Documents considered by the Committee on 25 January 2017 Contents

Meeting Summary

The Committee is now looking at documents in the light of the UK decision to withdraw from the EU. Issues are explored in greater detail in report chapters and, where appropriate in the summaries below, but the Committee notes that in the current week the following issues and questions have arisen in documents or in correspondence with Minster.

Brexit related issues

Chapter Summaries

EU Energy policy

Published as a separate report

Security of energy supply, competitively priced energy and reducing the environmental impact of energy generation are key public policy goals for any country. The EU’s approach to energy matters because electricity and gas imported into the United Kingdom from the EU make a valuable contribution to the UK’s security of supply.

In recognition of the need to improve the way in which electricity specifically is traded across the EU, and in response to an increasing reliance on renewable energy globally, the European Commission has proposed a “Clean Energy” Package of documents aiming “to keep the European Union competitive as the clean energy transition is changing the global energy markets.

The package consists of eight legislative proposals relating to energy efficiency, renewable energy, electricity market design and governance, as well as a number of non–legislative documents. In our Report, we assess the UK Government approach to the legislative proposals and summarise some of the supporting documentation.

At the heart of the proposals is a new approach to electricity market design, designed to ensure a more effective internal energy market that promotes the secure supply of efficient, clean and affordable energy. The Commission also proposes a new overarching energy governance structure with a view to ensuring that the EU delivers on its energy and climate change commitments.

On Brexit, the package raises important factual questions about the arrangements for energy trading between the EU and third countries, including the UK. This is of importance given the contribution made by imported energy to the UK’s energy security. We therefore ask the Government whether it is approaching the negotiations from the perspective of a third country seeking to trade energy with the EU, and under what conditions the UK might be able to continue to trade energy with the EU post-Brexit.

Across the various proposals, we look forward to receiving a clear assessment of the costs and benefits of each proposal to the UK in due course. We raise specific questions about energy efficiency targets, renewable energy targets and the proposed new governance arrangements.

Non Legislative documents cleared; legislative documents not cleared; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee and the Exiting the EU Committee.

New EU partnership with African, Caribbean and Pacific countries

The EU’s economic and political partnership with developing countries in Africa, the Caribbean and the Pacific (ACP) is governed by the 2000 Cotonou Agreement. Over half of all ACP countries are Commonwealth nations with close ties to the UK. Many of them are economically reliant on trade with Britain, which at present takes place under preferential market access rules put in place by the EU.

The Cotonou agreement expires in 2020. It is underpinned by development assistance funding provided from the €30 billion (£21.9 billion) European Development Fund, to which the UK is a major contributor. The European Commission has published its recommendations for a renewal of the EU-ACP partnership, based on an overarching legal framework underpinned by three separate regional partnerships with Africa, the Caribbean and the Pacific respectively. Negotiations will take place throughout this year at EU-level to allow for talks with the ACP countries to start in 2018.

It is unclear to what extent other EU Member States will be willing to accommodate the economic needs of Commonwealth countries when negotiating a new partnership that is expected to come into effect after the UK has left the EU, or what are the Government plans to ensure the conditions of market access for Commonwealth countries transition smoothly from EU rules to post-Brexit domestic rules.

Cleared from scrutiny; drawn to the attention of the Foreign Affairs and International Development Committees.

European Consensus on development

The European Commission proposes to revise the “European Consensus on Development” (high level policy principles agreed in 2005) in view of the UN’s 2030 Sustainable Development Goals, which were adopted in September 2015. The Committee welcomed the proposal as a timely update of the EU’s development policy framework. However, it did not receive an assessment from the Government of the implications of the UK’s exit from the EU on our national policy on development cooperation. The Department for International Development’s recent Bilateral and Multilateral Development Reviews talk of the UK “opening its markets to the world’s poorest people” after Brexit, but as the EU’s import duties and quotas on imports from developing countries are already low, it is unclear what this will mean in practice for the UK’s post-Brexit trade and development policy.

