 R subjective evidence is the evidence session on international agreements. I would like to welcome to the meeting Dr Lordมาtels, a reading in international law at the University of wonderland. I'd like to remind members, and the public to turn off mobile phones, any members using electronic devices to access committee papers, should please ensure that these are turned to silent. We have received apologies today from Jamie Grene MSP. The first item of business on the agenda today is an evidence session on international agreements. of Cambridge, Dr Holger Hester Mayer, reader in international dispute resolution at King's College London and Ali Renison, head of EU and trade policy at the Institute of Directors. Thank you very much for coming to give evidence to us today. I would like to start, given that we seem to be looking probably closer to no deal than we have ever been this morning. On 13 March, the Government announced a tariff scheme that will apply in the case of no deal. Under the tariff scheme, there were newly announced tariffs on a non-discriminatory basis. My understanding is that the UK Government chose to grant duty-free access to an additional range of products that did not have duty-free access before, including things like bicycles, cereals and shoes, irrespective of the goods origins. That will come as a bit of a surprise to people. Many people were quite surprised to know that it was possible to do that. I wondered if you could share some of your knowledge on that particular topic and why the UK did not just roll over those agreements and why it decided to slash the tariffs and what the effect might be on manufacturers in this country? First of all, under the WTO law, the UK has made commitments. Those commitments are maximum tariff bindings. The UK can unilaterally lower those tariffs, but then it has to be done towards all WTO members, what is called most favoured nation on a most favoured nation basis. If we are looking at no deal, that means that the UK will no longer be entitled to give special treatment to the EU or to get special treatment from the EU because that has to be justified under a trade agreement under article 24 of the gut. The UK is looking at a situation in which imports from the EU, if tariffs would remain as they are, would just become more expensive, which hurts the consumer and also hurts industry because they use the input. It is a rather rational emergency measure to say that we will lower tariffs. Of course, it has to be done on a consulted basis with industry and with consumer associations to understand where tariffs can be lowered because it will have a dual effect. First of all, of course, it is there to prevent prices from going up, but the other effect is that there will be a lot more competition, so Chinese products can also enter at the same tariff rate and that is a risk to UK industry. Does anyone else want to comment on that? Add something on the legal front, and I'm sure Allie's got lots to say on the business front. Just one additional point to what Holger was saying. There is another level that sits on top of the normal tariff rate, which is what you asked about and what Holger was talking about, which is anti-dumping duties and in theory other types of so-called trade remedies, anti-subcity duties as well. The government has also said that it will continue to apply EU-level anti-dumping duties on 43 products, which is about a third of the others. That comes after having done a review with consultations with UK industry. Essentially, the idea is that there is no need for anti-dumping duties on products that are not made in the UK. I don't know if that is 100 per cent true, the outcome, but my understanding is that they took a fairly benevolent view in favour of UK industry concerns there. That covers products like steel and so on. It is not just maintaining the EU tariff and then going down to zero and all the other products, but there is also anti-dumping on top of that. If I am completely honest at this stage, I think that most of our members for whom this is business critical are quite happy to actually have the information and are still processing that to a certain extent. We know that we did a survey not long before the decision was taken to try and gauge where opinion was. The priority balance was slightly more in favour of prioritising EU import flow, now keeping in mind obviously that despite the fact that these new duties were slashed for the rest of the world, there is, I think, the figure—I am not 100 per cent if that is certain—is about somewhere between 13 per cent to 18 per cent of products that had no duty on it, will now face it, obviously, on products being brought into the EU. There is a concern, I think, about the way in which it was handled, the process, and I think that that is probably coming out more vocally from the membership in terms of where their views are on tariffs is the length of time it took to get the information released. I think that the other concern that they are looking forward is that we have the information now how long the measure is going to be in place, what does temporary actually mean. From my perspective, the most common thread of consensus across lots of different sectors, which our organisation represents, their concern is about multiple changes. The biggest question that we are getting now is less about what does this mean for my business, but more about when is it going to change again in six months or in 12 months again. That is where I think the broadest consensus of concern is coming from rather than about the changes themselves. When you talked about the consultation, was there a detailed consultation about how the different goods were selected? I would imagine that there might well be manufacturers who make some of those goods in the UK, and there may only be one or two of them, but they would be very hard to hit. I am just thinking about a manufacturer in my constituency who makes a product that nobody else makes in the UK, but there are lots of competitors from India, but they would not expect to feature very highly in some of those discussions because they are just one manufacturer, but it would devastate their business and devastate the people that work for them. What happens to people like that in the course of these kinds of consultations? To answer your question about consultation, it depends on who you are speaking to. I think that there is a general consensus across all business organisations, with the exception of potentially agri-food, because I think that the department for environmental food and rural affairs started discussions a little bit earlier on. There was no widespread extensive consultation that you would get when you have any kind of changes to tariffs in other countries effectively, and I think that was the biggest issue that came out of the process. It was very ad hoc, it was very belated, and to some extent there is very little engagement with businesses themselves. A lot of it was done, I think, belatedly through business organisations, but that has not left us a huge amount of time to go back and take what might be being proposed to the members and come back with feedback. The process has been pretty woeful. In consultation in the document by the Department of International Trade, the process is for making free trade agreements after the United Kingdom has left the European Union. It details the consultation of both the House of Commons and the House of Lords with anodd to the devolved administrations. In terms of things like those agreements, I do not recall any consultation with any Parliament when something like that was decided. Was there any political consultation? First of all, as a matter of disclosure, I work as specialist adviser for the House of Lords EU Committee. I cannot speak for them, though. I just speak in a private capacity. The problem is that there are so many processes going on at once that it is very difficult to generalise. The tariff measures was a unilateral UK measure, so there was no other country involved, whereas the trade agreements are, of course, a separate matter because there is another country involved. When it comes to trade agreements, you have to distinguish several types of processes The first one is what is generally called the rollover. There is no public