Implementation of the Common Commercial Policy

The Committee consisted of the following Members:

Chair: Philip Davies 

Burns, Conor (Bournemouth West) (Con) 

Crabb, Stephen (Parliamentary Under-Secretary of State for Wales)  

Dakin, Nic (Scunthorpe) (Lab) 

Elliott, Julie (Sunderland Central) (Lab) 

Fallon, Michael (Minister of State, Department for Business, Innovation and Skills)  

Hoey, Kate (Vauxhall) (Lab) 

James, Margot (Stourbridge) (Con) 

Marsden, Mr Gordon (Blackpool South) (Lab) 

Mordaunt, Penny (Portsmouth North) (Con) 

Pugh, John (Southport) (LD) 

Raynsford, Mr Nick (Greenwich and Woolwich) (Lab) 

Shannon, Jim (Strangford) (DUP) 

Walker, Mr Robin (Worcester) (Con) 

Adrian Jenner, Committee Clerk

† attended the Committee

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European Committee C 

Tuesday 26 March 2013  

[Philip Davies in the Chair] 

Implementation of the Common Commercial Policy

[Relevant documents: 29th Report of Session 2012-13, HC 86-xxix, Chapter 1, and 36th Report of Session 2012-13, HC 86-xxxvi, Chapter 1.]  

2.30 pm 

The Chair:  I understand that a member of the European Scrutiny Committee wants to make a brief explanatory statement about the decision to refer the documents to the Committee. 

Julie Elliott (Sunderland Central) (Lab):  I would like to explain the background to the proposal and why the European Scrutiny Committee recommended it for debate. The debate concerns the Commission’s powers to adopt subordinate legislation—delegated and implementing Acts—in the field of EU trade policy. Subordinate legislation in the EU is not dissimilar to subordinate legislation in the UK. It is adopted without the rigour of co-decision negotiations between the two EU legislators —the Council and the European Parliament—just as subordinate legislation in the UK is adopted without the rigour of a Bill’s passage through Parliament. 

The entering into force of the treaty of Lisbon in 2009 has led to significant changes in the framework for the adoption of delegated and implementing Acts, previously known as comitology. The provisions of the treaty on delegated Acts provide for the Council and the European Parliament to control the exercise of the Commission’s powers only by means of a right of objection or revocation after an Act has been adopted by the Commission. By contrast, the provisions of the treaty on implementing Acts provide for prior authorisation by EU member states. The European Scrutiny Committee has concerns that the right to adopt delegated legislation confers significant power on the Commission and so should be used only where appropriate. The Government share that view. 

The proposal we are debating, known colloquially as trade omnibus II, adapts certain decision-making procedures found in trade policy legislation to the regime of delegated Acts. The Commission has identified 14 trade regulations for examination and proposes that certain procedures be converted into delegated Acts in 10 of the 14 regulations. The 10 regulations cover, for example, imports of textile products, medicines, products from the US and steel from Russia and Kazakhstan. The 14 regulations are annexed to the proposed trade omnibus II regulation. 

The European Scrutiny Committee recommended a debate on the proposal for two reasons. First, the Commission has succeeded in incorporating into two annexed textile regulations the right to use delegated legislation to block imports of textiles. That is a significant power, which in other trade defence measures can only be exercised by an implementing Act after an examination

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procedure, which gives member states greater control. In our report last week, which is in an addendum to the debate pack, we asked the Government to explain in today’s debate why the use of the examination procedure was not followed in the proposal. The relevance of the distinction between the main regulation and the annexed textile regulations was not clear from the Minister’s letter of 15 March. We also noted from the letter that the Government had concluded that the amendment to use delegated Acts in the textile regulations was required, as proposed by the Commission. If so, we asked the Government to explain today why a Council declaration is considered necessary to underline that the approach does not set a precedent for future trade defence mechanisms. The Committee thinks that is an important issue. What we are scrutinising is the risk of trade protectionism by a powerful regional institution. 

