Finance and Constitution Committee

Meeting date: Wednesday, April 18, 2018

Official Report 412KB pdf

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Trade Bill

Item 2 is to take evidence on the Trade Bill, which is United Kingdom legislation. I warmly welcome our witnesses: Graham Kemp is from the St Andrews TTIP Action Group; Liz Murray is head of campaigns at Global Justice Now’s Scottish office; Daphne Vlastari is advocacy manager for Scottish Environment LINK; and Clare Slipper is political affairs manager at NFU Scotland.

In order to provide some context for the session, I will ask a very general question to get the process under way. Can you outline your organisation’s principal concerns around the Trade Bill—concerns about environmental and agricultural issues, for example, or about accountability and transparency? I would also appreciate your views on the restrictions that the bill places on Scottish ministers and its potential implications for the devolved settlement. That would be very helpful.

Who would like to kick off?

I will.

Clare Slipper has volunteered. Thank you.

Thank you for inviting me to be here today.

The Trade Bill, as far as we understand, is intended to be a procedural bill that will deal with transitioning the European Union’s trade agreements to the United Kingdom arrangements. However, we are very concerned. As a first principle, we do not want the nature of the bill’s passage to set a precedent for future trade deals in terms of consultation with the devolved Administrations. For us, the key thing is maintaining trade in a way that is transparent and inclusive. That requires a formal, consultative approach to trade—it possibly even requires consent—that will involve both the devolved Administrations and stakeholders, who are the experts.

We welcome the fact that the Trade Bill sets out that the UK Government wants to try to keep the UK legal framework as consistent as possible with that in the EU. It is important to begin by setting a level of consistency. We also welcome the UK Government’s promise to set up a trade remedies and disputes framework, which we think will be important for protecting producers who trade.

However, we question certain elements of the bill. It outlines that the UK Government wants to try to maintain very high standards of consumer protection, animal welfare and environmental protection, but I am unsure how that fits in with some of the dialogue coming out of the Department for International Trade in recent weeks and months on the lowering of tariffs and, therefore, the lowering of the standards that we have in Scotland and in the UK.

It is clear that the bill will allow the UK Parliament to make changes to domestic legislation via secondary legislation in order to fulfil obligations that arise from future trade agreements. We have had a discussion with this committee about the implications of that approach in relation to the European Union (Withdrawal) Bill, and our concerns about the Trade Bill are exactly the same, particularly if changes are made by secondary legislation to things such as non-tariff barriers. That would be extremely concerning for our sector, in which high standards are absolutely paramount. That is the first principle.

Perhaps I can give a little bit of background to explain some of my views. We are a town-and-gown organisation in St Andrews—our members are made up of students and members of the public. The organisation started about four years ago when the first indications of the approach of the transatlantic trade and investment partnership became available. Our concerns were mainly about the secrecy element and the fact that there seemed to be a very small role for devolved Assemblies in deciding what goes on in such agreements.

Our concern then switched to the comprehensive economic and trade agreement, as it was more imminent, and there are some aspects of what is present in CETA that seem to us to have the potential to be detrimental to Scotland in particular. We are looking at it from a Scottish perspective.

Our main criticism of the Trade Bill as it stands is that it seems to cut away at Scotland’s influence over matters where things are done slightly differently in Scotland. In our view, there is a danger that the Trade Bill will undercut Scotland in those areas. In simple terms, our concerns are about the lack of information about and the public’s lack of influence over the way in which such trade deals are set up.

I am happy to provide some comments. Thank you for the invitation to participate today.

Scottish Environment LINK is approaching the UK Trade Bill from an environmental point of view, of course. There is some concern about free trade agreements in general. If they are not properly managed and considered, there might be damaging effects on the environment, and they might lead to regulatory regression; they might also affect our global footprint as a country. We would like the bill to be amended so that environmental protections are put on the face of the bill and there is certainty that our domestic legislation will not be changed to fit future trade agreements.

I echo some of the points that have been made already about Parliament’s role in scrutinising and having oversight of trade agreements. Over the past few years, because of our membership of the EU, trade agreements have been negotiated at EU level with the participation of the European Parliament and elected MEPs. We need to be revisiting our domestic structures in that respect and taking devolution into account. I think that the Welsh Government has made some proposals in that regard.

What is worrying about the Trade Bill is that, much like the withdrawal bill, it includes a number of delegated powers that, from our reading of it, will allow primary legislation to be reviewed when future trade agreements are reached or when existing trade agreements are renegotiated.

We understand that the UK Government wanted to limit the scope of the Trade Bill to existing trade agreements that will have to be renegotiated or adapted so that they continue to function as the UK exits the EU, and that there might be a separate policy coming on how the UK Government will treat future trade agreements. However, we think that the situation is urgent and that the Trade Bill should seek to address future agreements, given that, according to the transition deal that we have with the EU, the UK Government will be able to negotiate future trade agreements.

I will echo what some of the others have said—first, by saying thank you for having me here today.

Although I am here on behalf of Global Justice Now, we are part of the trade justice Scotland coalition, which was set up in 2015 as part of the campaign against TTIP. There are 27 organisations in the coalition, including some of the biggest trade unions—Unison and Unite, for example—the Scottish Trades Union Congress, campaigning organisations and local activist groups. We have been working together since 2015. We started out with a concern about TTIP and CETA, and we remain concerned about that new wave of trade deals, which go beyond tariffs and quotas and into the realm of public policy space and democratic decision making—in our view, almost slightly changing some of the global governance rules.

With the Trade Bill in particular, we would question the assumption about the deals that the EU has with third parties just being transferred, or cut and pasted. I listened to some of the evidence that was given to the Westminster committee that considered the Trade Bill, and others are saying that they felt that a simple cut and paste would be very unlikely and that, for a number of reasons, those trade deals would get opened up to renegotiation on a variety of things.