international law term for rollover. It does not exist as a concept in public international law, but the idea is that the current agreements that the EU has will become UK agreements. Technically, after a no-deal scenario or post-transition period, this means signing new agreements. Under public international law, those are entirely new agreements, but the conceptualisation that the Government had, at least from what I got from the press at the beginning, was that this will continue exactly what we have at the moment. I think that the Government probably did not see such a need for consultation. That came up in the trade bill discussions, where people criticised it, and this is coming up again and again. If I could just interrupt to the announcement that they made on the 13th of March, there was not a continuation and there was no consultation. That is also not an agreement, because you spoke about agreements, so I wanted to distinguish the two processes. Also, with the continuation agreements, there was very little consultation. Referring to the new scrutiny proposals, is that correct? I cannot speak for the Scottish Parliament or any other devolved administration in terms of what consultation there was. Having said that, we are part of an alliance between business groups and other stakeholders, trading groups that have called for much more improved consultation and more involvement, quite frankly, of the devolved administrations, before hand, at least in the mandate, for example, for trade agreements. However, I do not think that it has been sufficiently fleshed out very much at this point. I have not read the entirety of the document. I cannot remember. I do not think that it necessarily references something that I think would be helpful, which is to maybe have something akin to what you have the Joint Ministerial Council for European Negotiations. Potentially, you could have something along that line for trade as well, because there are examples in other countries. Nothing is a perfect precedent. There are trade-offs to the way in which you involve in Canada, the provincial provinces, the US, the states, for example, but in certain other countries you have representatives of states or provinces outside of the negotiating room, to a certain extent. Nothing is a perfect model. There are issues with something that is too prescriptive or not sufficiently flexible, but you would expect to see a much deeper set of scrutiny proposals before we embark on any new trade agreement at this stage. There is a big question mark. I presume not only for the devolved administrations, but particularly for business and industry, about how the intersection between EU negotiations and third-country negotiations is going to run, because there is obviously a huge amount of overlap. One of the biggest issues that we have found since the referendum really is the challenges that are posed at the moment to cross-government policy, shall we say? Thank you very much. Dr Hester Mayer, I know that you said that the announcement on 13 March was not a trade agreement as such, but given your role in close working in the lords, were you aware of any consultation with the committees of the lords or the commons on that announcement? I was not, but then this would also not go through the procedure that I am involved in. I work on treaties, basically. Thank you very much. Claire Baker. Good morning. I will just take you back to the comment that you made earlier about China, about how, as the tariffs were removed for European goods coming in, that would then open up the market to other countries and refer to China. Can you just explain to me how we would have to give the same, because you said that we could only lower the tariffs, that would come with NWTO rules. You could not do that exclusively for the EU, you would have to treat everybody the same, so all goods from anywhere around the globe. Is that correct? There is a principle in WTO law called most favoured nation principle, which means that you have to treat all other WTO members alike. If you have lower tariffs, you use that same tariff rate for all WTO members. However, there are exceptions. One of the exceptions is if you have a trade agreement. That trade agreement comes with a couple of conditions, but you need a trade agreement in place. Currently, we do have a trade agreement with the EU, that's the EU treaties. Accordingly, the UK can treat the EU better than all other WTO members. In a no deal scenario, that trade agreement falls away and there's no replacement. There's no longer a justification to treat the EU better. So, if we continue to impose the same tariffs that are imposed currently, we'd have to impose those tariffs on all EU goods coming in. If we decide to lower tariffs, that means we have to lower them for China, for all countries in the WTO at the same rate. Turn to my colleagues to judge the feasibility of this, that there was a suggestion made by a recently departed trade minister to the Government on the floor of the house about a month and a half ago, suggesting that to try and deal with the Northern Ireland border issue, particularly under a no deal scenario, that, effectively, that preference was continued to be extended to EU imports, which would flout one of the most fundamental rules of the WTO. His argument and rationale was that you would only have to deal with the challenge for at least, you wouldn't have to deal with the challenge until 18 months. I don't necessarily think that is Government thinking, but I was rather concerned to see that that is something that is being discussed, but would probably turn to my colleagues to see how feasible that would have been. So, that is more of an enforcement issue. That would basically say, let's just not respect this principle for a while and see what happens. And because the WTO dispute settlement mechanism takes a while, during that time, you just continue with a policy. It would be illegal, but because there's no remedy for past wrong in the WTO, you would just ignore the rule. You could try to invoke exceptions, there's a national security exception, but that would raise serious issues in the WTO. Just to add to that, I think the latest proposal on the Northern Irish border is to allow all products in without checks regardless of whether they're from the EU or from other countries. In fact, Holger and I have a different point of view on whether that is illegal under WTO law on one reading. So long as you treat all products equally, Chinese products and Irish products, at the Northern Irish border, in other words, you apply no duties to or checks to either of them, that's not necessarily an MFN violation because both sets of products are being treated equally there. The way I see it is it's a question of whether there is a requirement for the UK to have a uniform policy on tariffs at all of its borders, and that's a separate question that precedes MFN. This is a bit of a technical issue at the end of the day. I think we probably would agree that national security should cover it if it comes to that, but it's just a question of how you look at it. I don't think it's necessarily an MFN issue. If we fast forward, I don't know how long it's going to take and if we'll ever reach this stage, but to a stage where the UK is starting to negotiate new trade arrangements with other countries, primarily the US, Australia and China has already been mentioned. What kind of challenges are involved there? You're looking at the UK, a small country, looking to strike big trade deals with big economies, no longer part of an EU trading bloc. How difficult or straightforward are those negotiations going to be? On top of that, you're also dealing with, at the moment, we are aligned with the EU rules and regulations. They are not the same as the US, and there's already been issues over, we're all familiar with the T-type negotiations and the problems that arise from those. Where do you see the future for the UK in terms of its regulatory partners? I'd imagine it would be difficult for us to have a deal with the US unless we were to move away from the EU regulation regime. First of all, the UK is not a small country. It's a big country, and it's particularly big compared to my country, which is Australia or New Zealand or most other countries. There aren't