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WTO Agreement on Agriculture: regulations

Agriculture Bill – in a Public Bill Committee at 2:00 pm on 15th November 2018.

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Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales) 2:00 pm, 15th November 2018

I beg to move amendment 67, in clause 26, page 20, line 36, at end insert—

‘( ) Regulations under this section containing provision that extends to Scotland may be made only with the consent of the Scottish Ministers.”

This amendment would require that the power to make regulations extending to Scotland can only be exercised with the consent of Scottish Ministers.

Photo of Phil Wilson Phil Wilson Labour, Sedgefield

With this it will be convenient to discuss the following:

Amendment 119, in clause 26, page 20, line 36, at end insert—

“(1A) Regulations under this section containing provisions extending to Scotland, Wales or Northern Ireland that would ordinarily be within the competence of Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland and exercised by Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland may be made only with the consent of Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland, as appropriate.

(1B) This paragraph does not apply to regulations made by the Secretary of State under—

(a) section 35 or 58 of the Scotland Act 1998 (as amended),

(b) section 82 or 114 of the Government of Wales Act 2006 (as amended), or

(c) section 25 or 26 of the Northern Ireland Act 1998 (as amended).”

In order to preserve the principle that agriculture is a devolved matter, this amendment would ensure that the Secretary of State may only make regulations to secure compliance by the UK with the WTO Agreement on Agriculture with the consent of Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.

Amendment 68, in clause 26, page 20, line 44, leave out from “support” to end of line 2 on page 21.

This amendment would remove the role of the Secretary of State as final arbiter in dispute resolution.

Amendment 69, in clause 26, page 21, line 26, leave out subsection (6).

This amendment would remove the requirement to provide information to the Secretary of State.

Amendment 96, in clause 26, page 22, line 2, at end insert—

“(8A) For the avoidance of doubt, nothing in this clause shall affect the devolution of any power under—

(a) the Wales Act 1998, the Wales Act 2014 or the Wales Act 2017,

(b) the Scotland Act 1998 or the Scotland Act 2016, or

(c) the Northern Ireland Act 1998.”

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

Like previous amendments, amendment 67 is about tidying up the Bill to respect the devolution settlements. It is about allowing Scottish Ministers to exercise powers that are already within their purview. Amendment 68 would remove what I describe as the overseer powers of the Secretary of State in respect of devolved powers by taking away the role of final arbiter and encouraging instead an environment in which consensus and agreement become the norm, rather than a veto.

Similarly, amendment 69 would remove a provision in the Bill that gives the Secretary of State power over the devolved Administrations that is not necessary. Although I can predict that the Minister will argue that there is a need for information to be provided to demonstrate compliance with World Trade Organisation rules, I contend that his assumption is not correct. Again, we return to the issue of respect for the devolved Administrations and the desirability of finding consensus and moving forward together. Removing subsection (6) would facilitate that and remove the impression that the Secretary of State wants to gather power to himself, rather than seeking agreement.

I have sympathy with the amendments suggested by other Opposition Members and the way in which they are trying to secure the future of the devolved settlements. I urge the Minister to consider how he can best do the same.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

We are all glad to be back in our places in Committee. This has been a fairly momentous day so far.

I wish to speak to amendment 119, and my hon. Friend the Member for Gower wishes to speak to amendment 96. I do not want to delay the Committee too much; I just want to make some observations. I concur with what the hon. Member for Edinburgh North and Leith has just said, and she might want to look at our proposal, because it incorporates everything, including Wales and Northern Ireland.

The point about this line of amendments is one that we have discussed before. We are trying to make the point that, when carrying through the WTO arrangements, we have to ensure that we fully consult the different territorial Administrations—in this case, Scotland, but also Wales and Northern Ireland.

Let me explain why we have tabled amendment 119. As I have said before, I visited Northern Ireland and Ireland last week, and the situation is clear. I will not say that completely different agricultural systems are evolving, but there is some difference between them. We have to recognise that. It will be something that we need to be aware of whenever we talk to the WTO if and when we leave the European Union—it will be interesting to hear whether the Minister has something to say on that, because clearly it is not a given.

We will have to apply to the WTO. Currently, we are part of the EU, so we will have to apply to the WTO in our own right. That will involve making sure that all four territorial Administrations are included in whatever appeal we make to the WTO, so in amendment 119 we are paying due regard to the devolution settlements. The situation is made more difficult, as I have said before, because there is no Administration in Belfast. We have to rely on the Department of Agriculture, Environment and Rural Affairs in Northern Ireland to take the appropriate measures on the say-so of the UK Government, but not necessarily to be completely dictated to by the UK Government.