As members will have seen from our evidence, trade representatives from other countries who have been involved in those deals are saying that they would want to look again at agricultural quotas, subsidies and so on. We feel that parliamentary scrutiny of the Trade Bill is as important as it would be for any future trade bills because, as Daphne Vlastari said, the situation is urgent and a precedent needs to be set in relation to parliamentary scrutiny of the current bill. Obviously, such scrutiny needs to be done at Westminster, but we also believe that the devolved Administrations should have a role in that parliamentary scrutiny. We made specific suggestions in our evidence, including the setting up of a joint ministerial committee; having some sort of committee process here and a legal right for you as MSPs to be able to see the text as it is negotiated; and perhaps the use of the LCM process for the final text. There are a number of places where we feel that the devolved Administrations should absolutely be involved, from the setting of the mandate and the agreement of any changes to it through to the agreement of the final trade deals.

We think that the devolved Administrations—in this case, the Scottish Parliament—should be involved because of the scope and extent of trade deals such as TTIP. We have no reason to believe that the UK Government will not use TTIP as a template for a trade deal with the US, for example. Scotland has regularly passed legislation that is stronger than legislation in other parts of the UK. For example, smoking in public places was banned in Scotland before it was banned in the rest of the UK, and we have the extensive moratorium on fracking and the approach to genetically modified crops; we also have a different approach to public services. Given the impact of such trade deals and their extensive nature, we feel that it is really important for the Scottish Parliament and MSPs to have a say.

Good morning, everyone, and thank you for being with us.

This set of issues is clearly going to be quite challenging for the devolution settlement. I wonder whether I could go back to basics on the devolution settlement and find out whether we all agree on at least the starting point, if not the destination. Would the members of the panel agree with the proposition that international relations and international treaty making—including the making of international trade agreements—are matters that are reserved to Westminster? I think that we all agree that, in future, international trade must respect the devolution settlement, but respecting the devolution settlement means respecting that which is reserved to Westminster as well as respecting that which is devolved to Holyrood or, indeed, to Cardiff Bay. Do you agree with the proposition that international trade is a matter that is reserved to Westminster under our constitutional law?

10:15  

You are looking at me.

I am looking at all of you.

Any of you should feel free to answer but Liz Murray can kick off.

I have heard Adam Tomkins ask every witness the same question, so I assume that he knows the answer.

I know what my answer is; I am interested in your answer.

You just want views. Well, yes, trade is reserved but, as we have heard, the whole issue of Brexit is a test of the institutions of devolution. The trade deals that have been mentioned have a wider impact than many previous trade deals, and negotiating trade deals is something new for the UK because we have been part of the EU. We do not yet have a proper process for that, and here is a chance to create one. That may have some implications and difficulties for devolution, but I think that it is important.

Is there any dissent from the view that international trade is reserved to Westminster but the content of modern international trade agreements and treaties may more than touch on devolved issues? Is that the view of every member of the panel?

I defer to your experience as a lawyer. I am not a lawyer; I am just an ordinary member of the public.

You still have a view, and our job is to hear your view.

My view on the law is tempered by what I think it should be rather than what it actually is, so I will defer to Adam Tomkins’s much greater experience in this area. However, that does not preclude my view that there should be proper consultation and agreement between all the constituent nations of the United Kingdom. We have been told that we are equal partners in the union, and my understanding of that is that we should have more than just a say. Our views should be taken into account in future trade deals, because there are a number of areas—Liz Murray touched on some of them—where Scotland does things differently.

There is talk of Westminster retaining some of the powers that will come back from Brussels in order to create common frameworks. Our view is that there is a danger to Scotland’s distinct identity from the unilateral imposition of common frameworks. Therefore, although I have to accept Adam Tomkins’s view of the devolution settlement—I am sure that it is absolutely correct—there are ways of doing that, and the Trade Bill does not, in my view, give enough say to the devolved Assemblies.

Would Clare Slipper or Daphne Vlastari like to comment?

I will make a small point on common frameworks, which Graham Kemp mentioned. I agree that the area is reserved to Westminster, but the Trade Bill sets the ground work for a new trading framework that we will operate after we leave the EU. I go back to points that we have made in previous evidence to the committee about commonly agreeing those frameworks and the way in which that is done. For us, it is not about re-devolving those powers; it is just about the way in which you find common agreement.

I understand that the European Parliament will be able to vote on new trade deals that the EU strikes, but the Trade Bill takes away that step in terms of the parliamentary scrutiny aspect. That is an important step to miss.

I want to add a quick point. Adam Tompkins is quite right that the UK negotiates international obligations but—certainly as far as devolved matters are concerned—of course it is the devolved Governments and Parliaments that do the implementation.

In so far as new and existing trading arrangements impact our ability to meet international obligations, you could argue that there is a bit of an overlap—or at least an area where we need to consider the implications. That is what we are particularly concerned about. You will see some overlap if there are new trade arrangements, or changes to existing trade arrangements, that have the potential to impact our ability to adopt future environmental legislation to protect nature and the climate, or which could lead to regression in relation to environmental commitments. You need to be concerned about that.

That is helpful. The deference is flattering, but please do not defer to me. I am asking you these questions because I am genuinely interested in your responses to them. I already know what I think, but I want my thoughts to be informed by your evidence.

I asked whether the panel accepts that the starting point is that international trade is reserved. Clearly, the force of your evidence is that, even if it is the starting point, it is not the end point and it is not the whole story—it is more complicated than that. The issue is how we in the United Kingdom construct institutions, organisations and ways of doing business and of making and implementing policy that respect the devolution settlement, in that they understand that we are talking essentially about reserved policy but that the making of that reserved policy might directly impact on matters that are devolved to Scotland, Wales and perhaps Northern Ireland.

That is a puzzle and a conundrum and, in my view, it will not be straightforward to get it right. One of the many organisations that have been looking carefully at that is the Institute for Government, which is based in London and which has long expertise on the issue. The institute has been looking at the issue for a long time and recently published an interesting report on it. Do you agree with one of the recommendations or conclusions that the Institute for Government made in that report that

“UK-wide legislation will provide greater certainty for businesses and third country trading partners, either by setting legally enforceable outcomes or through detailed regulations”,

and that

“When it comes to areas that are likely to be important features of future trade relationships, UK-wide legislation would reassure international partners that the UK is going to meet its side of the bargain”?