that many countries that the UK is not bigger than, if you think about it. Economically, it ranks about six or seven. It is a significant force in international economics, really. That said, what does it mean for trade agreements? You can distinguish between tariffs and regulations. When it comes to tariffs, assuming that the UK is able to engage in trade negotiations and is not bound to the EU customs union, which of course would mean there's nothing to talk about, when it comes to tariffs, I think it would be a normal trade negotiation, and I don't really see why the UK would be in a particularly bad situation. It's a big country. Now, of course, if the UK has got rid of its tariffs unilaterally, that means, in negotiation terms, there's nothing much to talk about, so that's an issue. Of course, the UK has held on to a few others, and then the question will be, well, which ones will it negotiate away in exchange for market access into another country, and what sort of market access as well. That's one issue. When it comes to regulations, which was the second part of your question, I think this really kindboshes everything that I've just said, because trade negotiations in reality, trade agreements, they are actually about tariffs, but they are also about services. There's a lot of effort that goes into negotiating regulations. It doesn't usually amount to anything in reality. So, essentially, countries say that they will talk about their domestic regulations and that they will reduce them in trade agreements, and countries never do. It just doesn't happen. So, you could say, well, the reason for that, from the UK's point of view, is that it's bound to EU regulations, and that certainly, if there is, let's say, some form of single market Norway type arrangement, whatever, if you have that sort of thing, then that formally speaking stops the UK from doing anything. In reality, it's domestic pressure. It's very hard domestically to publicly go out and say, you're going to reduce your regulatory space because of an international agreement. And so, I think this is really going to mean that nothing much happens there, that probably if the US sees this as a condition of a T-tip type agreement with the UK, that would stop that sort of agreement because the US really cares about that sort of thing. Most countries don't really care about that sort of thing because they accept that when it comes to changes in domestic regulation, you can't expect anything, nothing much is going to happen, and they'd rather just talk about whatever tariffs are there. I think, I want to make two points. The first one is, to some extent, we are already engaged in negotiating new agreements. I know that the Government says that the current arrangements are we're trying to roll over existing agreements, but when you look at an agreement like the one with Norway, our current arrangement with Norway is based on the EEA. As all of that EU-type regulation will fall away, whatever comes after will be different. So this is already a new agreement, to a large extent. It might be copy-paste with some regards, but it's going to be new in other respects. I agree with almost everything, of course, that Laurence said. I would add one point. What makes a difference in terms of leaving the EU? There are two soon three trading powers in the world that have the power to push through their regulatory models, to some extent. That's the US, first of all, the EU, and China will join them eventually. You can see how they push through the model, for example, in the CETA negotiation. That's the negotiations with Canada. Canada is, of course, a federal state, so there are things that the federal government cannot offer. For example, government procurement in the provinces. The EU pushed and ultimately achieved for the provinces to be at the table to get agreement on that. These sort of structural changes in how negotiations are done, in how regulation is drafted, I don't think is something that the UK can aim for, because the market is too small to some extent for that. However, a normal trade agreement, very much possible, I think there has to be some realism in what those trade agreements do, because there's a lot of talk about free trade and services, but free trade and services means committing your regulation. Before we start thinking about opening the markets of others, we'll have to reflect, do we actually want to be bound, because we seemed to have a problem when it came to the EU being bound when it comes to regulation. If we want to open services markets, the same will happen in a free trade agreement. Do we actually want that? What do we want? Let's add quickly a talk. I don't want to take up alley space, but I think CETA, the agreement between Canada and the EU, is a good lesson in fact, because if you have a look at that agreement, when it comes to changes in domestic regulation, there's nothing. There's literally a blank page that says, to be discussed. As between the EU and a fairly big player like Canada, it's a good example of what I was saying. It just doesn't happen. There is, of course, a difference when it comes to countries within the EU's regulatory orbit. Those are countries that by and large like to align with the EU. We're talking about Eastern partnership countries, Ukraine, Georgia, Moldova, et cetera, and in some smaller sectors Israel, but I don't think that that's a common experience. When it comes to services, of course, I agree with what Holger has said. It's one of those areas everybody talks about a lot. It's very hard to identify areas where anything has actually changed in the career agreement famously. There was a little bit of a market access opening for law firms, which meant that a UK law firm, actually one that I work for, was able to set up there and get first mover advantage. This is one of the very, very small examples that anybody can point to where there was any market access opening under a free trade agreement. I would say that where you really do see value in free trade agreements, aside from basically like in the 19th century reducing tariffs, that's still the guts of any negotiation. Where you see value is opening up government procurement markets. There is a lot that is of value there, and as Holger was indicating, it's in that area where you need, in federal systems, you need the engagement of devolved administration simply because they control money and they control procurement. Having worked from a business organisation perspective on the T-Tip negotiations, I don't see any reason why at a superficial and macro level doing a trade agreement with America is any less desirable. Having said that, I think that there is maybe slightly more reason to question the impetus or the need because the degree to which, and I'm not making an argument to say that the UK is completely open to competition, but there are more closed markets, I suppose you could say, in the EU than the UK for the US market. The US market is still very closed in many areas, procurement particularly at a sub-federal level. It's a question about ambition. The UK completely reserves the right to not put certain things on the table, or for example, when we talk about the famous issues around agri-food, it really depends. It's not co-opting the US's rules. What do you allow in that you're not currently allowing, whether it's because of our own desired preferences or because it's a function of EU law? If you look at, for example, the hormone treatment of cattle, that is currently allowed for the imports of dairy into the EU, but not for beef. There's a question mark about to what extent the UK does want to put that on the table, so to speak, to allow those imports in. I know that there is a discussion going on on the agricultural bill in the House of Commons about requiring certain standards for all imports. Some of those are legitimate, some of those could be construed as standards or can be used for protection as purposes to a certain extent. It's a question of how what your ambition is. The EU and the US, one of the reasons for TTIP, I think, was really to try and put a basket of issues in one place that hadn't been resolved over the period of 10 to 20 years. You could also argue that to some extent they failed because you had two massive power blocs, so there are pluses and