I thank everybody who has contributed to what has been, as always in this House, a fascinating debate, ranging far and wide, from cattle droving in the 1700s, through to the immense knowledge of the noble Lord, Lord Liddle, on current EU matters. It is good to see him again to take up cudgels across the Dispatch Box.
As he knows, I do not agree with him, but I always enjoy debating these matters. I hope that noble Lords will have patience today. I have quite a lot to say—many points have been raised and I intend to go into a lot of the detail. I apologise if my remarks are a little long.
Amendments 7, 8, 20, 21, 22, 26, 32, 45 and 61, all seek to alter or change the application and scope of mutual recognition and non-discrimination for the internal market and goods. The workings of mutual recognition and non-discrimination as applied in this Bill have been carefully designed to suit the UK’s unique constitutional and legal arrangements. We consulted widely on this, based on the Government’s proposals set out in the White Paper in June.
The noble Baroness, Lady Finlay, wanted to know in detail about the consultation. We published for her benefit, a response in full to the White Paper consultation on 9 September and I would be happy to send her a copy. The consultation demonstrated that UK businesses and industry representatives are overwhelmingly supportive of the measures to prevent discriminating behaviours within our internal market. I will set out the rationale why I cannot accept these amendments. I am happy to explain how mutual recognition and non-discrimination work in greater detail.
We have been clear that the UK will do nothing to diminish its reputation as a leading nation when it comes to setting and expecting high standards of its domestic businesses and international trading partners. I know this is a concern that the noble Baroness, Lady Hayter, has expressed on other Bills that we have discussed in relation to EU exit and is what she seeks to address in Amendment 7, but I contend that this simply will not arise.
Removing imported goods from the mutual recognition principle would mean that those goods, simply because of where they were sourced, could not benefit from the same regulatory treatment as goods produced in the United Kingdom. Even when produced to identical specification and quality as domestic products, this discriminatory impact would put imported goods at a conspicuously unfair disadvantage. Under such a discriminatory approach, we would be likely to be in clear breach of our World Trade Organization commitments to treat imports from other countries no less favourably than similar products produced domestically.
This amendment would also create continued uncertainty for importers. Those businesses whose supply chains rely on overseas sourcing could find themselves at a competitive disadvantage. This amendment would not tackle the issue it seeks to address and would have significant negative consequences for the UK if included.
There was considerable discussion of Amendment 8, tabled by the noble Lord, Lord Rooker, which would ensure that food and animal feedstuffs would not fall within scope of the mutual recognition principle. Like my noble friend Lady Noakes, I was slightly struggling to understand the relevance of his comments about pig semen. I think he asked whether pig semen across the island of Ireland would be affected by Clause 2, but I am happy to confirm for his benefit that pig semen will be subject to the same rules as other goods
across the island of Ireland and only when it moves from Northern Ireland to Great Britain will it be subject to any checks. On pigswill, I am happy to confirm for him that the Government will not allow the reinstatement of its use.
This amendment could have serious consequences for the food supply chain, as foods sold in one nation could not be sold in another if there were different regulatory requirements, creating significant barriers to trade within the UK. As I have said, the Government remain committed to maintaining the highest standards in food and feed safety. The UK internal market approach will not change the approach to determining food and feed safety and hygiene policy. I can put at rest the noble Lord’s mind and that of the noble Lord, Lord Purvis: Schedule 1 to the Bill contains an exclusion to the market access principles to continue to enable the UK Government and the devolved Administrations to take appropriate risk-management measures to prevent or reduce the movement of unsafe food or feed from one part of the UK to other parts. I will have more to say about that later.
Turning to Amendment 20 and the consequential Amendment 22, tabled by my noble friend Lady McIntosh and relating to the exclusion of certain existing statutory requirements from the mutual recognition principle, Clause 4 ensures that pre-existing regulatory differences within the UK are excluded from the scope of mutual recognition. This is a forward-looking Bill that seeks to ensure that businesses can continue to enjoy the benefits of our well-integrated internal market after the transition period ends on 31 December. Businesses already live with and have adapted to any regulatory differences that currently exist, so mutual recognition does not need to apply retrospectively. In line with this objective, Clause 4(2)(b) ensures that this exclusion is specifically targeted at those areas in which regulatory differences have previously emerged.