That is strong evidence from the Institute for Government that trade legislation is and should be a matter for UK-wide legislation and not for separate legislation in each of the component nations of the UK. To what extent do you agree with those recommendations from the IFG?

I personally would not agree with it. I have not read the report, and when you get to my age your short-term memory begins to fail a little, so I may not recall exactly what you said just now but, from what you have just read out, it does not seem to accept that the different nations of Wales, Scotland and Northern Ireland have different practices in some areas. In our view, that must be respected, so it is not possible to get a UK-wide policy on all issues that would be covered by a trade deal.

Our experience with CETA showed that there were some areas where the UK Government did not seem to be taking into account important differences in Scotland. For example, geographical indication and protected designation of origin are proportionately more important to Scotland than to the rest of the United Kingdom. Around 15 to 18 per cent of the 70-odd GIs and PDOs that are recognised in the UK by the European Union are in Scotland, so proportionately those are more important to Scotland than to the rest of the country. However, in negotiating CETA, the UK did not think to protect any of those at all, in England or Scotland. There was absolutely nothing in the list that the UK presented.

The issue of the national health service is always brought up. CETA operates what is in our view a very dangerous approach of having a negative list, under which, if we want something to be protected against liberalisation or privatisation, it has to appear in annex 1 to the CETA agreement. However, the words “Scotland” or “Scottish” do not appear in the health and veterinary services section in annex 1. That prompted us to ask our MSP Mark Ruskell to ask a question on the issue in the Scottish Parliament, which he did. The answer that came from Keith Brown was that the Scottish Government had taken legal advice and that the Scottish NHS was not protected under CETA.

There are perhaps one or two other such areas in which the UK Government does not seem to be taking account of the differences in Scotland. That is evidence that there is a danger in excluding the devolved assemblies from having a say in the negotiating mandate and in what eventually appears. It is very important that they have that say.

Trade deals would be at UK level, just as they are at EU level at the moment. Our concerns are about the process of arriving at and agreeing trade deals. That is where the devolved Administration or the Scottish Parliament—I will stick to that way of describing it—needs to have a role with some very specific features. For example, there should be a joint ministerial committee that reaches consensus on the negotiating mandate beforehand. A negotiator from each of the devolved areas should be on the negotiating team for a trade deal. As I said, members of the Scottish Parliament should have a legal right to see the negotiating texts along the way and should have a role in scrutinising those and recommending changes. Obviously, a similar process would be going on in Westminster that in some way mirrors the EU’s scrutiny committee. There should also be a role for civil society.

Even though the legislative consent motion process is perhaps imperfect, that should be gone through once the negotiations are completed. The Scottish Parliament absolutely needs to be able to look at and raise issues around any impacts that a trade deal might have on its powers and the effects in Scotland. There should also be a five-year review period for trade deals, and again the Scottish Parliament should have involvement in that in order to assess the impact that a trade deal is having here and, if necessary, to propose changes or even recommend to the UK Parliament that the UK withdraw from it.

Those are our suggestions. They may not all be absolutely possible, but we suggest that there needs to be a really comprehensive process to ensure that the Scottish Parliament has more of a role than just having a say.

I echo Liz Murray’s points on the process and the involvement of devolved Parliaments. The IFG report that Adam Tomkins mentioned—which, if I am talking about the same report, was funded by the RSPB and WWF—also concluded that the Brexit process has highlighted changes that we need to make to the institutions that support devolution. That goes back to whether our mechanisms and processes are fit for purpose, and that takes us back to the JMC process and the involvement of Parliaments. There is a whole host of recommendations in that report, and they should be looked at together.

The IFG report is a helpful addition to the debate, and I have read what I can of it. I take the point that Adam Tomkins referred to in the report that a UK-wide framework on something like trade is important and it will be set by UK-wide structures. However, it is about setting a level playing field but allowing certain aspects to play under different rules of the game. Although the report says that it is important to have common standards, it goes on to say that

“Where legislation is required, it should be passed with consent, keeping amendments to the devolution settlements to a minimum”,

and that, when legislation is not required,

“concordats, protocols or memoranda of understanding between the four nations”

should be brought in. That goes back to the point that I made that the way in which common agreement is found is extremely important.

The example of the JMC has been raised. We agree that that needs real teeth to allow the four parts of the UK to feel that they have been consulted and have given agreement on what are fundamental issues.

10:30  

That is helpful. I was going to ask one final question, but you have already anticipated it. I was going to make exactly the point that Clare Slipper has just made that the IFG says that, where such UK legislation is made, it should be made with consent, and my final question was going to be whether the LCM mechanism, which we have had for 20 years, is sufficient to protect what you identify as Scotland’s distinct interests in the process. Liz Murray has already answered that question fully with a series of reasons why she thinks that, on its own, it is not sufficient—it is necessary but not sufficient. That is very helpful, so thank you very much.

I know that Ivan McKee wants to get into international comparisons but, because the issue of scrutiny is already under discussion, we should probably go there first.

Good morning. To pick up on Adam Tomkins’s argument that the starting point should be an acknowledgement that international trade is reserved, it seems to me that that might be slightly beside the point. The constitution is reserved, yet there is a constraint on the UK Government in its use of that reserved power—it is not allowed to change the devolved competences without the consent of the devolved Parliaments. It seems to me that the use of a reserved power on trade should be seen in the same light and that there should be a constraint on the use of that reserved power if it affects devolved competences which, as Liz Murray has argued, many modern trade agreements do.

Do you agree with another recommendation from the Institute for Government that, in co-ordinating UK-wide input into international negotiations,

“the UK should look to international examples, particularly the involvement of the Canadian provinces in the”

negotiations between the EU and Canada. Would that model satisfy the needs that you are talking about? What is the opportunity for democratic engagement, not just by parliamentarians but by members of the public and other organisations, in the absence of such an arrangement?