minuses to having people who are in different competitive strengths, shall we say, or different market sizes. I don't think I would necessarily have picked the US as my first priority for US trade agreement, for UK trade agreement, simply because I think it's quite important to get some experience under your belt. To some extent, it forces in certain areas, I suppose you could say, choices between alignment in the EU and alignment in the US, although I would say that, to some extent, if you were, and I'm massively simplifying here, and my colleagues can disagree with me as they see fit, but to some extent if you were to sort of characterize the difference between what the EU does through its trade agreements and what the US does, I think the US tends to focus a lot more on enforcement, particularly on intellectual property rights through its trade agreements. The EU, I think, could be argued to export more of its standards, so I actually think that the EU tries to get other places in the world to adopt its standards. However, sometimes the way in which the US pursues enforcement, particularly in the intellectual property space, can amount to effectively a country having to change some of its rules around patent terms, for example, the length of time. That was something that the Canadians are going to have to change as a result of the new changes to the NAFTA agreement. Ross Greer, followed by Tavish Scott. Thanks, convener. I'd like to just stick with this point from him and drill down slightly further. As Loran has already said, most trade negotiations are about tariff and regulations. Sometimes it's a little bit more political, so for the EU to progress its arrangements with Morocco, it has essentially recognised the occupied western Sahara as part of Morocco, at least for economic purposes. However, if we were to look at the economic powers that are larger than ourselves, taking on board Loran's point that the UK, even outside the EU, is still a large trading power, to take the US and China, if we're in the situation of a no-deal Brexit, and the US in particular sees the opportunity for the points that I always just made around perhaps being an unusual choice for the UK to prioritise the US so quickly, what would their priorities be in trade negotiations after a no-deal? What incentive would they have to speed that process up? If we are in that situation where tariffs have been dramatically lowered or in some cases removed, what incentive is there for large trading blocks, large economic powers, to actually progress negotiations quickly? Can I kick off probably all the things to say about this one? The US has made its negotiation aims public when it comes to the UK and they're similar to the US's aims when it comes to other countries as well. Let me just pick a few examples that are of political salience. There'd obviously be a desire to reduce tariffs on normal products, which would affect producers of those products but wouldn't have wider policy implications beyond that. It's well known that the US would like to be able to sell services that are currently provided by the NHS. There are obviously economic arguments in favour of that in terms of consumer choice and so on and there are obviously public policy arguments against that and that's a very hotly debated issue so far. The UK's approach when it comes to the NHS is to ring fence it. Of course the NHS comprises many, many different types of services. Cafeteria services are different from brain surgeon services usually, hopefully anyway. One has to distinguish a little bit what one means by NHS services and in fact the UK has made commitments when it comes to midwives and so on. I mean there is some flexibility there already but that's clearly one issue and I think that that is something that may well be on the table. Another area is to do with food safety standards. It's another big deal. The US has said publicly that it would like to be able to sell its beef into the UK. It's no secret that that beef that it's talking about is beef that's produced by artificial growth hormones. The thing to say about that, it's not exactly and then with the chlorinated chickens is another example. The thing to say about that is that free trade agreements when they deal with these sorts of issues they essentially replicate the rules that are already there in the WTO. Sometimes they add a bit of detail, a bit of flavour, let's say, but they don't change the fundamental predicate of trade regulation in the area of food safety and that is that you can protect food safety so long as it's based on science. The US argument on this is that current EU standards on food safety are actually not based on science. They're based on what the US says is an inappropriate application of the precautionary principle. So this is just let's say a negotiation version of what the US could probably argue in dispute settlement at the WTO today and in fact when it came to the chlorinated chicken and the hormone beef it argued this and when it came to the hormone beef it won. With the chlorinated chickens it actually pulled the case for reasons that I don't know but with hormone beef it actually won the case. There was no science at the EU could aduse to say that its restrictive measures are valid and that's been fought out in retaliation for the last, what is it now, 20 years I think. So these are two areas where I think you can analyse them a little bit differently or three I mean to start at the beginning there's the tariff, normal tariff type negotiation which is nothing special. Secondly there's going to be an effort by the US to chip away at the NHS and other types of services where I think there is a policy decision that needs to be made and thirdly there's a lot of obviously this turns up in the newspapers a lot, arguments about food safety and I think what's sometimes overlooked there is that ultimately the rule there is can you justify it based on science. Just want to pick up the second part of your question and I apologize if I'm not answering it correctly but in terms of the point about what could be done or what could speed up some of these decisions, I would keep a very close eye particularly under a no deal scenario on whether Lauren referred to the EU having lost that case for lack of a better word at the WTO. Now that was temporarily because I think it's now up for review actually dealt with by the EU agreeing to increase its quota for non-hormone treated beef coming from the US. Having said that it would be interesting to see whether the you know when it is technically under no continued obligement to follow EU regulations relating to the single market in particular and if the UK decides to continue with most of those rules and regulations whether the US wants to also bring a case against the UK as well. Now there are other countries that have similar bans in place slightly different reasons you know Switzerland technically has similar ban but allows labeling there is a labeling sort of choice almost to a certain extent to allow some of these products in from the US but there are other countries that ban Ractopamine for example which is one of the big things that you that the US farmers feed their cattle and the EU hasn't necessarily hasn't necessarily pursued them at the WTO so it's it's hard to tell whether that is just a function of market size or whether that you know that is certainly beyond tariffs and big offensive interests that the UK the US will have particularly since I think there is a political view that it judges the UK to have a slightly different approach to the precautionary principle as the rest of the EU that's not necessarily the case but I think there is a view that the US has the UK has a slightly different view towards how science is used in that kind of regulation than the EU does so it'll be a particularly if tariffs aren't able to be on the table or on the table to the extent that the US would like it to be that will be a big big offensive interests. I'd like to add because we didn't have enough areas yet I would like to add two more one is pharmaceutical prices the American pharmaceutical industry has long and the American government has long thought that it unfairly pays much higher prices than everyone else because it finances research and then other countries get to live