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. The Committee notes that in the current week the following issues and questions have arisen in documents or in correspondence with Ministers:
Law enforcement cooperation—EU/Canada Agreement on Passenger Name Record Data
- Whether the Government rules out any “grandfathering” of existing EU PNR agreements with third countries during a transitional period, so that these would continue to apply while the UK negotiates new bilateral agreements to take effect at the end of a transitional/implementation period.
- Whether the Government considers that the absence of a grandfathering arrangement would create risk and uncertainty for carriers and how it intends to mitigate this risk.
- Whether the Government accepts that the scope for the UK to diverge from the EU template for PNR agreements with third countries will be extremely limited and that, the greater the degree of divergence, the higher the risk that the UK will be unable to conclude its own PNR agreement with the EU.
Citizens’ rights—The European Citizens’ Initiative
- Whether the Government expects to use its correcting powers under clause 7 of the EU (Withdrawal) Bill to make clear that UK nationals would no longer be entitled to take part in European Citizens’ Initiatives (ECIs) once the UK leaves the EU.
- How Brexit will affect the involvement of UK nationals in ECIs (either as organisers or as signatories) which were initiated before Brexit day.
- Whether the Government intends to seek transitional arrangements to ensure that their participation would count towards meeting the requirements for registering an ECI and securing sufficient statements of support for formal examination by the Commission.
Single EU VAT Area
- The implications of the UK leaving the common VAT area as part of Brexit, which means that VAT will need to be collected at the border to avoid the risk of large-scale tax evasion. It is unclear how the ambition for “free and frictionless trade”, and the absence of any physical infrastructure at the Irish border in particular, are compatible with leaving the EU’s VAT system.
EU-Norway VAT Agreement
- The EU and Norway have negotiated a new agreement on tackling cross-border VAT evasion and fraud. The new Agreement, which is the first of its kind negotiated by the EU, could form a template for future UK-EU relations in this area. The Committee has therefore asked the Treasury some further questions about its position.
Emissions Trading System
- The impact on UK operators of proposed changes to the EU’s Emissions Trading System, from 1 January 2018, in order to protect its integrity in the event of an abrupt UK exit.
Anti-microbial resistance
- The implications of divergence from the EU’s veterinary medicines regulatory framework, including measures to tackle anti-microbial resistance.
Digital Single Market: ENISA/the EU Cybersecurity Agency
- The range of means by which third countries currently participate in, or cooperate with, ENISA, including through the NIS Directive and its supporting institutional arrangements.
Vehicle type approvals
- Precedents for vehicle certification authorities outside the EU and EEA being able to issue European type approvals which are recognised within the EU.
Summary
EU/Canada Agreement on Passenger Name Record Data
The Government informs the Committee that the Justice and Home Affairs Council on 7/8 December is expected to agree a proposed Council Decision authorising the Commission to negotiate changes to a draft PNR Agreement with Canada which would bring it into line with a recent Court of Justice Opinion. The Government says it is “minded to opt into the Council Decision” and to support its adoption, even though the three-month period available to the UK to decide whether to opt in has not yet expired. The Committee asks the Government to justify its early opt-in decision and requests further information on the implications of the UK’s exit from the EU for its ability to share PNR data with third countries.
Not cleared from scrutiny; scrutiny waiver granted; further information requested; drawn to the attention of the Home Affairs Committee and the Committee on Exiting the European Union.
EU participation in Council of Europe Convention and Additional Protocol on the Prevention of Terrorism
The Commission has proposed two Council Decisions authorising the EU to conclude (ratify) a Council of Europe Convention and Additional Protocol on the Prevention of Terrorism. Decisions authorising the EU to sign these instruments were adopted in 2015. The UK did not opt in and the Government indicates that it is “not minded” to opt into these proposals “at this stage”. The Committee asks the Government to clarify its position on the Court of Justice exercising jurisdiction over national security matters; explain whether it considers that the Convention and Additional Protocol concern areas of exclusive or shared competence (the distinction matters because it determines whether the Member States are free to act individually or only the EU can act) and how this should be reflected in the proposed Decisions; provide some indication of the views of other Member States; clear up any ambiguity about the possibility of the UK opting in post-adoption; and indicate how soon the Government expects the UK to ratify the Convention and Additional Protocol.
Not cleared from scrutiny; further information requested; drawn to the attention of the Home Affairs Committee.