The model in Canada with the provinces seems a very sensible one, particularly from the point of view of making the negotiations smoother for both sides. I believe that it was the EU that requested that the provinces be involved, and they were involved at an early stage and along the way. Some of the recommendations that we have made are based on what we have seen and read and heard about what happened in Canada.

I am sorry, but what was the second part of the question?

If the bill goes through as it stands, this Parliament will be asked to give legislative consent. If we were to give that and the bill went through as it stands, what opportunities for democratic engagement would exist? To what extent would there be any space or scope for such engagement, either by parliamentarians or by members of the public and other organisations?

My understanding is that there would be very little scope for that. CETA has not yet been ratified by the UK Parliament but, at the moment in the UK, trade deals such as CETA are ratified through the use of the Ponsonby rule, under which the text is laid before Parliament for 21 days and members of Parliament can raise a question or objection that the Government has to respond to. However, that does not change what happens; it just initiates another 21-day period, during which time members can raise an objection or question and that can maybe go on until one side gives up or something. I do not know exactly what the outcome of that is likely to be.

The UK has not negotiated its own trade deals for some time but, even as part of an EU process of negotiating EU trade deals, we think that that scrutiny process is not good enough. There is no role at all for the public and there is only a very limited role for MPs. However, in future, the UK will be negotiating deals on its own, so now is the time to change that through the bill.

It is a dramatically lower level of scrutiny and democratic engagement than, for example, the debates in the European Parliament on TTIP.

Yes—absolutely. By losing that aspect, we will be a long way behind. It is not a radical ask to suggest that MPs, at the very least, should have much more say and that there should be some public scrutiny. There are many examples of where that happens. In Denmark, a lot of international policy goes through the Danish Parliament in some detail and there is public consultation. That is not a radical ask and nor, in principle, is wanting the devolved Administrations to have a say.

Convener, can I ask a follow-up question to the NFUS?

Yes, but can we get the others to answer the first question just to make sure that we have all the answers?

Sure—no problem.

Clare, do you want to contribute or are you happy with Liz Murray’s comments?

I am happy to let Patrick in first.

Okay—on you go, Patrick.

I have a question for the NFUS, as the Scottish aspect of a wider UK body. One aspect of the debate is about the devolved Administrations and Parliaments and the level of devolved input where trade agreements would impact on devolved competences. Another aspect is about the democratic principle in general. Is the National Farmers Union, beyond NFU Scotland, expressing the same concerns around democratic scrutiny, irrespective of the devolved issue? What wider engagement is there on the scrutiny aspects of the Trade Bill and the agreements that would be negotiated under it?

Actually, we are a separate organisation from the English and Welsh NFU. We are sisters; we are not the same organisation.

I beg your pardon.

It was just a point of clarification, in case there was any confusion. However, we regularly speak with the NFU in England and Wales and we are almost on the same page on a range of issues, although sometimes there are areas of difference.

I spoke to my counterparts there yesterday in preparation for this session, and they see the bill as procedural, but they have raised the same concerns that I raised in my opening remarks about the lack of parliamentary scrutiny. Clearly, our concern is with trade in agri-food products. As those are perishable and because you cannot turn farming on and off overnight, my counterparts are worried about any sort of impact that could lead to trade flows being disrupted. In evidence to the DIT and to parliamentary committees, they have raised concerns about the lack of devolved input as well, which we welcome, so we are in a very similar place.

To answer your question about Canada, I have to be completely honest and say that we have not spent a huge amount of time examining that, purely because of resource constraints, but I have a slight concern. As much as scrutiny and democratic engagement are extremely important, and as much as we are keen for those to be instilled in the process, we are worried about creating another layer that trade deals or trade in the future might have to go through. I am thinking about the practical point that, when you are importing or exporting, you need things like export certification, official vets and customs arrangements. I worry about there being another layer in which there could be divergence between the UK and Scotland and other parts of the UK, which could disrupt trade flows.

That ties into the point that Adam Tomkins made that, from the point of view of the interests of those taking part in international trade, UK-wide regulations and legislation would be beneficial. To me, that seems to be a clear argument for staying inside the single market and doing away with the fragmentation that Brexit creates altogether.

Yes. We have been clear from the outset that we would prefer to stay within the single market and the customs union. That is a matter of record.

That makes a great deal of sense. Thank you.

We are where we are.

I want to continue with the theme of transparency and accountability. We live in strange times when we have to make a case to someone to give us the opportunity to scrutinise things and to hold people to account.

Do you fear that we are in danger of repeating the mistakes of the TTIP process with this bill? With the TTIP process, there was huge public concern—right across the European Union, not just in the UK—about the lack of transparency and the lack of engagement by the Parliaments and the public in the process. Do you agree that we are potentially at risk of repeating that mistake? Can you please give us one or two examples of how we should resolve the issue? It is not just a Scottish issue. There is no scrutiny or accountability at the UK level either, as I understand it. First, do you agree that that is a risk and, secondly, how can we make this a better process?

That was the concern that first got us interested in TTIP and then in CETA. We could not believe that these negotiations were being done in secret and that even MEPs, MPs and MSPs had no idea about what was going on. As part of our process, we went to Brussels to lobby our MEPs there. We took a delegation down to Westminster to speak to MPs there, and we have attended debates in the Scottish Parliament and asked our local representatives to raise questions on the issue. At the risk of seeming obsequious, the best response has come from the Scottish Parliament. Compared with the other two, this is a very open, engaging and friendly institution, which has been a big help in elucidating what is going on.

The premise of your question is correct—what has happened recently with CETA is a good example of what you were talking about. The Secretary of State for International Trade promised the European Scrutiny Committee that there would be a debate on the floor of the House of Commons on CETA. I think that that was in November 2016 or thereabouts; the debate never happened. The only debate that occurred subsequent to that was in a small committee that met in the committee room at exactly the same time as the main body of the Parliament was debating article 50, so the chance of that getting any publicity or even much interest was minimal. It seemed to us that it was being snuck through on the quiet and there was no debate on it. As far as I am aware, before the CETA bill was published, there was no information available to the public. Therefore, there is a danger that there will continue to be a lack of scrutiny of trade deals.

