Amendment 31

Trade Bill - Report (2nd Day) – in the House of Lords at 6:30 pm on 13th March 2019.

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Baroness Brown of Cambridge:

Moved by Baroness Brown of Cambridge

31: After Clause 10, insert the following new Clause—“Assessment of anti-dumping or anti-subsidy measuresIn determining whether the application of an anti-dumping or anti-subsidy measure meets or does not meet the economic interest test under Schedule 4 to the Taxation (Cross-border Trade) Act 2018, the Secretary of State or TRA must give special consideration to the injury caused by the dumping of the goods, or the importation of the subsidised goods, to a UK industry and the benefits to the UK industry in removing that injury.”

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench

My Lords, Amendments 31 and 32 are in my name and those of my noble friend Lord Kinnoull and the noble Baroness, Lady McIntosh of Pickering. Amendment 31 relates to the presumption in favour of adoption of trade measures and it will be familiar to noble Lords from Committee.

The Taxation (Cross-border Trade) Act sets the overarching rules under which the UK’s new Trade Remedies Authority will operate. The Act does not have a clear or explicit presumption in favour of adoption of trade measures akin to the EU equivalent, the Union interest test. Considering whether measures are in the interests of the UK involves taking into account five different sets of interests. In doing that, unlike the EU approach, the Act does not give priority or special consideration to the interests of the complainant industry. That special consideration gives the EU test a presumption in favour of adoption of measures, which is absent in the UK Act. While government amendments on Report of the Taxation (Cross-border Trade) Act improved the wording around the economic interest test, and Ministers have privately assured manufacturers that the intention is that there is a presumption in favour of adoption of the measures, the words contained in the Act fall short of such a presumption.

I thank the Minister for helpful meetings with me and my noble friend Lord Kinnoull on this issue, and I hope that, in her reply, she will be able to clarify the presumption that the TRA will apply when it conducts the test. An explicit reference to special consideration of the need to remove injurious dumping would be particularly helpful.

Amendment 32 relates to the way that the detailed rules for the operation of trade remedies will be scrutinised. These rules will have profound impacts on UK manufacturers’ ability to level the playing field when overseas competitors do not play by the rules. Many of those rules about the operation of trade remedies will come through secondary legislation as a result of provisions in the Taxation (Cross-border Trade) Act. Trade policy generally, including specific issues such as these, is of such importance that we should be discussing it frequently in your Lordships’ House—a sentiment that I believe the Minister might also support. Amendment 32 would require the statutory instruments to be affirmative instruments, to be discussed and approved by resolution of both Houses. I am interested to hear from the Minister about the opportunities that your Lordships’ House will have to debate important trade policy issues. I beg to move.

Photo of The Earl of Kinnoull The Earl of Kinnoull Crossbench

My Lords, I added my name to these two amendments and I will be brief. I agree with every word that my noble friend Lady Brown just said. I add my thanks to Ministers and the Bill team, who have been very gracious and given of their time generously to discuss these issues. I have nothing to add to what my noble friend Lady Brown said about Amendment 31, about which I wholly agree.

I also agree with what she said about Amendment 32, but I have one more point to add. It arises out of the report of the Constitution Committee into the Trade Bill. Talking about the formation of the Trade Remedies Authority, it states:

“While we recognise the pressing timescales and uncertainties concerning Brexit, in constitutional terms, creating and empowering an important public body in such a manner is inappropriate”.

I very much agree with that assertion. I therefore regard Amendment 32 not only as a mechanism for debate but as a partial cure for the problem that the Constitution Committee has unearthed in its report. I therefore see it as being an attempt to try to somewhat address that problem. Can the Minister comment on that and, if she feels the amendment should not be agreed, how we should address the itch that the Constitution Committee identified?

Photo of Lord Lansley Lord Lansley Conservative

My Lords, I will make three very quick points. First, we need to be clear that Amendment 31 simply tries to attach the words “special consideration” rather than “take account”. It is not that all the factors are not there; they are, and they will be considered. The point is that special consideration should be given to this. It is not necessary to do that, because the nature of the structure in Schedule 4 would suggest that that precisely would be the case. I cannot therefore support the amendment. Temperamentally, I want to support Amendment 32, but I fear that in practice there will be many such regulations and it would not be the best use of time for this House and the other place repeatedly to engage in approving regulations of this kind.