The European Citizens’ Initiative
The European Citizens’ Initiative (ECI) was introduced by the Lisbon Treaty and is intended to give EU citizens a direct say in shaping the laws that govern them. The Commission considers that there is scope to clarify and simplify the existing rules to make ECIs more accessible for EU citizens and less burdensome for their organisers. Most of the changes proposed are designed to streamline the ECI process. They would also give young people aged 16 and above the right to support an ECI (currently they have to be of voting age). The Government raises no concerns about the substance of the changes proposed but alludes to “timing and implementation” issues connected with the UK’s exit negotiations. The Committee requests further information. It also asks whether it is the Government’s position that UK nationals will cease to be EU citizens on Brexit day and what implications this will have for their participation in ECIs initiated before the UK leaves the EU.
Not cleared from scrutiny; further information requested; drawn to the attention of the Committee on Exiting the European Union.
Single EU VAT Area
The European Commission has proposed to end the EU’s “transitional” system for collecting VAT on cross-border sales of goods between Member States, under which businesses who buy goods from another EU country effectively have to charge themselves VAT. The Commission has proposed to establish a “definitive VAT system”, under which cross-border sales would be treated the same as domestic sales, with VAT to be collected in the Member State of the buyer but accounted for by the supplier. However, the Commission proposal only legislates for the intent to establish such a system, leaving the detail to be fleshed out in further draft legislation in 2018.
The Committee has serious concerns about the complexity of the reforms proposed by the Commission, as well as the various derogations from the new “definitive system” to reduce the administrative burden on suppliers. In addition, the Minister has not addressed the significant consequences of the UK’s exit from the common EU VAT area, as it means UK businesses will no longer benefit from supplying or receiving goods from EU countries without VAT being collected at the border. It is unclear how the Government’s ambition for “free and frictionless trade” with the EU after Brexit, and the absence of any physical infrastructure at the Irish border in particular, are compatible with leaving the EU’s VAT system. The Committee has asked the Minister to address its concerns that, in the absence of physical VAT controls, the UK Treasury could lose significant amounts of tax revenue due to the VAT evasion on imports from the EU.
Not cleared from scrutiny; further information requested; drawn to the attention of the Business, Energy & Industrial Strategy Committee, the Northern Irish Affairs Committee and the Treasury Committee.
EU-Norway VAT Agreement
The European Commission has negotiated an agreement on addressing cross-border VAT fraud with Norway, which is awaiting ratification by EU Finance Ministers. The Committee considered the new Agreement politically important, as it could constitute a template for UK-EU cooperation in this area after Brexit. Although the Government described administrative cooperation as “one of the most effective tools for fighting cross-border VAT fraud”, it has refused to indicate whether this EU-Norway Agreement could set a useful template when the UK leaves the common VAT area.
Cleared from scrutiny.
Coordination of social security systems
The Committee again considered a proposal to amend the Social Security Regulation, which governs the way in which EU citizens access the social security system of their host Member State if they exercise their freedom of movement rights. It granted a scrutiny waiver to enable the Employment Minister to support a Council agreement on certain aspects of the new legislation, but awaits further clarification from the Minister about both the substance of the proposals and their implications for the Brexit process. These were contained in a previous Committee Report on 13 November 2017.
The proposal is particularly important because the UK and EU have agreed that the Social Security Regulation will be “grandfathered” into the Article 50 Withdrawal Agreement for EU citizens already resident in the UK before Brexit and vice versa, including a bilateral mechanism to update the Withdrawal Agreement in light of future amendments adopted to the Regulation after the UK ceases to be an EU Member State.
Not cleared from scrutiny.
Sanctions on Venezuela
The Committee discussed the EU’s new sanctions regime for Venezuela, which was approved by Foreign Affairs Ministers in November in response to the country’s socio-economic crisis and the repression of political dissent by the Venezuelan Government. The new sanctions framework imposes an arms embargo on Venezuela, and the EU may also in the future impose travel bans and asset freezes on high-ranking Venezuelan officials.
Cleared from scrutiny; drawn to the attention of the Foreign Affairs Committee.
Aviation Emissions and EU Emissions Trading System
The Committee considered proposals on the next phase of the EU Emissions Trading System (ETS) and on the specific arrangements for aviation within the ETS. Satisfactory agreement on both proposals has been overshadowed by EU proposals to future-proof the ETS against an abrupt UK exit from the EU. Concerned by the impact of that scenario on the carbon market, the EU has proposed that emission allowances issued by the UK from 1 January 2018 would be marked as such and would be invalid where the obligations on operators are “lapsing” due, for example, to the withdrawal of the UK from the ETS. The Committee notes that UK allowances could potentially be worthless and asks the Government for its analysis of the impact on UK operators.
Not Cleared/Cleared; further information requested; drawn to the attention of the Business, Energy and Industrial Strategy Committee.
