Increases in imports or changes in price of agricultural goods

Taxation (Cross-border Trade) Bill – in a Public Bill Committee at 3:45 pm on 30 January 2018.

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Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy) 3:45, 30 January 2018

I beg to move amendment 110, in clause 14, page 9, line 45, at end insert

“following consultation with relevant stakeholders including consumer representatives and agricultural producers.”

This amendment requires consultation before the making of regulations to increase the customs tariff for agricultural goods.

With this it will be convenient to discuss the following:

Clause 14 stand part.

New clause 6—Additional import duty on agricultural goods: enhanced parliamentary procedure—

“(1) No regulations may be made by the Treasury in exercise of the power in section 14(1) except in accordance with the steps set out in this section.

(2) The first step is that a Minister of the Crown must lay before the House of Commons—

(a) a statement of the reasons for proposing to make the regulations; and

(b) a draft of the regulations that it is proposed be made.

(3) The second step is that a Minister of the Crown must make a motion for a resolution in the House of Commons setting out, in respect of proposed regulations of which a draft has been laid in accordance with subsection (2)(b)—

(a) the proposed additional amount of import duty; and

(b) the proposed period for the purposes of section 14(1)(a);

(c) the proposed trigger price for the purposes of section 14(1)(b).

(4) The third step is that the House of Commons passes a resolution arising from the motion made in the form specified in subsection (3) (whether in the form of that motion or as amended).

(5) The fourth step is that the regulations that may then be made must, in respect of any matters specified in subsection (3), give effect to the terms of the resolution referred to in subsection (4).”

This new clause establishes a system of enhanced parliamentary procedure for regulations setting additional import duty on agricultural goods, with a requirement for the House of Commons to pass an amendable resolution authorising the rate of import duty on particular goods and the relevant conditions.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

I rise to move amendment 110, but I will mention now that if new clause 6 is moved at the appropriate stage, we will support it, because an enhanced parliamentary procedure seems sensible.

Clause 14 is headed “Increases in imports or changes in price of agricultural goods” and deals specifically with special agricultural safeguards and what can be put in place in relation to them. Our amendment is a very short one, but it is designed to require that the Secretary of State consult with consumer representatives and agricultural producers when making any decisions relating to special agricultural safeguards.

The Minister, when he spoke earlier about safeguarding, said that the decisions taken are about balancing the needs of producers with those of downstream consumers. This is exactly the kind of thing we are trying to do: we are trying to ensure that the Secretary of State, when making the recommendation to the Treasury to exercise the regulations, is doing so after consulting both consumer groups and agricultural producers. That is the only sensible thing to do in this case. The Minister has previously been clear that the Government like consulting with people and tend to try to do so wherever they can, but it would be sensible if it were stated in the Bill that they were required to do so in advance of putting in place, via a relatively unusual process, relatively unusual measures that would have an impact on our agricultural producers and consumers.

That is important because Brexit is looming on the horizon and our farmers do not know how they will be supported financially after 2020. I think Ministers have given undertakings to safeguard the money that comes from the EU until that point, and farmers have no certainty beyond that period of time. The UK Government are looking to make their own trade deals, which may change the agricultural landscape in the UK or result in our taking imports we have not previously because because of the trade deals as part of the EU—we have previously discussed things such as chlorinated chicken. Given all the changes on the horizon, both for agricultural producers and for consumers, who are already finding, for example, that the price of butter is going through the roof because of the increase in sterling, it is difficult for the Government to foresee what may happen in the future. If the Government are going to put in any measures related to increasing imports or the price of agricultural goods, particularly through the safeguarding measures, it would be sensible to consult both agricultural producers and consumers in advance of putting those in place.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

The Minister was getting a little bit tetchy and prickly there. There is a quote from “Henry VIII” which, given that we are talking about Henry VIII powers, seems appropriate today:

“Be advised:

Heat not a furnace for your foe so hot

That it do singe yourself.”

The new clause would establish an enhanced parliamentary procedure in relation to import duties on agricultural goods. During our sittings, the Committee has heard serious concerns expressed by multiple witnesses about the democratic shortcomings of the Bill. The Bill is, first, strikingly light on detail, notwithstanding the Minister’s assurances that things will be put into place and more detail will come in due course. The Government are pushing that detail on to secondary legislation, but the delegated legislation process was designed to make administrative changes to laws—in effect, a rubber-stamping process—not for items that will form the material basis of our trade defence policies and so require proper scrutiny and debate. More worrying are the items to be channelled directly through the Executive in an unacceptable concentration of power, which ought to be subject to scrutiny, with Parliament given a say in holding the Government to account. The amendment is one of several in which the Opposition are calling on the Government to put critical decisions on tariffs, quotas and preferential rates in front of Parliament.