This amendment would widen the exclusion to include any statutory requirement that existed prior to the relevant day set out in the Bill, regardless of whether there had been divergence in that area. However, this is not necessary. Mutual recognition has a practical effect only in areas where requirements differ across the UK, which is why the exclusion is targeted at those areas. Regulatory requirements, which are currently harmonised across the UK, do not need to be specifically excluded as the application of mutual recognition will not make any difference to the status quo. Of course, if the existing requirements excluded by Clause 4 are amended in a way that changes the effect or outcome of the legislation, they would then come within the scope of mutual recognition.
Amendment 21 is consequential on Amendment 6, which we discussed previously as part of a wider discussion on market access principles. It would amend the exclusion of pre-existing requirements from the mutual principle if Amendment 6 is also adopted. My noble friend Lady Bloomfield addressed Amendment 6 yesterday in the fifth group but, in brief, these amendments in combination would enable harmful regulatory divergence within the UK internal market into 2021 and beyond. This could lead to new barriers for businesses trading within the UK, instead of clarity and certainty.
The noble Lord, Lord German, and the noble and learned Lord, Lord Hope, asked about any follow-on emissions trading scheme. This is a non-market framework, so it would not be captured by the market access principles as it does not relate to a good or service.
The noble Lord, Lord Purvis, raised a number of questions about fertilisers. I shall give him a detailed reply. To exclude from the principle of mutual recognition as proposed by the Bill the safeguarding decisions of Administrations in relation to the placing on the market of fertilisers would allow each Administration to ban the sale of a fertiliser or impose conditions on that fertiliser in their jurisdiction in response to a risk to the health and safety of humans, animals, plants and the environment. We think it necessary to retain the current ability for the individual nations to take local circumstances into account and immediately to take a fertiliser deemed unsafe off the market in their territory without the risk of that product finding its way back into that territory via another nation. Without that amendment, it could take some time formally to ban a product through legislation—perhaps a couple of years.
The noble Lord also asked about pesticides. Decisions on which pesticides can be authorised to be marketed and sold in each part of the UK are already within devolved competence. All four Administrations work closely together, supported by HSE, and most decisions can be taken jointly by consensus. However, retaining the ability of each Administration to take its own decision where necessary is important, for example, if merely to consider locally specific factors, such as environmental or farming conditions, which can differ across the UK. This has worked well for many years where there has been occasional divergence between different parts of the UK and has not, so far, caused problems. This amendment therefore maintains the current position.
Amendment 26, tabled by my noble friend Lady McIntosh, seeks an explanation of the meaning of Clause 5(3), which I am happy to give. Clause 5(3) will operate so that any future requirements that fall within the scope of the non-discrimination principle will be of no effect to the extent that they are discriminatory. For the benefit of the lawyers, this does not mean that the requirement is to be treated as if it never had any legal effect. Rather, it allows the continued operation of the requirement, except to the extent that it has discriminatory effects. This aims to ensure that businesses can continue in their trade and goods can continue to be sold, despite protectionist measures that might treat goods from one part of the UK more favourably than goods from another. As the Bill deals with trade across the whole of the United Kingdom, the intention is that this will apply to all legislation: secondary legislation, primary legislation passed by devolved legislatures and legislation passed by the UK Parliament.
We believe that this does not require further elaboration in the Bill and is clear that only changes to existing legislation that affect the outcome are in scope. The amendment in question could cause confusion as there may be amendments that are considered “significant”, but do not change the outcome or effect of legislation. Fundamentally, however, the drafting in this clause
will allow businesses to continue following the same regulations as they have been accustomed to, as our desire is not to disrupt their operations. That flexibility is important, because we want this provision to catch legislation only to the extent that it produces discriminatory effects. If something is not law, it cannot have any effect. As I said, we want to create a presumption that future Acts of Parliament are subject to this rule, which the current drafting allows.
My noble friend Lady McIntosh also asked whether, if the FSA and FSS had different rules, that would impact on the free movement of goods. The principles of mutual recognition and non-discrimination will apply to goods, including food, feed and animal products. This means that a good that can be lawfully sold in one territory can be lawfully sold in the other territories without having to comply with that other territory’s requirements. The only exclusion from this, as I said earlier, is set out in Schedule 1, which provides for exclusion in emergency scenarios where specific criteria are set out.