Veterinary Medicinal Products
The Commission proposed in 2014 to amend legislation on veterinary medicines and medicated feed in order to improve its effectiveness and safety. Negotiations on these proposals are likely to culminate in agreement shortly after three years of discussions. The Committee waives the scrutiny reserve in order that the Government might give agreement, but raises a number of Brexit-related queries on: the amount of trade in veterinary medicines and medicated feed between the UK and EU-27; the implications for the UK of separation from the EU’s veterinary medicines regulatory framework, including the restrictions to tackle anti-microbial resistance, the proposed new common database and the requirements on authorisations and mutual recognition; and whether the UK would be likely to choose to maintain alignment with EU standards post-Brexit in any case.
Not cleared; scrutiny waiver granted; further information requested.
Digital Single Market: ENISA/EU Cybersecurity Agency Regulation
The Commission proposes to give the European Union Network and Information Security Agency (ENISA) a permanent mandate. ENISA would acquire a role in the development and implementation of EU cybersecurity policy, as well as overseeing a new EU-wide “cybersecurity certification framework”. On Brexit, the Minister states that the UK derives less value from membership of ENISA than smaller Member States. He accepts that the UK will need to enter into negotations with the EU to clarify its future relationship with ENISA. A number of third-country provisions exist in the NIS Directive and its implementing acts which should make some level of ongoing cooperation possible. The Committee seeks further information on these points.
Not cleared from scrutiny; further information requested.
Vehicle type approval
The UNECE World Forum for Harmonization of Vehicle Regulations, or Working Party 29 (WP.29), is a regulatory forum in which states agree to mutually recognise their vehicle type approval processes based on common standards, to reduce technical barriers to trade. Leaving the EU will mean that the UK will vote on these matters itself, instead of the Commission registering the bloc’s position (pre-agreed by qualified majority in Council). Although many vehicle regulations are harmonised globally at UNECE, a significant proportion are not. At present this is not an issue when exporting from the UK to the European market, as the EU Regulation on type approvals means that certifications issued by the Vehicle Certification Agency (VCA) are recognised within the EU. However, the UK’s withdrawal from the EU means that (in the absence of an agreement) the EU Regulation on type approval would no longer apply to the UK, meaning that UK-based manufacturers would have to use other European approval authorities. The Committee seeks further clarifications about the implications of withdrawal from the EU for UK participation in WP.29 and recognition of VCA certifications within the EU.
Not cleared from scrutiny; further information requested; drawn to the attention of the Transport Committee.
Rail passengers’ rights and obligations
The European Commission has proposed a recast of an existing regulation covering rail passengers’ rights and obligations. The proposal reduces the scope of current exemptions from the regulation, clarifies and strengthens a range of protections - particularly in relation to people with disabilities or reduced mobility - and introduces a force majeure clause for operators as well as a ‘right of redress’. The Minister is supportive of EU action to achieve the objectives given, but concedes that the Government has yet to undertake a detailed analysis of the proposal’s impacts. On Brexit, the Minister says that the rights put in place by this proposal would apply equally to all rail passengers and therefore benefit rail passengers who are not EU/EEA citizens. The Committee seeks further clarification of the proposal and its Brexit implications, particularly in relation to cross-border rail services on the island of Ireland.
Not cleared from scrutiny; further information requested; drawn to the attention of the Women and Equalities Select 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: EU Emissions Trading System 2021-2030 [Proposed Directive (C)]; Aviation emissions [Proposed Regulation (NC)]; Single EU VAT Area [(a) Proposed Directive (NC), (b) Proposed Regulation (NC), (c) Proposed Regulation (C), (d) Commission Communication (C)]
Exiting the European Union Committee: The European Citizens’ Initiative [Proposed Regulation (NC)]; EU-Canada Agreement on Passenger Name Record Data [Recommended Decision (NC)]
Foreign Affairs Committee: Sanctions on Venezuela [(a)Proposed Decision (C), (b) Proposed Regulation (C]
Home Affairs Committee: EU participation in council of Europe convention and Additional Protocol on the Prevention of Terrorism [Proposed Decisions (NC)]; EU-Canada Agreement on Passenger Name Record Data [Recommended Decision (NC)] Northern Ireland Affairs Committee: Single EU VAT Area [(a) Proposed Directive (NC), (b) Proposed Regulation (NC), (c) Proposed Regulation (C), (d) Commission Communication (C)]
Transport Committee: Vehicle type approvals [Proposed Decision (NC)]
Treasury Committee: Single EU VAT Area [(a) Proposed Directive (NC), (b) Proposed Regulation (NC), (c) Proposed Regulation (C), (d) Commission Communication (C)]
Women and Equalities Committee: Rail passengers’ rights and obligations [Proposed Regulation (NC)]
11 December 2017