Secondly, the Commission has incorporated throughout the regulation the right to use urgency procedures when adopting delegated Acts, which means that they come into force immediately, rather than after two months, during which time the Council or European Parliament can object to them. They are available, for example, in article 8 concerning additional imports, in article 10 concerning safeguard measures, and in article 15 concerning circumvention. In our last report, we asked the Government to explain today what clarifying revisions the UK proposed to the use of urgency procedures, which the Minister’s last letter said “improved the text,” in what circumstances the Government foresee the Commission using urgency procedures, and whether that is a cause for concern. 

Finally, while the European Scrutiny Committee recognises that an EU classification of limité means that the Council’s first reading proposals cannot be reported, we think the classification makes the process of scrutinising negotiations with the European Parliament, and holding the Government to account on them, particularly difficult. As a consequence, the draft regulation under scrutiny is still the original proposal of June 2011 and so is completely out of date. That is not consistent with either open democracy or effective scrutiny. We look forward to hearing the Minister’s views. 

2.35 pm 

The Minister of State, Department for Business, Innovation and Skills (Michael Fallon):  May I welcome you to the Chair this afternoon, Mr Davies? The Committee is in the debt of the hon. Member for Sunderland Central for helping to explain the proposal so clearly and for quite reasonably raising several questions on behalf of the European Scrutiny Committee. I will speak fairly briefly, but I am obviously ready, as the procedure allows, to answer specific questions. 

The trade omnibus II proposal seeks to further align trade policy procedures with post-Lisbon EU decision-making arrangements. The treaty on the functioning of the European Union requires the Commission to review trade policy procedures falling within those arrangements and propose which should become delegated powers. Delegated powers allow the Commission to amend elements of existing legislation when the amendments do not affect the objective and purpose of the basic regulation. Amendments to the regulation itself remain subject to agreement by the Council and Parliament. They can also revoke the delegated powers at any time and object to their use in individual cases. 

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The British Government’s objective is to ensure that powers delegated to the Commission maintain an appropriate balance between the EU institutions. We broadly supported the Commission’s proposal but during the negotiation have pressed three specific issues, which are reflected in the terms of today’s motion. After a period of intense negotiations, a Council mandate for trilogue was agreed at the end of February, which satisfactorily reflects the UK position on the issues. 

First, our central concern was that delegation should be done correctly. The Commission proposed the use of delegated powers to impose safeguard measures under two textiles regulations. Such measures place restrictions on the quantity and/or price of imports. We questioned the Commission’s use of delegated powers for such measures and the inconsistency between this proposal and trade defence regulations, in which safeguard measures use implementing Acts that are subject to a determining vote by member states. The Commission argued that the structure of the regulations did not allow for the introduction of implementing Acts and that the delegated authority related to amendments to an annex—a non-essential element of the regulation. A delegated Act was therefore appropriate. The only alternative was the use of the ordinary legislative procedure. The Council Legal Service supported that view. The UK concluded—with advice from the Cabinet Office European legal advisers—that the Commission’s proposed amendment was needed. 

To reflect member state concerns on inconsistency, the presidency proposed a joint declaration. At our insistence—the hon. Member for Sunderland Central touched on this point—that makes it clear that the approach to safeguards in trade omnibus II does not create a precedent for future trade defence regulations and other safeguard provisions. 

Secondly, we were concerned about urgency procedures. The common understanding between Council and Commission is that such procedures are used in exceptional cases only. That is when there is 

“an imperative or overriding general interest requirement.” 

We were concerned that the Commission had not sufficiently justified its use of urgency procedures. The Commission’s argument was that they were justified where a delay in action could lead to irreparable damage to EU interests. The presidency suggested revised wording that echoed the Commission’s explanations. We then suggested some further revisions; some were accepted, while some provided the basis for further revision or for further Commission explanation. 

The third issue was the period for the delegated powers. Our view is that it should be a fixed, not an indeterminate, period, as the Commission proposed. The European Parliament agreed with us. It proposed a five-year term with a requirement for a Commission report on the operation of the delegated authority. Unless opposed by the Council or Parliament, the delegation will then be extended for a further five years. 

A preliminary trilogue session took place on 5 March. That was due to be followed by a technical level discussion. We will continue to monitor the position closely as the process develops. 

The Chair:  I think that there is going to be a vote in the Chamber imminently, but, pending that, we have until 3.30 pm for questions to the Minister. May I remind

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Members that questions should be brief, and that it is open to Members, subject to my discretion, to ask further related supplementary questions? 