of that research but get low pharmaceutical prices so there's a push for having a from the point of view of the US fairer situation usually done through IP law but also to prevent price comparisons effectiveness studies and those things and the UK has always been a model in this regard and that would certainly for the pharmaceutical industry destroying this model because UK prices are used as reference prices in other countries would be an enormous win so you can expect to push there GMO is of course another area where you can expect to put data data flows are a big thing the European model for data protection the Europe tries to export that model whereas the US opposes that model GI protection protection of geographical indications that's long been a dispute between continental Europe which protects geographical indications of origin and the US and the new world that opposes them and I think this also answers to some extent your other question what is the interest in what would be the interest for the US to push this quickly currently the UK is also negotiating with the EU it is not unlikely that these negotiations will lock in these policies so if the US pushes now and can achieve agreement now on these issues that would of course disrupt the EU negotiations but it would be another country won over for a UK model before a US model I just want to just very briefly put on the record in terms of we have asked our own membership in terms of where the balance of priorities lie and I think it was about 62% think that the EU is the most important to prioritise compared to about 13 to 14% looking at third countries so we know at least where the bulk of the membership's focus is if it became an either or choice thank you you okay come back later if you need to move on right well I'm told that we have a little bit of time but if you could keep your answers as brief as possible so that I can get as many members in in that case I this is probably primarily for for Loran around WTO disputes my understanding is that the WTO's court of appeals is dangerously close to running out of a sufficient number of judges to actually make any decisions is there a danger that that that event could occur in the next two to three years where the UK is in the depths of a post no deal crisis it's going to happen on the 10th of December this year correct that's a cliff edge and it shows no sign of being overcome now that isn't necessarily the end of dispute settlement in the WTO there are work around so disputing countries still have the first level the panel level available to them the question is what happens at the end of that the problem with the appellate body disappearing if it does is that you have a right to appeal and so if you don't want to play ball you just say well I can't exercise my right to appeal and then everything just stops but it's possible to work around that by agreeing before the dispute that you will set up a separate appellate organisation there are proposals for that so you can play the game if you want ultimately most countries seem to want to the real question is what happens if you've got a dispute with the US and the US sits on its hands and says well no appeal we're not doing anything of course the US is just as frequently a complainant so um we'll just see what happens there nobody really knows thanks thank you Tavish Scott thank you and you just said thank goodness you did say this that your membership saying that our trade arrangements and British businesses trade arrangements with the EU and continuing those are more important than any third party agreement has the government the UK government recognised that point do you think that point has got into the minds of those ministers responsible for this I think it depends on the minister um I think it will it's the jury is out because the real test case will be when we are in the next phase of negotiations to see how that interaction between third country negotiations and the department responsible for that and the department that we assume is continuing dexu for for for for brexit negotiations future trade relationship negotiations intersect um you know I think for example the to some extent you have to also make allowances for the fact that DIT have no really remit to handle a negotiation so almost by default they have to focus on the rest of the world to a certain extent there is a concern about some of the interplay between that in the future which is why you know which is a big assumption to make but assuming we get on to that next stage in the next couple of months it's really important to for all of the focus on on doing this speedily taking time I know the prime minister has made a commitment I don't know if it will stand once we're in that phase to consult at least the Westminster parliament more about the mandate I think she said for the future trade relationship negotiations but I think the point that we're also repeatedly trying to make to the department for international trade and other parts of government is there's a lot that you can do with third countries that does not have to go into the trade policy or the trade agreement bucket in fact to some extent the more you put in there the more you're holding other things hostage to agriculture for an example so if you look at something like digital trade financial services cooperation so the financial services industry in the US and the UK are very enthusiastic about the idea of a trade agreement or some kind of other mechanism to foster the cooperation that you clearly the previous US administration basically the treasury departments shut down because they were worried about this leading to regulators in the US don't like particularly financial services regulators don't like those things being discussed in trade negotiations to answer your question more fully and to conclude I think they are the priority that's been accorded to the EU negotiations so far proves that that they are thinking about it but I think it will be a real big test once we're actually out of the EU and trying to compete between negotiations you have any sense of the capacity within government to do this because we've repeatedly been told that you know this is a country who've always has for the last 40 years 50 years relied on the European Union to negotiate internationally what do you sense in terms of businesses views about about that well I mean it's capacity is a concern no matter who you speak to but I wouldn't say one that shouldn't be gauged through any numerical lens you know I think the US trade representative's office has around 200 people so you don't need to go hiring thousands of people to deal with this and to some extent I'm hoping that the negotiators will be really cutting their teeth on the rollovers or what they're called what's called the rollovers because obviously it is a concern now keeping in mind that if and when we're on to that next stage and we're into that implementation period under the withdrawal agreement that you will still be having that the DIT will still be having to actually roll over the existing agreements or create new standalone UK agreements on top of its new third country pursuits so there is a concern about being stretched capacity there and the two other questions I wanted to ask firstly is UK government policy to simply seek as you were describing earlier on to roll over existing arrangements with third party countries i non EU countries where you can I think you said that you can literally delete EU and insert UK I mean is that the kind of default position they're trying to achieve that was an assumption at the beginning but it's not that easy and I think that's really important to point out there is not a single agreement where you can just strike out EU and write UK and it's done there's always the devil in the detail if you have rules of origin tariff rate quotas all of these need to be readjusted renegotiated you need to possibly find formulas to with regard to the agreements that have been done it seems that these are based on past trade flows with some opening where those trade flows were so low that you can't really say anything so there's always there's a lot of change going on and if you look at the switzerland agreement switzerland of course is one of those countries where that had a lot of