I hope that the Minister can allay our fears that this will be a bit of a dictatorial measure if it is not amended. That is why we have tabled amendment 119. If the devolution settlements mean what they should—of course, agriculture, in this case, is a devolved matter—we have to be clear, however we subsequently work towards our own independent application to the WTO, that agriculture, which is a crucial part of any WTO arrangement, is included.

The WTO agreement is quite interesting. I hope that if I say a few things about it now, we will not have to do so again when debating clause stand part. Agriculture and horticulture are crucial parts of the WTO agreement. That means that we need to take cognisance of this, as clause 26 does, but in a way that gives due regard to the different territorial Administrations, as these amendments do.

The whole point of the WTO is to shut down agricultural loopholes,

“by binding and reducing tariffs, removing import bans or restrictions, and cutting subsidies that distort trade, both in domestic markets and on exports. As such, ‘Country Schedules’ of market access and national treatment commitments for products form an important legally binding component of WTO Membership.”

That is the specificity of the WTO agreement regarding agriculture. I could say more about how it affects agricultural trade, how it shapes agriculture policy, what the future direction of travel is and what it means for the United Kingdom, but I want to concentrate on the post-Brexit situation when we will be making this application. That is why these amendments are important. We have to ensure that all four countries are on the same page when we make that application. One of the underlying principles of the WTO is that members must not discriminate against one another. One would think that that immediately comes between the United Kingdom and other parties, but it would not be very helpful if we had discrimination within the United Kingdom, so it is quite important that we understand this in terms of the whole arrangement.

I raise that because the Minister rightly brought forward—at quite a late stage—the English votes for English laws arrangements, which lay down where the Bill affects England specifically. It is a pretty arcane document, which the Minister may wish to speak about. I will not spend hours trying to explain what the different bits mean, because I am not sure that I understand what the different bits mean. As we have tried to argue, however, this Bill has a major impact on England, much more than on the other Administrations. Wales is following England in due course. Scotland does not have a schedule. From my intimation, Northern Ireland is doing its own thing at the moment and will do so until it gets an Administration. That matters because we have to be sure that on the one hand England is not adversely affected by what is happening elsewhere, because that would look strange when we make the application to the WTO, and on the other hand that the other Administrations know that they must not discriminate against England, and they must be included in any negotiations, consultations and discussions on how we move this particular clause forward.

This clause is important. It is a part of the Bill that looks forward. It is not something we have done before, because the WTO did not exist when we entered the then European Community—the Common Market. This is a very different set of circumstances. I ask the Minister to allay some of our fears. First, will there be proper consultation, including with all the different Administrations, or with the appropriate actors if there is not an Administration, as in the case of Belfast? Secondly, to do a wee bit of pleading on behalf of England, will he make sure that England does not make all the ground running, or all the sacrifices, because we have not sorted out our own arrangements within the four countries?

The worst possible thing would be if the WTO sits on the application, leaving us in limbo land. None of us can pre-empt what will happen when we make that application. It may go through like night follows day, or it may be quite a difficult operation. Today is particularly apposite in regard to that, because we have a Bill, a discussion or a deal—whatever Members want to call it; I am not sure what form it will take when we get to the meaningful vote—that has really brought home to some Opposition Members, if not Government Members, how we have to nail this down carefully.

I hope that the Minister listens and understands why we feel so strongly about this, and why we need to get this right. I hope that he looks at these amendments—particularly amendment 119, in my name and that of other hon. Friends—because otherwise we could open up a very difficult scenario when we make that application.

Photo of Tonia Antoniazzi Tonia Antoniazzi Labour, Gower

I rise to speak to amendment 96, which seeks to ensure that nothing in clause 26 affects the devolution agreements in Wales, Scotland and Northern Ireland. It is our responsibility to ensure that there are appropriate safeguards for agriculture in Wales and the other devolved nations. That is important, as the farming unions in Wales do not support the centralising approach that has been proposed. We cannot support any situation in which artificial and arbitrary limits can be placed on what devolved Governments can do.

I recently met my local farmers and our Assembly Member, Rebecca Evans. These farmers were young, dynamic and successful, working hard and planning how their farming businesses can be more profitable and resilient when they do not know what is around the corner. Not knowing what is happening in the light of Brexit makes that planning practically impossible. That is why they need the security and protection of such the amendment.

Those farmers have a great fear of the limbo that my hon. Friend the Member for Stroud spoke about. We need to ensure that this is not a power grab. No express agriculture reservations should be carved out for DEFRA Ministers without their engaging first with Cardiff, Edinburgh and Belfast. Any agreement must be made by common consent, not imposition.