Mr Gordon Marsden (Blackpool South) (Lab):  As the Minister has said, it is a pleasure to serve under your chairmanship, Mr Davies. I also thank my hon. Friend the Member for Sunderland Central for having so pithily expressed the position of the European Scrutiny Committee on this matter. I must say that when I looked at the document and some of the terminology, I was reminded of the famous saying about the Schleswig-Holstein question—only two people understood it; one of them was mad and the other was dead. Clearly neither you, Mr Davies, nor my hon. Friend falls into that category, so I am grateful and feel appropriately reassured. 

Moving to the substance of the issue, the position the Government have adopted is wholly welcome. It is disappointing that the Commission’s progress on full implementation of the regulation has been so slow. We support the Government’s position on the changes to the decision-making process. I think, Mr Davies, that you and many others in the Room would agree—inadvertently I am sure—that it is important that these sorts of developments do not result in mission creep from the Commission. Because that is the case, the issues that the Minister has raised in respect of delegated powers, the discussions that have taken place and the proposal for a fixed rather than indeterminate period for powers delegated to the Commission seem entirely justified. 

However, I have two or three questions for the Minister. He has talked about how joint declarations make it clear that omnibus II is not to be regarded as a precedent. Will he say whether he believes that agreement on omnibus II and omnibus I is likely by the June 2013 deadline, as Lord Green anticipated in his correspondence from last year? Will the Minister also give us an update on whether the Government have received a compromise from the Irish presidency in the terms that were anticipated by Lord Green in his December letter to the hon. Member for Stone (Mr Cash), the Chair of the European Scrutiny Committee? 

I know that the Minister has touched on my third question peripherally, but it would be helpful if he could address it, if not now, perhaps subsequently in a note. We share the Minister’s concern about the use of delegated Acts for safeguard action—incidentally, so do many Members of the European Parliament, including our colleagues there—and we obviously understand that the presidency has proposed this joint declaration to say that the use of delegated authority does not represent a precedent for other trade defence regulation. Incidentally, the area dealt with here, textiles, is very important and sensitive. Can the Minister update the Committee on what the exact wording of the declaration is likely to be? 

Michael Fallon:  First, I will address the point of substance on delegation. It is extremely important that it does not become a precedent for future trade and defence regulations. Why is that? It is because, as the hon. Member for Sunderland Central said, those regulations need to be handled under the proper examination procedure, where qualified majority voting is required. That is extremely important. 

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The hon. Member for Blackpool South asked me about the timetable for the remaining elements of the trilogue. We think it is possible, as my noble Friend set out in his letter to the Committee, to meet the June deadline, but it is not certain and we have to continue to make progress in the trilogue. 

The hon. Gentleman asked me about the compromise put forward by the Irish presidency, on which I might be able to assist him. The text of the declaration is as in the document provided, but there is an element of negotiation, and I would not want to go further and completely reveal the United Kingdom’s bottom line in the negotiation. I hope the hon. Gentleman understands that. 

Mr Marsden:  Indeed. 

The Chair:  If no more Members wish to ask questions, we will proceed to the debate on the motion. 

Motion made, and Question proposed,  

That the Committee takes note of European Union Document No. 11762/11, a draft Regulation amending certain Regulations relating to the common commercial policy as regards the granting

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of delegated powers for the adoption of certain measures; supports the Government’s view that power is delegated to the Commission in a way which ensures an appropriate balance remains between the roles of the EU institutions; and further supports the Government’s aim to ensure that urgency provisions are justified and that delegated powers are granted for fixed periods.—(Michael Fallon.)  

2.46 pm 

Michael Fallon:  I think the Committee supports the Government’s interest in ensuring that decision-making arrangements within the EU in common commercial policy regulations are fully in accord with the post-Lisbon requirements. The questions posed by the hon. Member for Blackpool South underline concerns that the process should be balanced and fair, that the powers being delegated are delegated appropriately and that provisions such as urgency procedures are properly justified. 

Mr Marsden:  I have nothing further to add, other than that we support the Government’s proposals. 

Question put and agreed to.  

2.47 pm 

Committee rose.  

Prepared 27th March 2013