TTIP is perhaps an example of how not to do a trade deal. Again, it speaks to the issues of transparency, the involvement of stakeholders and so on. The current Trade Bill talks about existing trade agreements, but it does not talk about how we will conduct such agreements in the future. That is very worrying, given that—as I mentioned in my introductory remarks—as of April next year, the UK will be able to negotiate new trade agreements and we have no idea about how that is going to happen, bar the existing limited domestic mechanisms.

It is also quite important to look at TTIP in the context of the regulatory divergence that it would have created. Looking at the US system, for instance, we are in a different space in relation to environmental protections and food safety. Just a few weeks ago, the Scottish Parliament voted—unanimously, I think—in favour of maintaining EU environmental principles, with the precautionary principle at the heart of those. We know that US regulatory systems do not operate on the basis of the same principles.

Looking forward to future trade agreements, we need to know that they will not be used as an argument for diluting standards or for going back on environmental commitments. The current UK Trade Bill allows for primary legislation to be changed so that we can continue with those existing retrofitted trade agreements with third countries, which is very worrying.

We want some amendments to be made to the Trade Bill to ensure that that does not happen. Any non-technical amendments to existing trade deals should be properly scrutinised and, in our view, should be accompanied by a sustainability impact assessment that looks at the social, economic and environmental implications. That is a commitment that needs to be made when conducting new trade deals.

10:45  

We are looking for a much more robust process when conducting those deals, with Westminster setting and voting on the terms of the mandate for the UK Government to negotiate trade deals. There should be a public consultation, and Parliament should have a final vote to reject or agree to the negotiated deal. Throughout the course of the negotiations, the UK International Trade Committee should be commenting and feeding back on the negotiations.

Liz Murray mentioned some very important considerations in terms of the role of devolved Governments and Parliaments. At each stage of the process, we would like to see an assessment of the implications for Scotland and for the Scottish Parliament and Government. If we look at CETA, Belgium raised concerns very late in the process. You want to avoid a situation where a trade agreement is about to be finalised and then something comes up at that final stage. You want to have those issues raised and flagged up front.

If politicians ignore what happened with TTIP, they are daft and they are asking for trouble in the future. I think that everyone was taken aback by the amount of public opposition. Across Europe, we had 3.5 million people signing a petition on that issue. In Berlin, 250,000 people marched against TTIP and in this country, where we often do not have such big marches on those sorts of things, we had tens of thousands of people marching in London.

Even though they were technical issues, when the public understood what was going on, they could absolutely see not only the injustice in the lack of transparency but the problems with these deals. That lesson needs to be learnt and the Trade Bill offers an opportunity to do that.

We could amend the Trade Bill. We need impact assessments that look at different sectors and different parts of the country—based on that, there should be a public consultation at an early stage. As part of that, you have to make proper efforts to reach out to, in particular, the sectors of society that will be impacted. That is where the impact assessments will help.

The outcome of that consultation then has to be taken into account in making a decision as to whether that trade deal should even go ahead or how the negotiations should then be shaped. We would also suggest setting up a civil society consultation body for trade deals, but with civil society deciding who should be included in that.

From the point of view of MSPs—and MPs—another reason why you need to be involved in the process is so that you can engage with your own constituents. When they come and ask you, “What is the impact of this trade deal on farming, food labelling or the NHS?” you can answer them not just by saying, “Well, I will try to find out about it,” or whatever. You will have something with more detail and substance that you can go back to them with.

We are discussing parliamentary scrutiny, and the possible role of a joint ministerial committee has already been mentioned in terms of trade. The GMB trade union—and I should declare that I am a member of the GMB—has said that it is interested in the Welsh Administration’s suggestion of a UK council of ministers of the nations. It believes that, if this structure was developed to ensure transparency and scrutiny, it could lend itself well to the development of future UK trade policy. Do you agree with the GMB? Have you considered the Welsh Administration’s proposals in that regard?

It sounds like a good idea provided that any such council has teeth so that it can make sure that its views are acted on rather than being something that can be ignored.

We agree. It is something that we have been considering for quite some time. It would work well across a whole range of issues—for us, the important thing is future agricultural policy frameworks. The suggestion of introducing some sort of qualified majority voting system has also been mooted, and we would be interested in that.

A further suggestion that I think my colleagues at the Scotch Whisky Association have put on the table is a mechanism that I believe operates in America. There is basically a statutory requirement to consult stakeholders on new trade deals where they will impact those sectors. For example, if it is a trade deal with the US and the issue of hormone-treated beef is on the table, the NFU and NFUS would have a formal consultative role within the process of that trade deal before it is signed off, which I thought was quite an interesting idea as well.

I am going to continue with this area, because a number of people have mentioned issues to do with negotiations. James, did you have a question on this area as well?

I want to ask about procurement.

Ash, I think that you were concerned about the particular role of the Government in negotiation.

I was interested in what role the panel thought that the Scottish Government should have in negotiations, but some of that was covered in response to Adam Tomkins’s question at the start, so I just want to drill down into how it would go a little bit further along in the process. There is the potential for investor protection clauses in future trade deals, and because—in the words of Liz Murray’s written submission—Scotland would be

“inextricably linked to any international trade deals signed by the UK Government”,

it would be in a position where it would be fully impacted by such things.

The panel have mentioned a number of procedures and structures that could be put in place, and we have just spoken about something like a joint ministerial committee on trade being set up. Our committee has looked at intergovernmental relations across the UK on a number of occasions, and we have taken evidence that, as it currently stands, the JMC process does not work that well, and I suppose that we would be continuing down that road.

If something like a JMC on trade was set up and trade deals were being negotiated, and the Scottish Government disagreed with a trade deal on the table that the UK Government had put forward, as it was not good for Scotland and did not protect our unique position or interests, would it be enough for Scotland to just—to use Clare Slipper’s words—be fed into the process? Should the UK Government be able to proceed with that trade deal if the Scottish Government did not give consent to it?

