Trade Barriers (Revocation) (EU Exit) Regulations 2018 — House of Lords, 2018-11-28
Topic: Foreign Trade
Rona Fairhead (Conservative, Centre-right): My Lords, these regulations revoke the EU Trade Barriers Regulation 2015/1843 under Section 8 of the European Union (Withdrawal) Act 2018. The EU Trade Barriers Regulation sets up a process for businesses, trade associations or member states to report trade barriers in non-EU countries to the European Commission. Cases have ranged from burdensome customs procedures to discriminatory pricing systems. The Commission assesses the measure and makes proposals for resolution—for instance, raising it in bilateral discussions or at the World Trade Organization. It should be noted that this covers unlawful trade barriers only After we leave the European Union, the work on trade barriers will fall to the British Government. It is important that we get this right. Trade barriers cost the UK economy billions of pounds in exporting opportunities worldwide, and non-tariff barriers on average add up to three times as much as tariffs to the cost of traded goods. That is why one of the Department for International Trade’s key objectives is to open markets and why our export strategy details the types of barriers businesses face when exporting and the government support that will be available. It is therefore crucial that businesses can continue to report them. But that only makes it even more crucial that the system for reporting them works effectively, and there is limited evidence of the success of the statutory process We do not believe the current Trade Barriers Regulation is fit for purpose in the new UK context. It is complex and costly for businesses, making it slow and infrequently used. It sets a high threshold to be met before an investigation is initiated. This high threshold acts as a disincentive to firms, particularly small firms, reporting market access barriers. The Trade Barriers Regulation requires a complaint to provide detailed evidence that obstacles to trade actionable under international rules are causing injury or adverse trade effects. Just gathering this evidence requires significant amounts of complex legal and economic analysis to be conducted by firms or trade associations. All this is required just for an investigation to be triggered and a report to be written. This is a higher threshold than the Government wish to set for a potential non-tariff barrier to be examined in the first place However, amending this threshold would be a change in policy, and thus not within the scope of the powers granted under the European Union (Withdrawal) Act. We would therefore need primary legislation to provide the legislative authority to have a new threshold for reporting trade barriers under a UK replacement of the EU Trade Barriers Regulation. Moreover, it does not create an obligation on the Government to resolve trade barriers. Creating such an obligation would again be a substantive change of policy, again needing primary legislation. The Government have therefore decided not to replicate the Trade Barriers Regulation, and instead to introduce a materially enhanced non-statutory system In the EU’s own evaluation of the Trade Barriers Regulation in 2005, a potential TBR user indicated that, while it believed it had a sufficiently sound case, it was discouraged from proceeding to file because of the volume of additional information requested by the European Commission during the pre-initiation phase. In the same report, one of the important EU trade associations commented that there is a large discrepancy between the TBR as a market-opening instrument and the reality faced by complainants in making a complaint. This leads to a lot of frustration for companies or industries that want solutions to market barriers The Trade Barriers Regulation, as it stands, provides for a five-step process: the complaint is submitted; the Commission has 45 days to determine whether to investigate; the Commission announces this decision in the Official Journal of the European Union; the Commission actually investigates; and a report is submitted to the trade barriers committee. It is drawn-out and complex. Businesses are required to submit lengthy reports, involving detailed economic and legal analysis for which small organisations just do not have the resources. It is also almost entirely superfluous. All the regulation does is to commit the Commission to investigate and write a report. There is no requirement to take action. In practice, the regulation has been almost entirely bypassed. Around 70 new barriers were reported to the EU last year. On just one of those did the businesses involved choose to use the statutory process; the rest were submitted informally. Indeed, in the last 10 years there has been just one UK application. There is no evidence that those submitted informally were any less likely to be resolved Businesses are already revealing their preference for a non-statutory process. So we propose a new, non-statutory process to improve the approach rather than continuing to use a less effective one. Our non-statutory approach will be accessible and user-friendly, with a simple online form on www.great.gov.uk for businesses to fill in. This is already well under way and will be ready for 29 March 2019. Because it is non-statutory, it will also be a flexible process. UK exporters will be able to tell the Government of the full range of barriers they face, including ones that breach the letter and spirit of international agreements. The Government will then use the full range of available tools to tackle these barriers: economic diplomacy, regulatory dialogues, WTO dispute settlements and, if necessary, committees. It will also be a two-way process. It has been designed with the objective of better understanding the trade barriers that businesses face so that we can target the Government’s effort more effectively We will, of course, provide reports to businesses and Parliament within the bounds of commercial confidentiality. In due course, the Government will be able to share information with businesses on where barriers exist or—just as importantly—have been removed. That will help businesses make decisions. We are absolutely clear that reports of non-tariff barriers will not disappear into a vacuum and that we will give both parliamentary oversight and feedback to businesses on barriers they report. We are expanding the market access team in the DIT to support this work, with a designated regional point of contact for each of the nine DIT global regions. Her Majesty’s Trade Commissioners overseas will spearhead and champion action on market access across our nine regions overseas. Of course, this will be accessible and available to all parts of the UK We are upgrading our capacity to deal with market access barriers, including the IT infrastructure to share information on market access barriers faced by UK businesses. This will enable better collaboration and information-sharing As the UK delivers an independent trade policy for the first time in 40 years, we are committed to ensuring that our businesses have as many exporting opportunities as possible. Part of that means helping to resolve trade barriers as effectively as possible. I welcome the opportunity for full scrutiny of this statutory instrument and of the Government’s new approach to tackling trade barriers. I look forward to hearing noble Lords’ contributions. I beg to move.