This is a probing amendment. However, I look to the Minister to protect the devolution settlements, even more so in the current climate.

Photo of Philip Dunne Philip Dunne Conservative, Ludlow

I am grateful that this morning’s sitting was suspended so that we could all take part—or attempt to—in the debate going on in the Chamber. I have only one point to make to my hon. Friend the Minister. I represent a border constituency. I have 35 miles of the English-Welsh border in my constituency, which I suspect is the largest, or close to the largest, certainly along the English-Welsh border. That area is represented almost entirely by agricultural holdings, many of which extend on both sides of the border.

I have been informed by NFU Shropshire, to which I pay tribute for digging out this information, that there were, in a recent year—I believe it was last year—a total of 575 basic payment scheme claimants, of which the Rural Payments Agency paid 244 for cross-border claims and the devolved Administrations of Wales and Scotland paid 331. This is not an insignificant group of farmers. There are a total of 83,500 in England, so it is a meaningful number. For those farmers, operating under two separate support regimes is already a challenge, but it is one that they have become used to under the common agricultural policy, which at least has a common framework. Here I have some sympathy with new clause 11, which we will come to today or in our next sitting. It seeks to provide some form of commonality, which we have touched on before in previous sittings.

I respect the fact that agriculture is a devolved matter, so this is a challenging thing to get right, but it is a problem for cross-border farms to operate in two systems. There is a real risk that, if the systems on different sides of the border diverge too much—in particular in the financial support given to farmers—it will lead to some distortion of trade and, at the worst end of the spectrum, some gaming to maximise the support available. I am sure that none of us wants to set up a system in which that is encouraged.

Photo of Martin Whitfield Martin Whitfield Labour, East Lothian 2:15 pm, 15th November 2018

I intend to speak principally to amendment 96 and, with the leave of the Chair, to make some comment on the situation that the Government have found themselves in, which is highlighted by the clause.

Agriculture is devolved, and the agricultural methods and the needs of farmers and farming groups—I will mention timber, as I keep doing—such as the timber industry are different in the devolved Administrations, and they are dealt with differently, with different solutions. Any piece of legislation needs to reflect that individuality. I am disappointed with the Agriculture Bill. I understand the political reasons, but I am disappointed in the consequence that more work on the Bill was not done with Scotland, in particular, and England. Northern Ireland has a slightly unique situation. A lot of the issues could have been addressed by people sitting in a room having sensible discussions. Instead, we find ourselves with clause 26, which infringes on the devolution settlement. The second that that happens, extreme caution is needed.

The matter is made even more complicated by the number of farms that straddle the border, as the hon. Member for Ludlow pointed out. I cannot say that a huge amount of consideration has ever been given to those farms, and matters are mainly dealt with now through the good common sense of farmers saying to people, “Someone owes me the money and I need it.” The Bill might well be a great missed opportunity to address how we deal with cross-border farms.

The purpose of amendment 96, which was tabled by me and my hon. Friend the Member for Gower, was to highlight the risk to devolution. I would be grateful for the Minister’s comments in connection with not only the current Government, but the difficulty of anticipating Secretaries of State to come. There is always a concern about new powers—not with the people who rightly say, “That’s not what we’re thinking”, but with the people who come later, who under the Bill would have the power to influence and cap the payments. That is not something that Scottish farmers want.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

It is a pleasure to be back, as always, and to provide some continuity on a turbulent day.

We are discussing an important issue. The hon. Member for Edinburgh North and Leith and her party have raised it several times, and we have had correspondence about it from Minister Ewing. I will therefore address it in some detail. The first thing to say is that subsection (1) is clear:

“The Secretary of State may make regulations for the purpose of securing compliance by the United Kingdom with the Agreement on Agriculture.”

The whole clause must therefore be read in that context of “securing compliance” with the World Trade Organisation, which is a reserved matter—incontrovertibly reserved.

When we look at what happens now, therefore, the point is that we do not have a schedule with the WTO. The shadow Minister said that, and I will come on to it later. The European Union holds the EU’s schedule, including the so-called amber box—the aggregate measurement of support allowance for the entire EU. EU regulation requires that we, the UK Government, on behalf of the whole UK—these obligations apply to all the DAs as well—must submit to the European Union the information relevant to the policies. The European Union has the power to limit the amount of money that we spend that comes into the amber box, to ensure that the EU as a whole—this has to be managed for 28 member states—does not breach its amber box.