I am interested in whether the Minster has anything to add on the potential announcements today on tariffs, which we foreshadowed last week. It is said that all the existing remedies presently imposed by the European Union would be continued, even under a no-deal scenario, by the United Kingdom. I want to inquire—the Minister might choose to reply by letter—to what extent it will be sustainable for us to do that when the remedies will have been assessed in relation to the European Union as a whole, rather than to the United Kingdom itself. For example, an increase in imports leading to injury to an industry might well be applied by the European Union in relation to an industry in Italy or Spain, but it would not be appropriate for such a remedy to be applied in the United Kingdom. That would very rapidly be open to challenge if we do not get the Trade Remedies Investigation Directorate, which is up and running in the Department for International Trade, on the case, so that we can, if we have to—I hope we do not—apply remedies on the basis of an investigation with UK, rather than EU, data.

Photo of Baroness Fairhead Baroness Fairhead The Minister of State, Department for International Trade

My Lords, I thank the noble Baroness, Lady Brown of Cambridge, and the noble Earl, Lord Kinnoull, for tabling their amendments and clarifying in advance their concerns with me and the ministerial team.

Before I respond fully to the amendments, I will take the opportunity to draw your Lordships’ attention to the steps that the Government have taken to ensure that the UK is ready to deliver a fully operational trade remedies system by exit day. The Government have brought forward legislation under the Taxation (Cross-border Trade) Act 2018 to establish the UK’s trade remedies system in the event that we leave the EU without a withdrawal agreement. These regulations also temporarily confer trade remedy functions on the Secretary of State until the Trade Remedies Authority, the TRA, is legally established.

Staff already recruited to DIT with the intention of transferring to the TRA on Royal Assent of the Bill, including those trained as investigators—the key function of this body—will carry out their functions as the Trade Remedies Investigations Directorate within the department. The directorate started work on 6 March and will deliver trade remedies functions in house pending legal establishment of the TRA.

Let me repeat that this arrangement will only be temporary. As noble Lords will appreciate, this is a necessary and pragmatic operational contingency to ensure continuity of protection for UK businesses. This must remain the Government’s priority. It is right that we plan for all eventualities, including where, for whatever reason, the TRA is not legally established under the Bill by 29 March.

As the Secretary of State explained in his previous letter to the International Trade Committee on 14 February, these regulations ensure that we can deliver a fully operational trade remedies system for any eventuality, but we are clear that the TRA remains the long-term sustainable way of delivering an independent trade remedies function. Our commitment to establishing the TRA as a non-departmental public body at arm’s length from government has not changed. We must have an independent TRA in the near future.

To ensure consistency, the Trade Remedies Investigations Directorate will follow the same policy and procedures, as set out in the relevant legislation. Most importantly, the directorate will carry out objective investigations and make evidence-based decisions for consideration by the Secretary of State on whether measures should be put in place. Indeed, noble Lords will see that the relevant legislation laid before the other place last week sets out how the TRA will operate as an independent arm’s-length body. But if this preferred approach is not possible by exit day, the legislation also includes the necessary modifications to confer functions on the Secretary of State. These modifications will automatically expire when the TRA is legally established, with no need for further amendments. The message is clear. The UK will act decisively to address trade that causes unfair injury to our domestic industries. As soon as the TRA is established, subject to the will of Parliament, it will of course take on responsibility for delivering this function.

The Government are committed to tackling unfair trade and injurious practice in all sectors, including the ceramics sector, which the noble Baroness, Lady Brown, is interested in. It is one of the UK’s most iconic industries that exports world-class pottery around the world. The call for evidence concluded that existing EU trade remedies should be maintained for the UK’s ceramics industry. We will continue to operate a trade remedies regime that will provide a robust safety net for our industries and will enable the UK to be a leading proponent. I hope that this reassures the House that we are taking the right steps in the national interest, pressing ahead with the Trade Bill as planned while ensuring that necessary operational contingency preparations are in place if required.