agreements with EU I think of 120 or something like that rather enormous a lot of them based on EU law and you can see a model sort of emerging everything that was based on EU law where the swiss are aligned basically it's difficult to roll over and cannot at times be rolled over at all because currently the UK is not ready to commit to align in those respects so you see to align on regulatory because that would exactly that would mean aligning to EU regulation which of course is something that will be done in the EU negotiations so all of those negotiations have a bit where you can already do something that's the standard trade agreements tariffs and those things and then there's a regulatory bit concerning things like SPS that currently cannot really be covered and is not covered oh that's a sanitary and fighter sanitary standards that simplifies controls at the borders by basically saying switzerland will follow EU rules then you'll have sort of veterinary exams in the country and then you don't need those strict border controls that you otherwise have between countries okay thank you dr Bartels could ask you one last question you mentioned i think the context of the irish border something a product or a you know 40 foot container coming in from china ultimate ultimate destination in the UK but in the scenario where we've left the european union that container rise in Dublin goes up and crosses the irish border forgetting all the detail of that and then comes to you presumably it's by definition come into the EU before it comes into the united kingdom so it'll therefore have to have been okayed as it was stamped coming through dubbing harbour am i am i missing something here about how it's going to work no that's perfectly correct i mean one would imagine that when it comes to tariffs that you know usually the tariff will be higher so that would stop that from being a problem it's not always the case because the EU has a lot of free trade agreements and as we've just been hearing the UK doesn't yet and so it's conceivable that you get a product coming in under a free trade agreement into the EU which then you know finds its way into the UK without having to pay what should be the UK tariff i mean a good example of this is turkey no i mean if you were a turkish um truck driver you'd be thinking of driving to dublin instead of london um and i think that uh you know that that the risk that the um uh UK government note of uh when was this last week the week before um things moved pretty quickly uh was addressing and essentially accepting and talking about justifying and and so on so there is definitely a risk there it's not as though um you know so long as it's in the EU first everything is dealt with yeah okay thank you so as you have just said uh dr Bartels um things are moving very quickly but as of this morning we are eight days away from crashing out with no deal that is one scenario that is now as the convener said earlier looking sadly a bit more likely than it ever has done so my first question is because the information that we are getting is second hand because we the the brexit secretary doesn't deem us worthy of direct contact so we are getting stuff passed on from the house of lords which is very good with the house of lords to do so um the last kind of update we got was the 25th of january so obviously things probably have changed a wee bit so my question first question is where are we today in terms of what has the UK signed or is about to sign such as it's in effect a signed trade deal what trade deals are there so in eight days time we can rely on those trade deals what trade deals have already been put into place i mean how many i don't know is it seven or six i mean i don't have any more information i don't have access to the brexit secretary either um but i it's it's what's publicly available no uh they're switzerland um and and we're talking about basic agreements some of them and the holger will be able to speak to this i think in probably more detail via his work in the european or for the european scrutiny committee in the lords um sometimes it these agreements are being advertised by the government as new trade agreements as though they're you know rock solid gold standard trade agreements but they're not really they're they're bundles of two agreements and one of them is um on the assumption that there's a withdrawal agreement a transitional period and then the other one is on the assumption there's a no deal uh which is a much more basic sort of agreement which is essentially tariffs only um how many of these do we have uh well you know from small to big lichtenstein uh fferal islands um uh norway i think now um iceland do we have uh switzerland um that's sort of it um i don't think there's a great deal more than that i'm probably forgetting you know israel palestine chili chili's probably so switzerland yeah chili it's yeah i mean it's in process there was oh isa yeah that's right isa in the southern africa which by the way does not include south africa um i think that's worth putting on record i've noticed that um that point is not made uh in fact uh and i used to advise both regions so i'm familiar with the makeup um the south african region is called saddock southern african development community that is south africa saku which southern african customs union and then um 14 countries in total isa is countries to the east um and the saddock negotiations are going badly as i understand it they were supposed to go well um the south african trade minister rob davies seemed to get on very well with our trade secretary and there was all sorts of positive noises coming out and um it turns out that as of last week last time i looked at this no negotiations have in fact not been so easy there are sticking points on for instance sanitary and phytosanitary standards which south africa has a concern about in particular citrus black spot maybe in beef with a bone in it and so on so they are negotiating these sorts of issues and that hasn't been sorted out let me maybe add so this this the the big trade agreements and i think of those switzerland is the most important norway um but we haven't seen the norway agreement yet my guess would be that there's not going to be a lot on services so all of the regulatory bit that we now have will fall away but there will be probably the zero tariff part and the agreements mentioned i would like to add though that there's a number of small agreements that people tend to forget because we focus on the big trade agreements those concern for example mutual recognition and there are some of those there's an agreement also with switzerland on insurance services with the us on prudential measures i think so for what could be expected in this difficult situation from dit i would actually say they've done a fairly good job of what was possible because you have to think that you're going to your trading partner and you're saying we want to roll over this agreement and then the trading partner says but isn't there going to be a transition period which you're negotiating in the withdrawal agreement you say well yes that's what we hope and that's what we expect what we're negotiating and then they say so so what are the arrangements afterwards like you say we don't really know yet so that's a very difficult negotiation situation for anything regulatory because you don't know what the situation will actually be and you are asking your partner to commit resources to negotiate something that might not be necessary or that might fall away anyway or that it's a difficult situation and i think the problem that i see the main problems in the process lack of transparency and over advertising and overselling which was part of a lot of the debates of saying we will roll over all agreements by the end date and then we beef people on condition of secrecy people need to trade on these agreements if you are using the turkey customs union and you're building your cars in turkey it would be advantageous to know what happens in two weeks eight days i mean i do not criticize government lightly i think the process of the handling in terms of communication with industry about the rollovers has been pretty awful and without betraying confidential information of the meetings it's very difficult to be briefed on things and