The key point is that when we leave the European Union, we will have our own WTO schedule. We will have our own amber box allocation, which will be something in the region of €3.5 billion—a significant sum of money. Here is a question: if each part of the UK decided to spend a billion on amber box, trade-distorting support, so that England did a billion, Wales did a billion, Scotland did a billion and Northern Ireland did a billion, and say, for the sake of argument, we had an amber box allocation of £3 billion, could we say that Scotland had stayed within its legal obligations?

So the key point is not the argument that Scotland, Wales and all the devolved Administrations must abide by international agreements. Of course they must; we rely on that all the time. The key question is how they can know that they are doing so, when we have a collective allocation of perhaps £3 billion for the entire UK, and we have to be able to allocate that somehow.

A number of hon. Members have said, “There has to be a role for the devolved Administrations in this.” Subsection (2)(a) states that there should be

“a process for the appropriate authorities to decide how different types of domestic support should be classified”.

A process will be set out in the regulations by which all the devolved Administrations will be able to discuss and agree that.

Where there is a lack of agreement, there is, in subsection (2)(b),

“a process for the resolution of disputes”.

There is already provision here through regulations for us to say, “If one part of the UK thinks it should be able to spend more on trade-distorting amber box support, there is a provision for dispute resolution.” Fundamentally it is reserved; it is now reserved with the EU and there are legal obligations on us all to provide the EU with information. There is no duty on the EU to consult if we want to breach it; they just tell us what the policy is and what our limits are. It is important that, as the holder of the WTO schedule, the UK Government at least have the power to collect the data and demonstrate compliance. That is all that this clause is about.

Photo of Martin Whitfield Martin Whitfield Labour, East Lothian

Should the process for the resolution of dispute in subsection (2)(b) be followed and there is no resolution, it falls on to the Secretary of State. We have already had a discussion about his or her role with regard to England and the devolved nations. Are we not able, in 2018, to come up with a better system that more rightly reflects the full powers of the devolved nations and the fact that perhaps the Secretary of State should not be the final arbiter in this matter?

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

Given that it is a reserved competence, it is right that the Secretary of State should be the final arbiter, because somebody has to be. We do not have a federal system; we have a devolution settlement. It is different from a federal system of government and we have deliberately stopped short of a federal model with qualified majority voting.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

The Minister talks about this being reserved, but we are quite clear that, as this concerns the implementation of international obligations, it is devolved and should be treated as such. I also remind the Minister that agriculture is considered to be within the competence of the Scottish Parliament because it is not a reserved matter under schedule 5 to the Scotland Act 1998. How does he address that and—I am sorry that this is rather a long intervention—the concerns of the National Farmers Union of Scotland that a future UK Secretary of State with these powers could have

“the ability to set limits on the amount of domestic support which could be targeted at specific measures that Scottish Ministers may seek to apply in Scotland to meet their objectives”?

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

Agriculture is devolved; we do not dispute that. That is why there are schedules for some parts of the UK that have asked us to do that, and it is open to other devolved Administrations, including Scotland, to bring forward their own domestic legislation on agriculture. However, demonstrating compliance with an international obligation through the WTO is a reserved matter. We do not dispute at all that agriculture is devolved—that premise runs right through the core of this Bill—but this is about demonstrating compliance with an international obligation.

Turning to the point that the hon. Member for East Lothian made about whether we could have a better way, as I said, we do not have a federal model. This system is one that we use a lot, through things such as the joint ministerial committees. Next month, hopefully, I will go the December council to discuss fisheries. When I do that, Ministers from all the devolved Administrations will join me in the trilateral with the EU presidency and the Commission. We work through our differences and work together on particular issues, but in the final analysis if there is a dispute about a priority or we have to make a judgment call about whether to support a final agreement, it is for the UK to make that final decision. That is right because it is an international negotiation.

Amendment 119 would make a similar provision on defending the devolved settlement. As I said, we are clear that the powers we outline in clause 26(1) are fully reserved—they do not encroach on any of the devolution settlement at all. Therefore, there is no need to restate some of these matters.

The hon. Member for Stroud asked what will happen when we lay our WTO schedule. We have already laid our proposals for that. We have been in a long discussion with the European Union. The plan is to split the WTO schedule both on tariff rate quotas and on the aggregate measurement of support—the so-called amber box. It has already been decided that it will be split using a method based on historical use or an appropriate allocation of the size of our agriculture. That schedule has already been logged with the WTO in draft form. We are currently going through what are called article 28 discussions with some countries about certain issues they have raised. The process is clear: the amber box—the AMS schedule—is split and, as I said, we get around £3.5 billion of that. We are already going through the process of laying that, with the agreement of the EU.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I must dredge my memory to recall what the different coloured boxes are. What the Minister has said is fine, as long as there is agreement in the four territorial Administrations on what the Westminster Government intend to offer them. What happens if there is no agreement? Will they make representations, perhaps directly to the WTO, to say that the allocation is unfair?