I turn to Amendments 31 and 32. The policy framework that the TRA will be responsible for operating is already established in the Taxation (Cross-Border Trade) Act 2018. With regard to Amendment 31, let me be absolutely clear: that Act already sets out a presumption in favour of measures in all dumping and subsidies investigations. As I explained to the House in Committee, the Government amended the Act during its passage to emphasise this point and clarify that the TRA must consider,

“the injury caused by the dumping of the goods, or the importation of the subsidised goods, to a UK industry in the goods and the benefits to that UK industry in removing that injury”.

Furthermore, the Government will be publishing guidance on the economic interest test, which will reiterate this presumption and specify that the TRA must make a recommendation to impose measures unless it can show that anti-dumping or anti-subsidy measures would have disproportionate impacts on the wider UK economy.

I will repeat the reassurance I gave the noble Baroness, Lady Brown, in Committee: this presumption will apply when the TRA conducts the test. It has not been possible to mirror exactly the wording of EU regulations in our statute book. There was a very helpful intervention by my noble friend Lord Lansley. “Special consideration” has a specific meaning under EU law but does not have the same meaning under UK law. However, we are absolutely clear that we share the intent of giving that special consideration to the injury caused to UK industry by imports of dumped or subsidised goods. The language in the Act achieves the same outcome of an explicit presumption in favour of anti-dumping and anti-subsidy measures.

Amendment 32 also refers to the Taxation (Cross-Border Trade) Act 2018, which has already been considered and passed in the other place. This House will have seen that the provisions in the secondary legislation contain a great deal of technical detail. That is why it was accepted that the negative resolution procedure is the appropriate scrutiny mechanism. Indeed, the Delegated Powers and Regulatory Reform Committee of this House has considered the provisions of the Act and did not comment on the use of the negative procedure.

The noble Earl, Lord Kinnoull, asked about parliamentary scrutiny. We have considered the right balance between primary and secondary legislation. We want the UK to have a robust, responsive, WTO-compliant trade remedy system. The technical provisions set out in secondary legislation must be compliant with WTO law. That means that we need the flexibility for the UK to adapt to frequent developments in WTO case law. Anti-dumping and anti-subsidy measures are some of the most frequently litigated issues at the WTO. We laid secondary legislation before the other place on 5 March to have details of the framework ready to be operational as an example. The existing procedures will allow for parliamentary scrutiny of this secondary legislation.

My noble friend Lord Lansley asked whether all existing EU trade remedies would be moved over. Our commitment is to make sure that the UK will apply only those EU trade remedies that matter to UK industries. I hope that this will reassure my noble friend about the potential issue with WTO compliance that he highlighted.

I trust that my responses have provided reassurance to your Lordships and that the noble Baroness, Lady Brown, will withdraw her amendment.

Photo of Baroness Brown of Cambridge Baroness Brown of Cambridge Crossbench 6:45 pm, 13th March 2019

I thank the Minister for her detailed response. It is very encouraging to hear of progress with the implementation of the trade remedies system and with the work being done to ensure that, should we need it, provisions will be in place to support industry in this way on exit day should the TRA not be legally established by that point.

It was also good to hear the Minister say that the Government intend that we will act decisively on injury to domestic manufacturers, such as our ceramics industry, and I thank her for the reassurance that the intent of the Act is that there will be—I shall put it in inverted commas—“special consideration” for hurt to manufacturers when the economic interest test is applied. I am very comfortable with the strong reassurance she has given.

On Amendment 32, I accept the argument that there will be a large number of SIs containing a great deal of technical detail and that that is the reason for the negative procedure. I still have concerns that some very important issues will come through under the negative procedure. Trade remedy issues will be some of them, so it is with some reluctance that I shall not move Amendment 32. I beg leave to withdraw Amendment 31.

Amendment 31 withdrawn.

Amendment 32 not moved.

Clause 11: Collection of exporter information by HMRC

Amendment 32A not moved.

Clause 12: Disclosure of information by HMRC

Amendment 32B not moved.