Documents considered by the Committee on 1 March 2017 Contents

Meeting Summary

The Committee looks at the significance of EU proposals and decides whether to clear the document from scrutiny or withhold clearance and ask questions of the Government. The Committee also has the power to recommend documents for debate.

Brexit related issues

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 Minsters:

Digital Single Market

The European Commission proposes to modernise the Audiovisual Media Services Directive (AVMSD)—the EU-level regulatory framework which governs trade in broadcasting—to reflect emergence of new forms of broadcasting, such as the growth of on-demand services like Netflix and video-sharing platforms like YouTube. The Minister has responded to the Committee’s questions about the implications of Brexit for this file and the broadcasting sector. The EU Internal Market for broadcasting is highly integrated: the AVMSD permits a broadcaster that is compliant in the Member State in which it is established to broadcast freely to the other 27. In combination with the UK’s strengths in the creative sector and favourable business ecosystem, this has enabled the UK to become the overwhelming destination for international broadcasters seeking to access the EU market. Post-exit, routes to the EU market appear limited. The Minister informs the Committee that the default fallback—the Council of Europe Convention on Transfrontier Television—excludes online services, cannot be effectively enforced, and does not include six EU Member States. The EU also excludes broadcasting from its FTAs and WTO commitments, because of the “cultural exception”. The sector therefore appears highly exposed. The Committee agreed to retain the file under scrutiny and request further information about the proposal itself, as well as the implications of UK non-participation in the AVMSD post-exit.

Services package

Despite the limitations and uneven implementation of the Services Directive and the Professional Qualifications Directive, which have been a longstanding concern of successive UK governments, the UK has been extremely successful at exporting these services to the EU. In 2015 UK exports of (non-financial) business services to the EU amounted to £22 billion and contributed a trade surplus of £5 billion.

The European Commission now proposes to introduce a number of legal measures that will address these concerns by reducing administrative barriers to intra-EU services trade and preventing Member States from adopting disproportionate regulations that restrict services trade—measures which the UK has long advocated.

The measures include the creation of a European services e-card, the introduction of a notifications procedure for the introduction of new regulation of services, and the introduction of a proportionality test for the regulation of professions. Although the Government provides little analysis of the implications of Brexit for these proposals, the Committee’s initial assessment suggests that:

In relation to the European services e-card specifically, EU subsidiaries of UK businesses will continue to be able to apply for an e-card to operate elsewhere in the EU, but will have to do so in the host Member State in which the subsidiary is established.

The Government provides little information regarding the implications of Brexit for these files and so further detailed clarification is sought.

Summary

European services e-card

Intra-EU trade in business services—an area in which the UK is highly competitive, with £23bn of exports to the EU in 2015, which generated a surplus of £5bn—is artificially low due to poor implementation of the Services Directive and other barriers to cross-border trade. In line with requests from the Government, the European Commission has proposed a package of measures designed to deepen the Single Market for services.

The European services e-card is designed to tackle administrative barriers to services trade. The Commission proposes to create a simplified electronic procedure, built on existing information systems, to make it easier for providers of business and construction services to complete the administrative formalities required to provide services abroad on either a temporary or a permanent basis. The new procedure will enable businesses to deal exclusively with a coordinating authority in their home country, which will liaise on their behalf with authorities in the host country. The procedure is time-limited, which will reduce the ability of obstructive Member States to drag out procedures. Successful applicants will be issued with an e-card which will act as proof of establishment and authorise the provider to operate in the host country.

The Committee requested further information on aspects of the proposal itself as well as the implications of Brexit for the proposal, including the extent to which retaining the proposal in domestic legislation will be effective, and the extent to which EU subsidiaries of UK businesses would be able to avail of the card.

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

Proportionality test before the adoption of new regulation of professions

A mutual evaluation exercise of regulated professions across the EU showed that many Member States struggle to assess the proportionality of new measures, contributing to uneven restrictiveness of access to professions. To address these concerns the Commission now proposes a Directive establishing a proportionality test to be used by Member States before adopting or amending national regulations of professions. The Minister is supportive of EU action in this area, but notes that further clarification is required in relation to some aspects of the proposal, notably the consequences when one party objects to a proposed measure or the outcome of a proportionality test.

The Committee chose to retain the proposal under scrutiny and request further information about aspects of the proposal, including what action would be required when the Commission or a Member State objected to a proportionality test (or its outcome) by another EU Member State, and the implications of Brexit for the file.

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

Directive introducing a notifications procedure to improve enforcement of the Services Directive

The poor implementation of the Services Directive - a longstanding UK concern - is partly attributable to the ineffective notifications procedure under which Member States are supposed to notify the Commission of new restrictions on service provision. The proposed Directive, for which the UK Government was a key advocate, seeks to address the failings of the notifications procedure. In future, Member States will have to actively demonstrate that any new restrictions are necessary, proportionate and non-discriminatory. Three months’ advance notice of new restrictions will be required, during which time the Commission and other Member States can raise an alert. The Commission will be able to block non-compliant restrictions. Both chambers of the French national parliament have issued reasoned opinions in relation to the proposal, however their subsidiarity concerns are unfounded.

The Committee retained the proposal under scrutiny and requested further information about the detail of the proposed procedure and the implications of Brexit for the file.