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

It would not be their position to make a representation to the WTO, because it is a UK schedule. As I said, in clause 26(2) we set out a process for agreeing an allocation of the amber box—the aggregate measurement of support—and we set out a disputes process. On classification, there is also some confusion, and we will come on to bits of that later. A lot of the support, such as the coupled support that takes place in Scotland, is not even amber box; it currently comes under what is called blue box, which is a departure from the traffic light analogy.

In WTO rules there is a red box, which means that something is banned and cannot be used at all; a green box, which is for the agri-environment-type schemes; an amber box, which is for anything that might be trade-distorting; and, finally, blue box, for anything that may have some trade impact, but that is not the primary objective, and that does not distort in a large way. Scotland’s coupled support on beef and sheep currently fits within blue box, so it does not even use up any of the amber box allocation. The types of support that use up amber box allocations might be some of the intervention powers, particularly market intervention, which involve buying up surplus products and placing them in storage. That type of intervention is what we mean by amber box.

Some of the concerns that NFU Scotland has expressed are partly founded on a misconception about where its current coupled support schemes sit in the WTO schedules.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

Is the Minister saying that voluntary coupled support schemes, which only Scotland takes up the option of implementing, count not as amber box subsidies but as blue box subsidies?

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

That is correct, yes. There is a bit of a misconception there.

We have been clear. Early on, there was a discussion about whether we should claim the full size of our amber box, because—let us face it—it is about €3.6 billion, so around £3 billion. We all know that there will be other constraints on how much we can spend before we start to spend that amount of money on trade-distorting issues, but it is important to have that option. If we want to experiment with some of the policies we outline on supporting animal welfare—innovative new policies that WTO rules might not have foreseen when they were dreamed up decades ago—it is important to have that option to facilitate innovative policy. That is why we have been clear that we will take our full share of the AMS amber box.

Amendment 96 is similar and simply says that we should not affect the devolution settlement in the way we exercise those powers. I assure the hon. Member for Gower that that will not happen, for the reasons I have outlined. The power is explicitly combined with a reserved purpose, which is compliance with the United Kingdom’s agreement on agriculture. We are absolutely crystal clear that agriculture policy is a devolved matter and that each devolved Administration will be able to design their own policy.

My hon. Friend the Member for Ludlow raised the linked cross-border issue about the potential for some farmers to make a claim in each Administration. We manage that situation now—I know some people would say that it can cause difficulties—and there are already administrative agreements around the UK between England and Wales and England and Scotland about how we manage those cross-border applications. A similar administrative agreement will be easy to roll forward. We already have some divergence in the types of policies in the various parts of the UK, particularly in the pillar 2 schemes, and it will certainly be possible to manage those cross-border situations.

That important issue has been highlighted several times in the debate, but I hope I have reassured the Committee that it is tightly prescribed around a reserved matter. I hope the hon. Member for Edinburgh North and Leith will withdraw her amendment on that basis.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales) 2:30 pm, 15th November 2018

I am sorry to disappoint the Minister, but I will press the amendment to a vote. We feel strongly that the matter requires the Scottish Parliament’s consent. It concerns the implementation of international obligations that are devolved. Ultimately, the Minister has described a situation where there is not agreement, but an imposition of the Secretary of State’s views whenever there is a dispute—and with the best will in the world, such things happen. I would like to see a mature approach, which is how the Scottish Trade Minister described the Canadian solution for its trade dealings with its territories and provinces yesterday in the Scottish Affairs Committee. That is what we should strive for, rather than looking to change a system.

Clause 26 contains provisions that affect the Executive confidence of Scottish Ministers as regards the exercise of functions concerning agricultural support in Scotland. We acknowledge that for some elements of the WTO obligations, decisions need to be taken for the whole UK, but that does not suddenly convert this into a reserved policy area, which is what I think the clause does. Establishing the UK-wide arrangements for allocating the financial ceilings under the WTO agreement concerns devolved matters and certainly requires the Scottish Parliament’s consent. I repeat that, although such decisions could be taken on a UK-wide basis, that should be done only on the basis of consent, as per the allocation of competences implicit in the Scotland Act 1998. I will press the amendment to a vote.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

We will support the amendment, but we would also like to press amendment 119 to a vote.

Question put, That the amendment be made.

The Committee divided:

Ayes 7, Noes 8.