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The noble Baroness, Lady McIntosh, also tabled Amendment 32. I understand that its purpose is to probe the meaning of “actual or hypothetical goods” in the Bill, and we are happy to provide further information on that. To be clear, though, this amendment would weaken the measures we are introducing to determine where relevant requirements are creating restrictions in a discriminatory way. The inclusion of “actual and hypothetical goods” within this clause is necessary, as it means that the provisions work effectively in scenarios where there are no actual local goods against which impacts on incoming goods can be compared.
To explain further, if a company has a product that is subject to a patent, it can therefore be made by only one company in the UK. If an authority were to regulate against that product because of where it is produced, there could not possibly be a local good to compare it to in order to determine relative disadvantage. Being able to compare it to a hypothetical good addresses this, and allows the rules against direct discrimination to operate properly and protect all businesses across the UK.
The existing wording is also important to deal with situations where arguments could be posited that a local good is similar to, but not the same as, an incoming good, and therefore would not be a good comparator in determining whether discrimination exists. Being able to compare to a hypothetical good that is the same as the incoming good, save for location, enables that determination to take place. I hope the noble and learned Lord, Lord Falconer, is taking careful note of this for his future legal career. This means that regulators can focus on determining whether discrimination might take effect, rather than identifying comparable goods.
Amendment 45 seeks to probe the Government’s understanding of what is meant by “substantive change” in Clause 9. A number of noble Lords have made this point. Clause 9 sets out that all existing statutory requirements will be considered out of scope of the non-discrimination principle for goods. This is to ensure that the non-discrimination principle will not have any reach-back effects on areas of pre-existing legislation.
As I said earlier, under the Government’s proposed approach, existing requirements will not be covered and businesses will have already adjusted to them. However, if these regulations are substantively changed, they would be brought into the scope of the non-discrimination principle for goods to avoid any new barriers arising within the UK. If existing regulation, which would otherwise have been in scope of non-discrimination, is re-enacted in a way that changes the effect or outcome of the legislation, it would then come within the scope of the non-discrimination principle. Where existing legislation receives technical or minor amendments that do not alter the scope of the legislation, that legislation would continue to be out of scope.
We believe that this does not require further elaboration in the Bill and it is clear that only changes to existing legislation that affect the outcome are in scope. The amendment in question could cause confusion, as there may be amendments that are considered significant but do not change the outcome or effect of the legislation. Fundamentally, however, the drafting in this clause will allow businesses to continue following the same regulations that they are accustomed to.
Amendment 61 was tabled by the noble and learned Lord, Lord Falconer. He said we would debate it in a future debate, but I will give him a brief reply now. I highlight that the protocol is clear that nothing contained within it prevents Northern Ireland goods from enjoying unfettered access to the rest of the UK internal market. The Government are committed to ensuring this. Clause 11 gives effect to a key element of the Government’s commitment to unfettered access for Northern Ireland goods to the whole UK internal market by ensuring that they benefit from mutual recognition and are not discriminated against, enabling those goods to be placed on the market in Great Britain without additional approvals.
Clause 11(8) limits the mutual recognition principle to “qualifying Northern Ireland goods”. This section ensures that the benefits of unfettered access are focused on those goods and, to ensure these benefits are felt, the Government have brought forward separate secondary legislation that establishes the definition of a qualifying Northern Ireland good from the end of the transition period. This is part of a phased approach, with a second phase to follow during 2021, which will focus the benefits of the regime on Northern Ireland traders. This clause therefore delivers a key element of our commitment to unfettered access, in line with the clear commitments we have made otherwise.
If the noble and learned Lord’s amendment were passed, there would be no definition of the goods to which any benefits would attach, meaning that Clause 11 would no longer be able to extend the UK internal market access principles to qualifying Northern Ireland goods. This would remove the basis for ensuring unfettered access and, in its place, leave uncertainty for Northern Ireland businesses.
Lastly, I will address the question put by the noble Lord, Lord Purvis, on the Isle of Man. Goods coming from the Isle of Man are not treated as imports for customs purposes. Therefore, the Government make clear, in Part 1, that goods coming from the Isle of Man count as “imported into” for the purposes of market access principles. We do not believe that this is
necessary for services. In summary, for all the reasons that I have set out in great detail, we cannot accept any of the amendments tabled. I therefore hope that noble Lords will withdraw or not move them.