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

Aviation Security

This proposed Regulation seeks to provide a legally-binding EU-wide certification procedure for equipment used in aviation security screening based on common standards. It seems unlikely that the proposal would apply substantially to the UK before Brexit. A subsidiarity Reasoned Opinion (RO) was approved by the House last October because the extent to which Member States could still impose stricter requirements for such equipment was unclear. This week, we consider the Commission’s response to the RO, which although seeking to reassure us that Member States will be able to impose stricter requirements, does not suggest any change to the proposal. We therefore ask the Government:

Not cleared; further information requested on the progress of negotiations; drawn to the attention of the Transport and Home Affairs Committees.

Implementing the EU-Turkey deal on migration

The EU-Turkey deal to curb irregular migration across the Aegean took effect in March 2016, and may well serve as a model for similar arrangements with other third countries. The Commission’s latest progress report underlines “the steady delivery of results”, not least a substantial reduction in the number of irregular migrants reaching the Greek islands from Turkey, but also acknowledges “many challenges”. These include delays in processing asylum applications by the Greek Asylum Service, severe overcrowding on the islands and the slow pace of returns to Turkey. The Committee asks the Government whether it is satisfied both that Turkey is a safe country for returned asylum seekers or refugees and that there is no risk of refoulement—involuntary return—from Turkey to unsafe third countries. Given the Government’s support for the use of fast-track procedures to speed up the processing of asylum applications on the Greek islands, the Committee asks whether it also supports the use of these procedures for vulnerable applicants, such as asylum-seeing children, or for more complex family reunification cases which may require particularly sensitive handling. The Committee asks what mechanisms are in place to ensure that individuals returned under the EU-Turkey deal are treated in accordance with EU and international law and invites the Government to provide further information on the deployment of UK officials to Greece. The Committee seeks details of the number of unaccompanied asylum seeking children who have been transferred to the UK from Greece so far (or are in the pipeline) and asks whether the Government has made an assessment of how many are likely to be affected by the closure of the so-called “Dubs scheme”.

Not cleared from scrutiny; further information requested; drawn to the attention of the Home Affairs Committee.

European Public Prosecutor’s Office (EPPO)

An EPPO would investigate and prosecute fraud on the EU budget and funds, either to the exclusion of national authorities (as per the Commission’s original proposal) or concurrently with them (the alternative Council text). This proposal links to another in the report this week: the proposed PIF Directive (see below) which sets out criminal offences related to fraud on the EU budget.

The Government reports on how lack of unanimous support in the Council means that supporting Member States (a minimum of 9 are required) are now looking to establish an EPPO using enhanced cooperation, but it is difficult to predict whether a Regulation might emerge pre-Brexit.

In view of its long-standing opposition, the UK is not participating in the EPPO proposal. However, provisions on relations between the EPPO and non-participating Members States and other agencies, such as Eurojust, have continued to be a concern for the UK. Whilst it is still in the EU it does not want the resources and impact of Eurojust to be diluted by the creation of an EPPO “out of Eurojust” (to borrow the wording of the Treaties). Third-country provisions are also now relevant in the light of Brexit. This is because future EU-UK cooperation in relation to Eurojust might be desirable, even if cooperation as a third country with EPPO seems very unlikely for many reasons.

Related Communications cleared but proposed Regulation not cleared; further information requested on the progress of negotiations; drawn to the attention of the Home Affairs Committee.

Protecting the EU’s financial interests

The Government has not opted into this proposal. It confirms that the text of the proposal finally agreed in Council still includes an unacceptable element on VAT fraud. As the Government regards that as a national competence, it will not be considering a post-adoption opt-in. This is unsurprising, both because of Brexit and the proposal’s close links to the EPPO (see above). It also means that the proposal can be cleared.

Cleared; drawn to the attention of the Treasury Committee.

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: Digital Single Market: Audiovisual Media Services Directive [Proposed Directive (NC); European Services e-card and related facilities [(a) Proposed Directive, (b) Proposed Regulation (NC)]; Directive on the enforcement of the Services Directive laying down a notification procedure for authorisation schemes and requirements related to services [Proposed Directive (NC)]; Directive: proportionality test before the adoption of new regulation of professions [Proposed Directive (NC)]; Cooperation on enforcement of consumer protection law [Proposed Regulation (NC)]; Shareholder rights [Proposed Directive (C)]

Culture Media and Sport Committee: Digital Single Market: Audiovisual Media Services Directive [Proposed Directive (NC)]

Exiting the European Union Committee: Digital Single Market: Audiovisual Media Services Directive [Proposed Directive (NC); European Services e-card and related facilities [(a) Proposed Directive, (b) Proposed Regulation (NC)]: Directive on the enforcement of the Services Directive laying down a notification procedure for authorisation schemes and requirements related to services [Proposed Directive (NC)]; Directive: proportionality test before the adoption of new regulation of professions [Proposed Directive (NC)]; Enhancing Security in a world of mobility [Commission Communication (C)]

Home Affairs Committee: Enhancing Security in a world of mobility [Commission Communication (C)]; Aviation Security [Proposed Regulation (C)]; European Public Prosecutor’s Office [(a) and (b) Proposed Regulation (NC), (c) and (d) Commission Communications (C)]; Implementing the EU-Turkey agreement on migration [Commission Communication (NC)]

Transport Committee: Aviation Security [Proposed Regulation (C)]

Treasury Committee: Protecting the EU’s financial interests [Proposed Directive (C)]





3 March 2017