Division number 17 Decision Time — WTO Agreement on Agriculture: regulations

Aye: 7 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Amendment proposed: 119, in clause 26, page 20, line 36, at end insert—

‘(1A) Regulations under this section containing provisions extending to Scotland, Wales or Northern Ireland that would ordinarily be within the competence of Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland and exercised by Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland may be made only with the consent of Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland, as appropriate.

(1B) This paragraph does not apply to regulations made by the Secretary of State under—

(a) section 35 or 58 of the Scotland Act 1998 (as amended),

(b) section 82 or 114 of the Government of Wales Act 2006 (as amended), or

(c) section 25 or 26 of the Northern Ireland Act 1998 (as amended).”—

In order to preserve the principle that agriculture is a devolved matter, this amendment would ensure that the Secretary of State may only make regulations to secure compliance by the UK with the WTO Agreement on Agriculture with the consent of Scottish or Welsh Ministers or the Department of Agriculture, Environment and Rural Affairs in Northern Ireland.

Question put, That the amendment be made.

The Committee divided:

Ayes 7, Noes 8.

Division number 18 Decision Time — WTO Agreement on Agriculture: regulations

Aye: 7 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I beg to move amendment 120, in clause 26, page 21, line 15, leave out paragraph (b).

Photo of Phil Wilson Phil Wilson Labour, Sedgefield

With this it will be convenient to discuss amendment 121, in clause 26, page 21, line 25, after subsection (5) insert—

‘(5A) In setting limits for domestic support, the Secretary of State must not set limits for different classes of domestic support in relation to Scotland, Wales or Northern Ireland.”

In order to preserve the principle that agriculture is a devolved matter, these amendments would ensure that the Secretary of State may not make regulations setting limits for different classes of domestic support in Scotland, Wales or Northern Ireland.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

Amendment 120, in which we seek a more definite requirement of the Minister, follows on directly from the previous amendment. It effectively recognises, given that agriculture is a devolved matter—not a reserved one—in the devolution settlement, that the Secretary of State should not have the power to set different limits for different classes of domestic support.

Amendment 121 seeks to preserve the devolution settlement and respect the fact that agriculture is a devolved matter. It would prevent the Secretary of State from making regulations that set different levels for different classes of domestic support for Scotland, Wales and Northern Ireland—that is important. We are disappointed to have lost the previous vote, but we will continue to make the point that in order for the Bill not to be England only, it must take account of the other three territorial Administrations.

The Scottish Government have already suggested that a future Secretary of State could put a constraint on their funding, in particular for issues such as the less favoured area support scheme, which, it might be decided, the Scottish Government are using in an uncompetitive way. That has been picked up by the National Farmers Union Scotland, which sought legal opinion on the issue. It suggested that the wording in the Bill creates the theoretical possibility that a UK Secretary of State could, in the future, put regulations in place over and above its obligations as per article 6 of the WTO agreement on agriculture, which is causing consternation north of the border. Without asking the Minister for a legal opinion, I would be interested—and it is important—at least to get the Minister’s understanding, given the consternation already being caused north of the border, of how, if we do not accept the amendments, the possible imposition could occur.

If the provision goes through as currently drafted, Scottish Ministers will not have the freedom to apply domestic support as they see fit, particularly given that, as the Minister has said, the United Kingdom is the competent authority to apply to the WTO. Presumably, once the matter has been placed before the WTO, the amounts that each Administration could spend on its agriculture would be laid down—not just identified but laid down as tablets of stone. It would be difficult to change.

It would be interesting to know how things stand under the devolution settlement in that regard. If and when we get to Brexit, and when the WTO application with its agricultural implications is put in, the debate about the effect on the devolution settlement will be interesting. We have grave fears about the UK Secretary of State being given the power to decide what moneys will be spent and how. It could be decided that certain measures were unfair to England or to another territorial area.

The National Farmers Union of Scotland believes that a dangerous precedent would be set, and that it would be different from what was understood under the devolution settlement; it would compromise it, and put financial ceilings on the money that could be allocated to agriculture. That is why we have tabled the amendment, and why we consider the issue to be an important one, which the Minister must address on behalf of the Government.

Clearly, there could be further investigation on Report, in relation to the amendment. Perhaps the issue is one of those where we might—I shall say it quietly—look for a statutory instrument to clarify what happens. However, something has to be done to give the other territorial Administrations security, and certainty that they will not face the imposition I have set out. The Minister talked about the different boxes and gave a good history lesson on what they all mean, but what I am talking about matters, because the flexibility of each Administration will be constrained by the application to the WTO and the way the Government interpret that.