My initial reaction is to say that no, the UK Government should not be able to proceed. We have been told that we are an equal part of the union and we should be treated as such.

I would want the Scottish Government to have to refer to the Parliament. In the same way that we want the UK Government to have to refer to the UK Parliament on these trade deals, and for MPs to have a say, I would want whatever position the Scottish Government took to come from the Parliament or be authorised by the Parliament. If we are saying that Parliament should have a say, I think that Parliament should be able to give its consent or withhold its consent, particularly on the areas of a trade deal that impact on the devolved powers that it has.

The legislative consent motion process is what exists at the moment. It is not perfect. If you were trying to make something better, however, I do not have the expertise to suggest how to do that.

I am not sure that I can offer a solution. I think that the Welsh Government’s approach was that a JMC or council of ministers type of thing should be created for reserved matters, which again speaks to the fact that there might be some overlap.

Looking at it from an environmental point of view, if there is a trade agreement on the table that impacts on environmental legislation in Scotland, we would like to see a role for the Scottish Government and Parliament in that. That speaks to the overlap, and the Sewel convention comes into play there again, but we would want potential discrepancies and issues to be fleshed out up front, so there would need to be some sort of mechanism that allows for that. We have developed some ideas about how that could function at Westminster, but we would want to look at how it could potentially apply to the Scottish Parliament as well.

I do not have anything to add to what has been said.

To finish off on this area, Ivan McKee has questions on what international examples could be used to help us through this process.

I thank the panel for coming along and talking to us this morning. I know that some of you have put in your submissions examples from the US and Belgium, and we have talked about Canada. We have kind of skirted around this, so I would be interested to get your input on what we can learn from other countries that have sub-national legislatures, whether they are federal systems or whatever, how they operate with respect to the trade deals that are being made at a national level, and what input or ability they have to direct or influence deals that exist at the sub-national level internationally.

I have not really got much to add to what I have already said. The Canadian example is in our evidence, then there are the examples of Belgium and the US, which has been mentioned. In Germany there is interaction between the Länder and the national government.

Obviously there is a different federal set-up in Belgium, but its example showed that allowing the regional Governments some say gave Wallonia the ability to respond. It had an 18-month inquiry into CETA and it did an impact assessment before it put in its objection. It did those things in response to what its constituents and farmers were saying. Its farmers were worried about the competition from agribusiness in Canada. That regional Government was allowed to respond to the concerns of its constituents. If we are talking about having a democratic process, with transparency and all those kinds of things, that is an example of it. Through the processes that it had, the Belgian Government was then able to refer the deal back and get some changes made. It has also referred the whole investor-state dispute settlement thing to the European Court of Justice.

On that, we would say that ISDS should not be included in these trade deals. I know that the Scottish Government or Nicola Sturgeon has certainly said she would not support trade agreements that have that in or that it should not be in trade agreements, so that could be quite a sticking point and it could test the kind of thing that Ash Denham was just asking about.

I am giving you a very circuitous answer, but I think that it reinforces the principle of the need for more devolved decision making on these trade deals so that the concerns of constituents, and parts of society and the economy that are going to be impacted, will be properly taken into account.

I suppose that what we are saying is that, yes, there are some solid examples of models that work perfectly well. We could learn from them and substantial parts of them could influence the way that we should operate.

Yes, there absolutely are.

We will get into some specific areas now. We have had quite a general discussion about the frameworks. Alexander Burnett and Emma Harper both want to talk about areas in agriculture.

I ask members to note my entry in the register of members’ interests around farming.

We all recognise the importance of agricultural trade and having a good trade deal. There has been much negativity about the ability to get such a deal, but little focus on the importance of such a deal for other countries. I am thinking of Ireland in particular, and about sector-specific deals. In Farm North East I read about the volume of French maize that makes its way into the whisky industry.

What work has NFU Scotland done and what discussions have you had on trade, and how likely is it that you will produce a similar document to your “Steps To Change: A New Agricultural Policy For Scotland”?

11:00  

We have been working closely with the Agriculture and Horticulture Development Board, which has produced an interesting series of papers about different sectoral opinions on what sort of trade we should be aiming for with the EU and internationally after we leave the EU. We do not have that sort of technical expertise in-house, but the AHDB has produced a fascinating insight into which areas might want a more protectionist stance and which might want a very ambitious international outlook. The truth is that it varies between different commodities.

The concerns are generally the same across the board, although clearly Scotland has certain areas of emphasis that the rest of the UK might not have. Scottish beef is one example: it is something really key that we need to try to protect. We need to ensure very strongly that geographical indications are included in any future trade agreement with international partners.

We do not have a document like “Steps To Change” in the running, but we are very much aware of the issues and very keen to try to strike up a dialogue with the Department for International Trade. I will be honest and say that we are getting very little to no engagement back from it at the current time, and I think that my colleagues in NFU have the same problem. I presume that that is primarily because the focus has been on dealing with the procedural aspects of the Trade Bill. However, it is important that the DIT starts to look at what different sectors might want and need, because, as I said, you cannot turn farming on and off. It is fair to say that the uncertainty is not helping confidence in the industry at the moment.

Good morning, everybody. I am interested in tariffs and trade and issues around agriculture and protected geographical indications for our products in Scotland. I was reading a Quality Meat Scotland briefing that says:

“Beef production alone makes up some 27% of total farm output … Trade in livestock and meat to destinations outside Scotland is fundamental to the long-term sustainability of the Scottish red meat industry.”

According to the QMS briefing and the AHDB briefing, there is lots of evidence out there that says that World Trade Organization options are not what we want, especially for whisky, beef and sheep and everything like that, but I am curious: the NFUS said that the best option would be for us to be part of the customs union, with single market access, but how concerned are you about PGI status for food and protecting our industry? The annual turnover for food and drink is £14.4 billion, and there are 119,000 jobs in the sector. There is also the supply chain. I am interested in your comments on those issues.