not be able to engage with them on the membership and it means that you know and you know most of our members company directors are not following the ins and outs of all this they are relying on the same headlines that most people read and so when you see you know there seems to be on the one hand a real proactive push albeit belated to get people ready for no EU deal but there doesn't seem to have been the same urgency on telling businesses that there are some negotiations some trade preferences which may be ended and considering the fact that from the beginning you knew one new that anywhere any any set of arrangements there were there was a heavy intersection with the EU turkey in particular i mean you could say that you it would have been much more helpful to make clear at the beginning this process that there was a strong possibility of these might not be rolled over in time because it would have helped businesses get prepared and be cognizant i mean just just to just to explain there are a lot of businesses who sometimes don't know or are members who don't know that they're using these agreements because very often if they are it's being handled by their freight forwarding company they may have hired someone to make efficiencies in their supply chain and they suggested using the trade agreement and most businesses are basically saying that's fine do do what's helpful what's advantage to the company so and this is anecdotal but i'm concerned by how often i hear it when you ask companies if they are trading with turkey under the customs union they have no idea or they say no and then you ask them what form they're using and it's an atr form and if you're using the atr form you are using the customs union agreement so we would have liked to have seen the same kind of get ready campaign on the rollovers potentially not all panning out as people had perhaps been led to believe as you see on the eu no deal preparations well more gloom and doom really two quick questions for me can be touching on so a reference was made by one of you to the issue of geographical indications and so forth where so in the scenario of eight days no deal out very few trade agreements where does that issue stand because of course that's very important for scotland in particular and the second issue concerns services and including importantly services provided to the eu 27 in particular in the financial services sector so those two issues because in eight days if there's no deal these have presumably very immediate consequences for those services and they'll leave geographical indications this is a split that we've had for about 20 years on services the default position is that the uk will be a third country so now speaking about uk versus not just eu but ea more generally the default position is that the uk is a third country which means it's in the same position as australia in new zealand a third country without a free trade agreement and that's obviously going to be a massive hit the uk as everybody knows has a large trade surplus in services and this is quite a big deal of course one does need to distinguish a little bit between what the international guarantees of providing services are under the wto and under free trade agreements and for that matter under eu law from what actually happens because it's not to say that services will stop being supplied it depends very much on the type of service if you're supplying an unregulated service in a country which doesn't much care like you know i don't know hairdressing or something it you know aside from visa issues there's no particular difficulty things could well continue if you're supplying regulated services and medical services or legal service and the situation is quite different so one has to distinguish between the guarantees and then domestic regulation which might itself just say well you know continue to come that said there are of course on both sides no deal contingency planning arrangements which are being set up the uk has said well we're going to just continue essentially in many areas including in financial services for the time being the eu my understanding is that within the eu there is a difference of opinion between the european commission which likes to take quite a hard line and say well it's all over red rover if you're lucky we'll offer you some equivalence decisions which we will you know give and take as we see fit and the member states on the other hand which are keener on keeping business as usual and we need to see how that plays out that is a dynamic that i haven't seen very much reported in the press but i know that it is a dynamic that's there and i think at this point the member states may well start to prevail over the commission because on the issue specifically of financial services so you know the single banking license a single investment services license single insurance passport that is subject to the mutual recognition deal with the minimum harmonisation standard so that is very very eu law heavy and you know with the member state one individual member state wishes to do something slightly different they have really no leeway to do so because it is an area of EU law that is really laid down in terms and there have been many many cases before the european court of justice so they don't really have any discretion with regard to the single banking license and the single investment services license no no i don't mean that they'll go it alone there is a little bit of talk of going it alone when it comes to ports you know calais and so on so i'm not referring to no operating outside of the normal scope of EU law rather what i'm referring to is the member states acting in council to tell the commission what to do i think your point about so so for services because we get this question a lot and it's a lot harder to give a one size fits all answer on what your barrier is you are going to face in services which is so so the lack of of when you compare it to the single market and goods in the customs union harmonisation to the same extent is both a benefit and a drawback i think to business on the one hand you may see less immediate automatic impact across all of the 27 because to some extent outside of the more harmonised area which you referred to that i'll come back to it can depend on how the third country or how each EU member state treats that third country but that's also a complication because it means unlike with the single market goods and customs union i cannot tell a manufacturing company that they are going to face the exact same rule in germany as they are in belgium for example so there's more discretion which may mitigate some of the impact but it also complicates planning because it's so dependent on the third country in question so the the the passport the sort of banking license you referred to effectively what that stops the UK from being or UK providers suppliers of services from being able to continue to do is to basically have one foot in all 27 just through that license they will have to recertify re-licence in each EU country um but and and you know when you are a business looking at what is the most efficient place to to locate it will completely depend on each individual's third country's licensing regime each member states excuse me licensing regime for third countries yes indeed and we've seen that many of the major players are you know are um showing you know what their plan is by just moving their effective head office to an EU 27 member state and you know a vast outflow of capital because of course the head office it has to be more than a boilerplate and it has to have it subject to prudential regulation with capital adequacy and so forth so there has to be an asset base in that member safe and of incorporation and the assets are going so it's surely a worry to when we organization we we the last data that we have on this was from January we asked about relocation and or because for some companies it is physically having to relocate for some it is my but necessity expanding I guess you could say but it is moving or expanding operations outside of the UK to the EU and we explicitly asked whether this was in connection to Brexit because there are people who will be moving for other reasons so so we did include that option and effectively what we