We happen to agree with the National Farmers Union of Scotland that what is proposed would undermine the devolution settlement, which is why I am happy to be speaking to amendments 120 and 121. We would have dealt with the matter more comprehensively in the form of new clause 13 but sadly, for reasons known to the powers that be, it was not selected and we have had to table the amendments. I accept that the change under the amendments would be quite minor.

We should like a wider debate, perhaps, on more of a wholesale improvement to the Bill, to go through how we would approach the question. That matters because we are not many months away from the Brexit settlement; if it is at the end of March—and who knows the day?—we will have to be quick. The Minister said we have already made an application, but we shall have to substantiate the allocation quickly.

I hope that the Minister will consider the issue and agree that we have a point. I know that he cannot give a legal response, but perhaps he will at least give us some assurance that he has listened and can act on the matter in view of the effect that there might otherwise be on the three other territorial Administrations and, indeed, England, which could be suitably constrained if we had some form of devolution in England—perhaps one day we shall. We can but dream. The reality is that we need to know such things before the Bill passes into statute.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs 2:45 pm, 15th November 2018

These are interesting amendments. It is more around the interpretation of the clause, and I want to reassure hon. Members that there is not some secret plan to start setting limits where they are not appropriate. The real purpose of subsection (4)(b) is to enable us to set limits in future: it is really a future-proofing clause. If at some point in the future the WTO placed limits on blue box or green box, on which there are no limits now, it would enable us to set limits for those other classes in that future scenario.

To be clear about the definitions here, when we talk about classes of support, we do not mean a particular type of coupled payment or a severely disadvantaged payment. We actually mean blue box, amber box or green box. We mean classes of support in the context of the WTO definitions of classes of support. We are not in the business of saying people cannot have that headage payment or this headage payment. We are simply saying that we could set limits on those other classes should, at a future date, the WTO rules evolve to the point that they have those.

I hope I have reassured the Committee that there is nothing beyond that. To be clear, if we were to set a limit on the use of blue box at the moment, using the power in subsection (4)(b), that would be illegal, because it would breach subsection (1), which is absolutely clear on the purpose. The purpose is for

“securing compliance…with the Agreement on Agriculture.”

If there is no limit on blue box spending in the agreement on agriculture—and there is not at the moment—then there would be no limit on the amount of blue box that a devolved Administration could spend and there would be no way, even using that clause, for the UK Government to place such an arbitrary limit that went above and beyond the agreement on agriculture. I hope I can reassure the hon. Member for Stroud of our intention. This is largely a technical, future-proofing clause to take account of the fact that there may be an evolution in WTO rules.

As the hon. Gentleman was talking, I looked at subsection (9) to see whether there was clarity about the definition. Before Report, I will look at whether it might be appropriate in that subsection, which is around definitions, to be clearer about what we mean by “class of support”. We define what “domestic support” means, but “class of support” could be misinterpreted. I will talk to our lawyers and parliamentary counsel on that technical matter to see whether there is a need for that clarity to be given and come back to the House on that matter on Report. I hope, having made that offer, the hon. Gentleman might not press these two amendments.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I suppose half a loaf is better than none, given that we are talking about food. I welcome that latter compromise. It is good to know that the Government are willing to compromise where we think an improvement could be made.

I am a wee bit worried about the way that the devolution settlements are going to be somewhat altered, in terms of the way in which the WTO application will need to be visited quite carefully. Who can tell what the future will bring in terms of the box arrangements, whether it is the blue, amber, green or red box? The problem with it is that, in a sense, we can only pass legislation today but the Minister is trying to pre-empt what might happen in the future. I am worried about this and I urge him, having offered us half a loaf, at least to look at whether we can define this in terms of what the devolution settlements say. I think there is the possibility, as the NFUS says, of some future dispute if the territorial Administrations decide on different levels of spending on their agriculture. Clearly, they cannot be outwith any WTO arrangement, because they will be subject to the penalty clauses that the WTO brings forward in due course. However, we know that takes years, so a difficult situation may arise whereby we have tension between the different Administrations with responsibility for agriculture yet we are trying to devise a settlement that fixes amounts for them all.

I will not press amendments 120 or 121 to a vote. We think we have got somewhere on amendment 121—the Minister will look at subsection (9) to see whether classes of support can be better defined, and we look forward to seeing the outcome of that. However, I urge him to look at how the arrangement will work and at least take cognisance of the legal judgment that the NFUS received, because this is an area of possible conflict. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 69, in clause 26, page 21, line 26, leave out subsection (6).—(Deidre Brock.)

This amendment would remove the requirement to provide information to the Secretary of State.

Question put, That the amendment be made.