Not cleared from scrutiny; further information requested, drawn to the attention of the International Development Committee.

Digital Single Market: Tackling unjustified geo-blocking

Geo-blocking is a practice that enables online sellers to deny consumers based in another EU country access to their websites and content, to re-route traffic to a country-specific or local website or to apply different pricing or other practices according to the consumer’s nationality or residence. It can be detrimental to online consumers trying to get a better deal in another country.

In May the European Commission proposed legislation to address unjustified geo-blocking and discrimination based on nationality or place of residence. The draft Regulation imposes an obligation on companies to ‘sell like at home’ and not discriminate against non-home EU Member State consumers in terms of access to prices, sales or payment conditions, unless justified for certain ‘objective’ legal reasons.

On 28 November a General Approach on tackling unjustified geo-blocking was agreed by the Member States at the Competitiveness Council. The text met the Government’s negotiating objectives as well as the conditions of the Committee’s scrutiny waiver.

In relation to Brexit, the Minister states that UK businesses operating within the EU will have to comply with the Regulation, but that EU businesses will remain free to employ unjustified geo-blocking techniques in relation to UK consumers.

In response, the Committee requests further explanation of this disparity, including clarification of which provisions in the Regulation will continue to apply to UK businesses post-Brexit, as well as an assessment of whether retaining the Regulation in domestic legislation would afford UK consumers equivalent protections, or if a bilateral agreement with the EU would be necessary to do so.

The Committee requests an update on the outcome of trilogue negotiations in due course.

Not cleared from scrutiny; further information requested; drawn to the attention of the Committee for Exiting the European Union and the Business, Energy and Industrial Innovation and Skills Committee.

Money laundering and terrorist financing: cash control

The Committee notes that although the proposals are likely to be useful, the Government has some reservations. It asks for more details, including information on the implications of Brexit for the UK’s compliance with Financial Action Task Force recommendations.

Not cleared from scrutiny: further information requested.

Financial services: occupational pension funds and requirements for a prospectus: the Government’s scrutiny failings

Given a relatively satisfactory outcome of negotiations we have cleared from scrutiny a proposed Directive to recast (consolidate and revise) Directive 2003/41/EC, which sets out a minimum harmonisation framework for occupational pension schemes, and a proposed Regulation to replace the 2003 Prospectus Directive, which concerns disclosure requirements for securities being admitted to an EU regulated market or being offered to the public. However, we have been greatly concerned by the Government’s failure to keep us properly informed about developments as each proposal has been negotiated, so rendering ineffective full parliamentary scrutiny. We expect the Government to avoid such failures for the future.

Cleared from scrutiny.

Documents drawn to the attention of select committees:

(‘NC’ indicates document is ‘not cleared’ from scrutiny; ‘C’ indicates document is ‘cleared’)

Business, Energy and Industrial Strategy Committee: Clean Energy for all Europeans [Commission Communication (C)]; Energy Performance of Buildings [Proposed Directive (NC)]; Energy Efficiency Directive [Proposed Directive (NC)]; EU Renewable Energy Directive [Proposed Directive (NC)]; EU Electricity Market Design [(a) Proposed Regulation, (b) Proposed Regulation, (c) Proposed Directive, (d) Proposed Regulation (NC)]; Energy Union Governance [Proposed Regulation (NC)]; Digital Single Market: Tackling unjustified geo-blocking [Proposed Regulation (NC)]

Exiting the European Union Committee: Digital Single Market: Tackling unjustified geo-blocking [Proposed Regulation (NC)]; EU Energy Policy

Foreign Affairs Committee: EU-Russia restrictive measures [Council Decision (C)]; EU Partnership with African, Caribbean and Pacific Countries [Joint Communication (C)]

International Development Committee: New European Consensus on Development [Commission Communication (NC)]; EU Partnership with African, Caribbean and Pacific Countries [Joint Communication (C)]

27 January 2017