The answer to your question is that we are very concerned about protecting the PGI status and the integrity of the food and drink industry. There has been a growing narrative in recent months about a no-deal Brexit, and that sort of thing is extremely unhelpful. Any indication that we might unilaterally lower tariffs across the board and just import and export in the world commodity market is just a no-go area for our industry, because we export on provenance, on extremely high standards, on the rolling hills—that is the unique selling point of our products. That means that we cannot be a player on a stack them high, sell them low commodity basis. We know what we can work to and what we can achieve. That will come at a cost as well but, so long as we are supported by Governments to produce that food to that high standard and at that cost, we can do that. However, we cannot be undermined by substandard products coming in from elsewhere.

We were very concerned to see after the ratification of the recent CETA deal, and I think other deals as well, notably with Japan, that PGIs were not included. When we looked into it with Department for Environment Food and Rural Affairs colleagues, the answer that we got back was essentially that they just forgot to include a schedule of PGIs within the text, which does not instil confidence in the process moving forward. We have addressed that issue and we can, hopefully, move forward. They are very much aware now that PGI status is an important area for Scotland to focus on, but that is just one example of where things could go drastically wrong for our industry if the whole industry view is not taken into account.

One of the reasons why we feel that it is important to set a precedent for parliamentary scrutiny in this Trade Bill is that, if there is another Trade Bill for future trade deals, it will be easier to get such scrutiny into that. If we are looking back at TTIP, something that we need to be aware of is trade deals between the UK and the US. On the one hand, we know that there are already discussions going on at a high level with the US. On the other hand, the Office of the United States Trade Representative has just published its foreign trade barriers report for 2018, which is a very weighty document of 500 pages or so, in which it lists things relating to the EU that it sees as trade barriers. For now, we include ourselves there, but we can assume that some of those things will be the same when we are negotiating as the UK. Emma Harper was asking about PGIs.

The report says:

“With respect to Geographical Indications (GIs), the United States remains troubled with the EU system that provides overbroad protection of GIs, adversely impacting the protection of US trademarks and market access for US.”

It also lists labelling, as there are areas in which the US believes that labelling that tells customers where different ingredients are from is a barrier to trade; nutritional labelling; prohibitions on beef that is produced using hormones or ractopamine; the prohibition on food from cloned animals; the slow approval of GM crops; prohibitions on GM foods and biotech seeds; prohibitions on chlorine chicken and other meat washed in microbial rinses; too low a limit on—I forget the technical name—white blood cells in milk; prohibitions on chemical flavourings; and prohibitions on live cow exports. There is a long list, and the GIs are mentioned again later on.

We already know the difference in standards, but we could expect that there will be some serious pressure during negotiations between the UK and the US, for example. Our position is not anti-American at all. There are other countries that the UK will be doing trade deals with where we would have concerns about human rights, for example. That is another reason why we feel that it is important that elected politicians have a say in these trade deals and that it is not something that the UK Government does using its prerogative powers and without reference to the Parliaments.

I forgot to mention earlier, convener, that I am the parliamentary liaison officer for the Cabinet Secretary for Rural Economy and Connectivity.

The Canadian trade deal started out with a 26.5 per cent tariff on beef, and it took 10 years to negotiate that to zero. That is a long time to negotiate trade deals. Can farmers sustain 10 years of 25 per cent tariffs if they are exporting?

My other thoughts were on somatic cell counts, which you is what you were talking about. The ADHB briefing states:

“Non-tariff barriers include sanitary and phytosanitary (SPS) measures and technical barriers to trade. SPS measures are used to protect human, animal or plant life or health. Technical barriers are often deemed necessary for environmental protection, safety, national security or consumer information.”

Those are the non-tariff barriers that Clare Slipper was talking about earlier. Those are not tariffs but they are really important when we are talking about the health of humans and plants and animals when we are negotiating the trade deals.

That is one of the reasons why we have consistently said that we want to be in some form of a customs union with the EU, because that would mean that we would maintain a standard of production and not allow in stuff that does not maintain those high levels and undercuts us. Particularly for the red meat industry, when you are talking about hormone-treated beef and that sort of thing, that is particularly important.

On the tariffs with Canada, my limited understanding is that, as that trade deal has now been struck, what we will try to do is essentially cut and paste the terms of it into UK law. We will not have to pay tariffs to import and export at the current time, but it could clearly be an implication for any future international trade deal that we strike on our own and would be something that we would be keen to avoid, but we will just have to wait and see.

This is an area in which I have to concede that I do not have a great deal of expertise. Will Clare Slipper, or somebody else, please explain to me about the current PGI system, how we come to an agreement on what should be protected and how we can have PGI status? What is the process? The current process is working to a reasonable degree, so what is the worry for the future that the process cannot continue to operate successfully?

What a PGI does is essentially give assurance status to a product, so Stornoway black pudding, for example, can be produced only there and only to certain specifications. Loss of that PGI, through any future trade deal, would basically mean that anybody else could produce a similar product and stick a label on it saying that it is produced in Stornoway. Therefore, the loss of PGI status takes away our provenance and the uniqueness of the product that we can go to other markets with.

On the process of how they are agreed, I may be exposing my ignorance, but it is an EU-wide recognised system and PGIs are put on to the schedules of any international trade deals so that international partners cannot replicate the products. It is important because there are PGIs on things such as Scotch beef and Scotch whisky.

It is a process. I am assuming, then—and, again, this is coming from a position of ignorance—that, in those circumstances, whether it is Scottish beef or black pudding from Stornoway, it is the UK Government that supports the process through the EU to get the PGIs put in place. Why would the UK Government, therefore, in future decide not to have that same standard? I need to get some of that on the record because that obviously would have an impact on any trade deal.

It may be something that it will have to trade off as part of the negotiations, for example. Graham Kemp may know more about this than I do, but with CETA the UK was very reluctant to list the PGIs. France listed a lot—I do not know how many, but it was a lot.

There were 120-odd PGIs listed throughout Europe and there were zero from the UK.

