monetary Policy Committee and the Financial Policy Committee.

New clause 12 gives me a little tickle, a little laugh, because it says that Ministers will now come to report to the House when there are any significant differences in the free trade agreements we have as a member of the EU that will be rolled over. Apparently the agreements will be cut and pasted, and it was only at last year’s Conservative party conference that the Secretary of State for International Trade himself promised that, one second after midnight, all 40 agreements will be rolled over and available from March 2019. Well, it has not quite been going his way, because the Government have not got a single other jurisdiction to sign up legally to doing that.

In fact, many of the countries with which the UK enjoys free trade agreements by virtue of its membership of the EU customs union are now starting to say, “Well, we would quite like a few significant changes.” South Africa has indicated that it wants to use this opportunity to weave in a few differences—if it is to do a fresh agreement with the UK alone, maybe this is a chance to look at some particular issues. South Korea has done the same.

I challenge the Government to answer how they will roll over so simply the cut-and-paste free trade agreement we have with Turkey. Of course, in essence we enjoy a customs union with Turkey by virtue of our membership of the EU. Cutting and pasting our relationship with Turkey? Good luck with that one.

Our membership of these 40 free trade areas would be far safer if we remained a member of a customs union, which is of course the subject of new clause 18, to which my name has been added. I want to make sure the House has a chance to vote on new clause 18, although it is in a later group, because while providing a chance for the Government to try to get their way on the Chequers agreement for a free trade area on goods, there would be a customs union safety net in place if that did not work. We want to make sure the House has an opportunity to debate new clause 18.

Richard Graham mentioned new clause 17, which would similarly provide a safety net for the regulatory framework we currently enjoy for medicines. Some 45 million packets of medicines go between the UK and the EU every month. New clause 17 was tabled by Dr Lee, and my name is on it, too. I hope we can press the amendment to a vote.

Today is the day that the European Union signs its free trade agreement with Japan. The UK is now benefiting, by virtue of our membership of the EU customs union, from a free trade zone with Japan that covers a third of the world’s GDP. By taking some of the decisions we might be taking to leave a customs union, we are putting at risk our stable and frictionless trade capacity with the EU, and now also with that wider part of the world. I hope we can stay in that arrangement and protect the jobs and livelihoods of our constituents.

Several hon. Members:

rose—

Photo of Greg Hands Greg Hands Conservative, Chelsea and Fulham

I welcome the return of the Bill to the House and, perhaps not surprisingly, I support the Government’s approach, having been the Minister responsible for the Bill until about three weeks ago. I commend the approach taken by my successor in moving a number of these issues forward, particularly in his discussions with my hon. Friend Mr Djanogly.

Parliamentary scrutiny is crucial for trade agreements, and we have seen the difficulties in recent years with trade agreements that have been insufficiently scrutinised, or where there was a feeling that there had been insufficient scrutiny—the Transatlantic Trade and Investment Partnership perhaps being the most important example.

I very much welcome the Secretary of State’s proposals yesterday for the scrutiny of new trade agreements. Returning to where we started, it is vital to distinguish between the 40-plus existing EU trade agreements and what may happen for future agreements. No one should underestimate the importance of those EU agreements. With Japan being in scope, too, the volume of our trade that is done with countries for which there is an EU trade agreement—that is not the same as saying the volume of trade that is dependent on those agreements—rises to around 16%, which is an incredibly important part of our trade. As we know, none of these countries are in principle opposed to doing and rolling over these agreements. I have had productive talks with South Korea and South Africa, as I am sure my successor has. Various memorandums have been signed agreeing to transition these agreements. So I refer anybody who says that these countries have problems doing that to those agreements that were signed, for example, the one signed with the South African Trade Minister, Rob Davies.

I welcome the approach taken by my hon. Friend the Member for Huntingdon and his agreement that we are now satisfied with and have coalesced around new clauses 12, 13 and 14. We are always trying to get a balance between ensuring that any significant change to a trade agreement is scrutinised by Parliament and not creating a laborious and cumbersome procedure that would potentially jeopardise the future of one or more of those 40-plus agreements. I am delighted that we seem to have reached that agreement. I have visited businesses that are directly impacted by some of these agreements, including the Ford factory just outside Johannesburg, which is very dependent on the EU-South African Development Community agreement, in terms not just of taking components for vehicles from the UK to South Africa, but exporting finished vehicles to the EU. The business voice is very much saying that it wants these agreements to continue—that is business’s principal concern.

Finally, I wish to argue against new clauses 3 and 16, and other proposals that seek to legislate now for future trade agreements. It is only fair that we look at the proposals made by the Secretary of State yesterday in this House and do not prejudge them by passing legislation today, as it would have an impact on future trade agreements. We must make sure we listen to all voices, so that they are included in consideration of where we take future trade agreements.