The measures in the Bill are at odds with the greater democratic control persistently promised to voters. Bringing back control, as we have said a million and one times, is about bringing back control to Parliament, not to a cadre of Ministers sitting in their offices in Whitehall. The new clause sets out four steps to enhance parliamentary scrutiny: first, a Minister must come to Parliament to explain the intentions of the draft regulations; secondly, a Minister must tell Parliament the import duty amount, as well as the period and trigger price under the relevant section; thirdly, the House must pass a resolution arising from the Minister’s motion; and, fourthly, regulations must be made to give effect to that resolution—all in the cold light of parliamentary scrutiny and sight. It is not for the Government to make decisions single-handedly behind closed doors, nor for the Secretary of State to steer the process unilaterally. Rather, such decisions must be subject to proper democratic accountability, with the essential checks and balances enshrined in law.

As I have said before, the Opposition recognise that the Government must make necessary preparations to create the UK customs and tariff regime post-Brexit, but they cannot have carte blanche. We should not allow, or be considering, a carte blanche process allowing the Government to concentrate all those new powers in the Executive. The Opposition’s view is that in this instance the interpretation of taking back control— moving it from Brussels to the Executive—is not acceptable. That is not only true of the provision before us today, but evident in the European Union (Withdrawal) Bill and the Trade Bill. The Government are attempting to sidestep parliamentary scrutiny, and that is not acceptable.

In our view, tariffs should undergo the same parliamentary process as taxation, with similar levels of parliamentary scrutiny. We will oppose the Government’s attempts to give the Treasury delegated powers to set future customs duties and tariffs away from the public and parliamentary eye. That is not the way we do things in Britain. New clause 6 outlines an enhanced parliamentary procedure for setting additional import duty on agricultural goods, among others, to bring scrutiny to our customs policy.

Our agricultural sector faces an uncertain future with Brexit ahead. It is distinct from other UK industries in possessing a more interwoven relationship with the European Union, given the existence of the common agricultural policy, which provides subsidies to UK farmers that the Government have indicated they will continue. The common agricultural policy provides critical support to UK farming—for example, the Department for Environment, Food and Rural Affairs estimated in 2014 that such payments represented 55% of farm income. As I said, the Government have promised to maintain those subsidies at the existing level until 2022, which I am sure is a huge comfort to the agricultural sector, but there are no guarantees yet on what will occur after a transitional period. Our step-by-step proposed parliamentary process will hold the Government to account for their policies and import duty proposals on agricultural goods.

Given the reliance in some quarters on subsidies and the fact that our EU counterparts will continue to be in receipt of subsidies across the continent, there will be a number of factors to consider when the UK comes to setting tariffs on agricultural imports. It is worth noting that the value of UK agricultural production at market prices was £25.8 billion in 2014, according to official Government statistics, and the farming sector provides 400,000 jobs in the UK. I accept that not many of them are in the constituency of Bootle, but there we are.

As the National Farmers Union has highlighted, the UK trade balance is negative to the tune of £22.4 billion, which makes the UK a net importer of food. Although there is an ambition for that figure to improve as the UK becomes more self-sufficient in food production, it shows that the UK is quite heavily exposed in terms of import dependency. As the NFU also highlights, the UK will be duty-bound to establish its own set of schedules with the World Trade Organisation, once we leave the EU. Although we know the Government have announced their intention to replicate the existing trade regime as far as possible in those new schedules aligned with existing arrangements, we have no guarantees on that front, and that must also be agreed by the other members of the WTO. Given the broad range of potential outcomes here and the importance of the agricultural sector to the UK economy, it is vital that any decisions made on import tariffs are subject to proper scrutiny and debate.

The amendment proposes that the relevant Minister must lay before the House of Commons full statements and drafts of regulations so that they can be properly scrutinised by Members from around the country who can represent the diverse interests of the agricultural community—the producers—and British consumers. It is almost a binary position.

Photo of Julian Sturdy Julian Sturdy Conservative, York Outer

I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests. I wonder whether the hon. Gentleman should also touch on the impact of standards. He talked about animal welfare standards, as well as genetically modified products that we do not have in the European Union and a number of pesticides that are not now used in Europe but are used around the world. Those issues will all have an impact on future trade deals on food and agriculture, and will affect the consumer.

Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury

I thank the hon. Gentleman for raising that point, which is very important. I know one of my colleagues will be moving an amendment on those issues, and I hope that at that point the hon. Gentleman will be able to join the debate in a little more detail and give his knowledge and expertise on the matter.

I call on members of the Committee to lend their support to the amendment to ensure that democratic safeguards are in place surrounding the future of the UK’s agricultural industry.

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

It is a pleasure to serve under your chairmanship, Mrs Main. I begin by thanking the Under-Secretary of State for International Trade, my hon. Friend the Member for Beverley and Holderness, for his spirited Henry VIII- style performance. We are now back to Mr Nice. [Laughter.] I feel bound to inform Members opposite that, although I may take a more gentle route, I will probably arrive at the same destination as my colleague would lead us to.