We have some evidence that it is not a priority for the UK Government and there are quotes from Liam Fox saying that it is not a priority for the Government. That is not to say that it might not change or that future Governments would not change.

It is an important point to make because I think that America is already making issues around whisky. Single malt Scotch is a brand that is very important for our industry. There is a big difference between a three-year-old Tennessee corn-made whiskey and a 12-year-old single malt in a barrel on the Island of Islay, so I think that a distinction like that is what needs to be made.

That is helpful and has brought my understanding up to speed a bit more.

It is important to reinforce the point that a large part of the food and drink industry in Scotland is based on the fact that Scotland is equated with quality. PGIs and PDOs are ways of reinforcing that and stopping that being diluted. That is a big market and it is down to the perception that people have of Scotland and the environmental aspects of the country, which lead to good-quality ingredients. Anything that undermines that will undermine that brand image. The Scotland brand is certainly important, but you guys would know more about that than I do.

I totally agree.

In all these discussions, we need to take into account whether the UK wants to have a very close trading relationship with the EU as well. That will factor in some of these considerations, because we already know that the EU will not accept a very robust and close free-trade agreement with the UK unless some of the standards are maintained. It is talking about including a non-regression principle, which means that there needs to be common ground on competition, state aid, guarantees against tax dumping, social standards and environmental standards, so a close trade deal with the EU will come with a package of measures that we need to adhere to. How does that impact the possibility of getting other trade agreements? That is something that we need to consider.

11:15  

I want to ask about procurement. As we leave the EU we will no longer be bound by EU procurement rules. However, we will still be party to the Government procurement agreement. Indeed, clause 1 of the Trade Bill is a clear statement of intent that the UK will be party to the GPA. There are also provisions in the bill empowering the Scottish Government to give effect to GPA requirements using secondary legislation. Do any of you have a view on the Government procurement agreement and the power that is being given to Scottish ministers to implement it?

I have to admit that it is not an area that I know a huge amount about, so I can come back to the committee to evidence my arguments in due course if I need to. My colleagues at the NFU have welcomed the fact that we will remain part of the GPA but are pushing the UK Government to ensure that the Government buying standards regulations are incorporated into any future procurement agreements with the Crown Commercial Service. Essentially, I think that those adhere to greener public procurement rules, which allow more local procurement. That is something that we would also heavily support, so I can look into it a bit further and come back to the committee in writing, but that could be something for the Scottish Government to also look at.

I agree with what Clare Slipper is saying. In present times, it is important to think of the environmental consequences of completely open procurement, and buying local or supporting local business is something that should be encouraged. I do not know to what extent the general procurement agreement makes that difficult but, if it does, I would be against it. It is very important to support our local economies as far as possible, from an environmental consideration but also from the social consideration.

One of the criticisms that are made very often of the current procurement regime that we have in the UK, which is set in an EU framework, is that it prevents us from doing just that. Do you agree with that?

I do not know enough about it. I will take your word for it that it prevents us from doing that.

That is a criticism that is often made. Clare Slipper is nodding her head at that.

Yes, we agree. In an ideal world, we would like to see possibly mandatory targets for levels of local procurement when it comes to foodstuffs and public services. That is what we would aspire to, so when we are out of the EU we may be able to consider that a bit more seriously.

I think that James Kelly has a question in this area as well.

I want to build on that point. Does the panel think that there should be a facility to vary the procurement arrangements where they affect devolved areas, particularly where Scottish bodies are involved in procuring under the remit of the trade agreement? To give a practical example, if the Scottish Parliament took the view that public bodies should mandate the payment of the real living wage, should we be building into the Trade Bill the ability for the Scottish Parliament to vary the arrangements in relation to specific trade agreements so that it could mandate the payment of the real living wage where the trade involved procurement from Scottish public bodies?

Personally, I would agree with that. It is such a shame that it would have to be mandated. Organisations should be doing that anyway.

I do not have a great level of expertise on that, but that sounds like a very sensible way of going about things—yes.

Just to follow up very briefly and to clarify, I get the sense that there is a broad agreement across the panel that the policy that James Kelly was talking about would be a good one. However, the question is at what level in the UK that should be imposed. If indeed the chance for more local, sustainable and ethical procurement is one of the few silver linings to this whole situation, does the panel agree that it would be perverse for that potential freedom to be closed down and have the UK impose the same constraints on Scottish and, indeed, local authority procurement decisions? Does the panel agree that those should be made locally rather than imposed with the same restrictions at the UK level?

I agree. There should be flexibility.

I agree. Wherever possible, buying locally and supporting local businesses should be encouraged.

But do you agree that the policy decision making should be made at a local level as well?

To my naive thinking, that follows on. To do that properly the decision has to be made at a local level.

I agree. It would be very important to make sure that that happened to ensure that you got the results you wanted.

Thank you very much.

Clare Slipper, are you on the same page?

To be honest, I am not sure that I have a view, here or there. As I have said, I am not an expert, but procurement is an issue that is dealt with by the Scottish Parliament at the current time. Obviously we would want it to stay that way, and whether it was the Scottish Parliament or the local authority that took that decision would depend on the issue or the products being procured. I do not have a particular view.

Daphne Vlastari, do you have any views?

Like Clare Slipper, I have not looked at this issue in great detail. The one thing that I would clarify is that, in any discussions that we have had regarding joined frameworks at the UK level, we have always wanted the possibility for devolved Governments and countries to go further in terms of ambition, so it could be worked in that context.

That is helpful, thank you.

I very much welcome the contribution that has been made by our panel today. That brings us to the end of the proceedings as far as the public part of the process is concerned.

Convener, could I briefly mention that I am sorry that I should have said before I asked my first question that my entry in the register of members’ interests shows that I am a member of Friends of the Earth, which is part of both Scottish Environment LINK and the trade justice coalition? I should have said that at the start.

It is on the record now, so thank you for doing that. You are safe.

It was agreed at the start of the meeting that we would take the next item in private. I thank our witnesses for their contributions. I now close the public part of the meeting.

11:22 Meeting continued in private until 11:25.