Several hon. Members:

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Photo of Wera Hobhouse Wera Hobhouse Liberal Democrat Spokesperson (Housing, Communities and Local Government)

Thank you, Mr Speaker. This Bill would not be needed if we remained in the customs union. The Government are repeating, like an old record, that, “Leaving the EU will transform us into global Britain, striking trade deals around the world. While striking them, we just carry over existing deals.” How realistic is that? Outside the EU, Britain is a much less attractive trading partner. Businesses invest in Britain because we are an entry point to the European market and the single market. Is it reasonable to think that the UK can negotiate alone the same deals it can when part of a block of 28 countries? Although some countries have indicated they are prepared to copy and paste over existing deals, others will be watching and waiting, reserving judgment to see exactly what access the UK will have to the EU after Brexit. For that reason, we simply cannot accept that existing trade deals will be copied and pasted; significant changes will come along.

I am pleased that the Government have recognised that Parliament needs some say in the matter by tabling amendment 75 and accepting my amendment 4. However, the Government’s understanding of parliamentary democracy remains pretty poor. Amendment 75 allows MPs to approve, by affirmative statutory instrument, any changes in the law required by one of these continuity deals. It is a take-it-or-leave-it vote. It is not amendable and it is not meaningful. That is why the Government need to meet the concern raised in new clause 3, which stands in the name of Caroline Lucas and which I support. People voted leave for different reasons, but nobody voted to make themselves poorer, to lose their job or to have food and product safety standards thrown out the back door.

With your permission, Mr Speaker, let me just say something about new clause 2, which is in the final group. The Government must be honest about the impact of any trade deals they sign and Parliament must be able to scrutinise this. The Tory leavers say, “Brexit is the will of the people”, but the Tories are in disarray, trying to work out among themselves what the will of the people actually is. As the chaos and confusion grows, it is time that more Members, on both sides of the House, joined the Liberal Democrats in supporting a people’s vote on the deal. We need to be honest with our constituents about the economic realities of Brexit and then give the people a final say on the deal.

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

I shall try to be brief, Mr Speaker. I thank the Opposition spokesman for his remarks, but I am going to limit my comments in return to saying that I am very disappointed that Labour Front Benchers could not welcome what is undeniably a good and robust scrutiny arrangement. We have hugely improved the position. The House will now have adequate and deep opportunity to challenge the Government’s proposals on any transitioned free trade agreement, and I just think it was a shame they could not say so.

Caroline Lucas knows very well that this Bill is about the continuity of existing arrangements. The Secretary of State yesterday set out our approach to new trade arrangements in the House, with plans for extensive public consultation, continuous parliamentary engagement and the setting up of the strategic trade advisory group, and clear plans for engagement with the devolved authorities, civil sector and civil society more generally.

My hon. Friend Mr Djanogly asked several questions. I very much welcome his comments on our discussions and the fact that he is prepared to accept our amendments today. I can confirm that not all transitioned agreements will need clause 2 powers to implement changes. I can further confirm that it is not the intention to use powers in clause 2 to implement a transitioned free trade agreement more than once, although of course these will need to remain operable over time. In relation to the clause 2 power, “exceptional” is modelled on the Constitutional Reform and Governance Act 2010 process. The threshold is high and the flexibility provided is simply a matter of prudence. Finally, he asked for reassurance about powers in the European Union (Withdrawal) Act 2018. That Act allows regulations to be made that deal with matters arising from the UK’s exit from the European Union. The implementation of or transition to free trade agreements is not such a matter, so we cannot use that Act for the purpose of implementing a free trade agreement.

Stewart Hosie will know only too well that the Bill is about continuity: it is about not our future arrangements but our current arrangements. Yesterday, the Secretary of State comprehensively laid out our plans. We are committed to working with the devolved Administrations on our approach to the implementation of trade agreements that are signed after we have exited the EU, and they will also have a role in shaping the UK’s future trade negotiations. The Department held a successful deep dive on trade with devolved authorities in March 2018. A major outcome of that was the joint agreement on a regularised senior officials meeting, to take place every six weeks between the Department and the devolved authorities. A detailed rolling programme of policy and market-focused roundtables will take place over the rest of 2018. Beyond that, the hon. Gentleman has the reassurances that the Secretary of State gave yesterday on the devolved authorities’ participation. I hope that that at least gives him confidence that the Government are serious about their wish to negotiate with devolved authorities.

Photo of George Hollingbery George Hollingbery Minister of State (International Trade)

No, I am afraid I will not.

Finally, I thank my right hon. Friend Greg Hands; my hon. Friends the Members for Chichester (Gillian Keegan) and for Gloucester (Richard Graham); and the hon. Members for Swansea West (Geraint Davies), for Nottingham East (Mr Leslie) and for Bath (Wera Hobhouse) for their contributions to the debate.

Question put and agreed to.

New clause 12 accordingly read a Second time, and added to the Bill.

New Clause 13