Clause 14 sets out the necessary provisions required to establish the UK’s independent agricultural safeguards regime. It enables the UK to mirror existing EU arrangements for agricultural standards post-EU exit. In addition to the range of tariff and quota regimes that currently govern imports into the UK, some agricultural imports are governed by special agricultural safeguards. Agricultural safeguards are contingency restrictions on agricultural imports. They permit additional duty to be applied on certain agricultural imports in special circumstances—for instance, if there is a surge in the volume of imports or a sharp fall in import prices that could have an adverse impact on the UK market. The use of agricultural safeguards is permitted under the WTO agreement on agriculture. They can be applied only to goods in the scope of this agreement, but they are specifically designated in a WTO member’s schedule of commitments.

Agricultural safeguards cannot be used on imports within tariff quotas. The EU currently has 685 goods designated in its schedule of commitments. In practice, the EU has safeguard measures only for a small number of fruit and vegetables and poultry products. There are specific formulas laid out in the WTO agreement on agriculture to determine how trigger levels should be set when a safeguard action is authorised, and how much additional import duty should be applied. The UK is also involved in a process of technical rectification at the WTO to establish the bound at WTO schedules and other WTO commitments. As part of that process, we intend to replicate our existing rights to use agricultural safeguards.

Clause 14 enables the UK to invoke agricultural safeguards on certain agricultural imports post EU exit. It sets out the necessary provisions required to establish the UK’s independent agricultural safeguards regime. That will ensure that the UK has the tools to counteract any adverse impact on the UK market from a sudden drop in price or rise in the volume of imports of agricultural goods. It enables the UK to mirror existing EU arrangements on agricultural safeguards post-EU exit as the UK shapes its future trading relationship with the EU, including any transitional arrangements. Ultimately, the UK will be able to use its discretion about whether and how we choose to apply these measures.

Amendment 110 seeks to require increased stakeholder consultation for imposing additional import duty on specified agricultural goods, which is also referred to as agricultural safeguards. Agricultural safeguards can be used to counter sudden surges in the import volume of agricultural goods. The regulations relating to agricultural safeguards could be subject to regular amendment. For example, the regulations will need to be updated throughout the year to reflect the previous three years of import data for those agricultural goods. Changes to regulations regarding agricultural safeguards can therefore occur multiple times throughout the year. It may be necessary to lay regulations swiftly.

The proposed amendment would significantly add to the lead-in times required to set or amend agricultural regulations related to safeguards. That would not allow the Government to respond quickly to changes in circumstances or to update the measures in line with the latest import data in a timely fashion. Moreover, most changes to regulations related to agricultural safeguards will be of a technical nature, such as recalculating import volume triggers for goods subject to agricultural safeguards when the latest import data is available. Increased stakeholder consultation would not be relevant for all technical changes and updates made to these regulations. Where possible, as the hon. Member for Aberdeen North reflected, the Government will consult on changes to import duty, including changes to increase import duty for agricultural goods. However, given the regularity and technical nature of the changes, the Government do not consider it practical to consult stakeholders every time regulations change.

New clause 6 seeks to put in place a further parliamentary process for imposing additional import duty on specified cultural goods.

Photo of Julian Sturdy Julian Sturdy Conservative, York Outer 4:00, 30 January 2018

For my clarification, is the Minister saying the UK Government can act much quicker if there is a disease outbreak in a country from which we import food or meat products that would ultimately affect UK agriculture and the UK consumer?

Photo of Mel Stride Mel Stride Financial Secretary to the Treasury and Paymaster General

My hon. Friend is probably raising an issue that would be outside the context of the agricultural safeguarding regime. The regime relates to sudden drops in the price of goods, and indeed certain increases in the volume of goods that are being imported, as opposed to the kind of issues he raises. Phytosanitary issues are outside the context of the Bill but will be subject to the kind of negotiations and measures that we bring into effect in that particular regard.

The Bill introduces a comprehensive framework for a new stand-alone customs regime, which will be underpinned by detailed and technical secondary legislation. The Bill ensures that the scrutiny procedures that apply to the exercise of each power are appropriate and proportionate, taking into account the technical detail of the regulations and how quickly they need to be changed.

As I set out in addressing amendment 110, the effectiveness of the agricultural safeguards regime relies on its responsiveness. The proposed additional procedure would give rise to unacceptable delays, which would not allow the Government to respond quickly to changes in circumstances or to update the measures in a timely manner. The power in the clause is subject to the negative procedure. Given the technical nature and frequency of changes, the Government consider that appropriate and proportionate. I hope the Committee will agree that the clause should stand part of the Bill.

Photo of Kirsty Blackman Kirsty Blackman Shadow SNP Spokesperson (Economy), SNP Deputy Leader, Shadow SNP Spokesperson (Economy)

The Minister made a relatively good point in relation to how many technical changes there may be. I will look into the frequency at which changes are likely to occur. If they will be frequent, I will not bring this matter back on Report, but if they will be infrequent, I will consider tabling an amendment. At this stage, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 14 ordered to stand part of the Bill.

Clause 15