The Committee divided:

Ayes 7, Noes 8.

Division number 19 Decision Time — WTO Agreement on Agriculture: regulations

Aye: 7 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

We have discussed this issue in detail, so I do not intend to say much. Clause 26 is all about the UK Government’s being able to fulfil our obligations under international law—to demonstrate compliance with WTO rules and demonstrate that we abide by the limits set out in our WTO schedule. I shall not repeat our detailed debate on the amendments.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I do not intend to delay the Committee for long, either, but the clause is important and detailed. I accept that the Minister is prepared to make improvements to subsection (9), which we welcome.

Again, the clause in a sense pre-empts what may happen after March. It is important that we know what elephant traps there may be if we do not get this right. We have concentrated on the impact on the territorial Administrations, but there is a wider impact. The Minister may choose to intervene to give us some idea of the timescale of the WTO application. Understandably, the Government have already put in a draft schedule, but it would be interesting to know for what period we will be without any protection. We will be outside the EU, although we will be in a transitionary period—presumably that transitionary arrangement will cover us. It would be interesting to know whether we have got to have the WTO application accepted when the transitional arrangement with the EU comes to an end. The Minister might care to intervene on me to tell me that, because I personally do not know—[Interruption.] Or not, as the case may be. I will leave that as a question for some future date.

It is important that we know what that arrangement is, because we could be outwith any protection. Food is a pretty important area, and all sorts of substandard food could come in—dare I say it?—legally, so we want protection. The Minister has heard that and perhaps needs to think about it a bit. We need to know the timescales; otherwise we will return to this issue on Report with an amendment to ask the Government to explain what the timescales could be, and what happens if we do not get them right.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

As I said earlier, we have already got an agreement with the EU—we have been working with it for well over 12 months—on splitting the EU schedule. There will be a UK schedule setting out all our agricultural tariff rate quotas—TRQs—and our share of the amber box. That has already been laid with the WTO and is now going through what is called an article 28 process, in which there are technical-level discussions with other members of the WTO who might have questions. Once it is laid, it is laid, and it does not have to be certified to take effect. Whether or not it is certified and agreed by every member of the WTO is largely inconsequential. It is the schedule that we will work to from the end of March 2019 in the event of a no-deal Brexit. If there is an agreement and an implementation period, we would continue to work within the EU framework.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I ask that not because it is hypothetical. I understand that Australia and New Zealand already have complaints in the WTO about sheep. The Minister is nodding.

Photo of George Eustice George Eustice The Minister of State, Department for Environment, Food and Rural Affairs

Yes, of course. The WTO is not a supranational institution like the EU, in which there are infraction proceedings; it is a dispute-resolution process, and is often used by certain countries to try to secure advantages. Typically, when the EU has an accession country coming in—when we have had EU enlargements—the amended schedule that it tables can sit unagreed and uncertified for about a decade, but it is still worked to. The WTO works at an even slower pace than the European Union, but because it is a looser framework—effectively, a dispute-resolution process—there is plenty of latitude for us to lay our schedule and work towards it for as many years as it takes before people finally sign it off and agree it.

Photo of David Drew David Drew Shadow Minister (Environment, Food and Rural Affairs)

I thank the Minister for that; that is very useful. It is just a strange world if we have already had a complaint before we have joined. They are getting their retaliation in first. These issues matter. Sheep will be an important variable if we leave the EU the way we could do, because we would be subject to the end of the New Zealand’s quota arrangement. Australia, in particular, will want to send a lot more sheep into this country, because it thinks it can do it cheaper and better. That has a huge implication for Wales and Northern Ireland, although perhaps less so for Scotland. These issues matter, and we need to know what the full implications are.

I do not have anything more to add, other than—dare I say it?—caveat emptor. We need to be aware that what is potentially coming is quite complicated, and that we have got to keep lots of balls in the air, particularly for the devolved Administrations, which could lose out if we are not careful in how we draft the completed application to the WTO.

Photo of Deidre Brock Deidre Brock Shadow SNP Spokesperson (Devolved Government Relations), Shadow SNP Spokesperson (Environment and Rural Affairs), Shadow SNP Spokesperson (Wales)

We are not happy with the clause. It gives the Secretary of State powers over the devolved Administrations that are not necessary or appropriate. It allows him to be the final arbiter in future disputes about the nature of domestic support. As I have said before, this is about respect for the devolved Administrations, which I find sadly lacking in this clause. I urge the Minister to revisit it, and we will be re-examining it on Report.

Question put and agreed to.

Clause 26 accordingly ordered to stand part of the Bill.

Clause 27