found was I think about 29 30 percent have either moved or are seriously considering doing so and that's the only reason I have my laptop open was I was checking the Scotland I think it's about the same at the same share as well to a certain extent really briefly before Holger probably comes in on geographical indications I haven't seen the absolute latest the UK was intending to introduce a register for to continue could providing those protections up for GIs I don't know where it is in the process though at this stage very quickly on the point of finance moving I think it's important to draw a distinction between what's happening in a period of uncertainty and what would happen when there's an actual cliff edge from the perspective of the EU member states ultimately they don't want their consumers of financial services to be in trouble now the EU does nicely out of a period of uncertainty because there's no cost to the consumers there's a cost to the suppliers they have to set up in two locations waiting to see what happens the fact that all you know business has been moving to the EU in advance is smooth and that is very different and so that's of no particular consequence the EU member states in fact it's a good thing for them when they want to attract that sort of business but I think they're not facing the wrath of consumers whose contracts will collapse from one day to the other and I think one needs to also look at that scenario which would be their position in a no deal situation and they might look at the situation a little bit differently that's what I was referring to I have to confess that I stopped looking at this ever since I've spent all of my day reading treaties but as to GIs the EU puts GI protection in its treaties and the UK actually does so too in the rollover agreements it's a little bit different from other treaty obligations seizing as for example in services or trade in goods where you know that immediately everything will change in the partner country if the treaty seizes in effect because quite often you force the other country to change their regulations they grant a quasi property position and I would argue that's actually problematic to withdraw even if the treaty obligation to have it falls away because you have granted a property position you cannot just take it away but we'll have to see how countries react the problem in IP is of course larger because it also includes trademarks and EU trademarks that will seize in effect for the UK I have not quite seen what exactly the UK plans to do in this regard but I've always considered that a rather important issue I think it's a knocked out for trademark I mean the sorry just really briefly the the difference between so GIs was a big issue that was settled late in the day and the withdrawal agreement I think for trade-off purposes if I'm speaking frankly although I'm not in the negotiations it is something that you would not give away lightly even if you want the continued protection of your own because of what some people might consider I think there's a division opinion within the trade policy community about this to what extent continuing to afford those protections currently provided to products under EU law that exists now whether that complicates your trade negotiations in future I don't think it does to the same extent as others because if you look at the t-tip negotiations the UK had ample opportunity to actually register plenty of products and didn't I don't think it did any as far as I know that may be also just thinking of obviously Scott Twiskey that maybe to some extent because I think that industry is very good at not relying on trade agreements to do that work it does a lot of its own bilateral work with governments to get that registered to get protection for Scott Twiskey on to other GI registers in other countries can I ask a very quick supplementary on this issue of GI because in the in the table that was sent to us by the house of lords committee outlining some of the different agreements that had been signed or were about to be signed it has an agreement with the UK and the US on the mutual recognition of certain distilled spirits and drinks and then also as a separate agreement between the UK and Mexico on the mutual recognition of distilled spirits and spirit drink now in the agreement with the US and the UK it talks about protecting spirits such as Scott's whisky and Tennessee whisky but in the one with Mexico it specifically mentions GI's it doesn't mention GI's in the agreement between with the US is there a reason why it would feature with Mexico but not the US so I think this is a it's a hugely complex field which is made complex furthermore by the fact that the EU was able to achieve something in the World Trade Organization if you look at the TRIPS agreement that's the WTO agreement on intellectual property you can see that wines and spirits receive a slightly different treatment treatment from other areas the UK or the US's position actually was always we don't really like GI protection what we will do is we'll grant a protection under other laws as some sort of trademark because we don't like the concept of a GI and I would assume that this is where the difference comes in that the US will then grant a different form of intellectual property protection rather than GI protection to worry about no I don't think that's particularly something to worry that's just a long standing trait conflict between EU concepts which say the EU argues that GI protection is something that is inherent in the territory where something is grown so they would say if you do parmesan cheese and you do it in the area where parmigiano reggiano comes from it's inherently different from doing the precise same process process in minnesota it's unique because of the territory and you can only grow it there that's the original GI concept the US doesn't sign up to this and the conflict has been particularly arduous when it comes to one type of beer but wiser because the US produces but wiser under the name of but wiser and there's also a town in the Czech Republic called Budweis in German actually buddivich Budvar in Czech and they produce their own beer and they have it protected as a GI in the European Union and that clashes with the US trademark everywhere in the world it's an issue GIs are an issue between the EU and the US because it's a and I think unlike most other you have GIs and trade agreements but it is a huge offensive interest for the EU it is effectively exporting its GI regime to get other countries to recognise it the reason and you'll probably detect from my accent that that I have a slight window into it the reason it is a particular issue in the US is because you have in specific products not all products particularly with cheese you have a lot of European immigrants who came over in the 19th century who have continued to use the name cheddar buddha etc so they have effectively become generic terms in the US and their issue with it is they don't want to force their own producers their own consumers to have to change their labelling laws just to reflect the EU's effectively. Alexander Stewart followed by Kenneth Gibson thank you convener we all know the the clock is ticking and time is running out but every single organisation has been putting continuities in plan that we've been told that and that continually happens across all the sectors whether it's in good services or it's in products or environment whatever involved it so we know that's the case but we still find ourselves in this dire situation potentially at the end of few days time we're over that situation and if that does occur there are been huge of rules talked about the temporary measures that may require to be put in place and you've gone into some of these today already about what might happen and what could happen but realistically you know your fears your own anxieties about how we find ourselves in the situation and how will it evolve in the the next few weeks depending on how things progress what is your take on the whole process because as I say every every individual organisation and every commentator and every academic has a view as to how things might happen but do you have a take as to how severe it will be or are we being over ambitious about what we think is going to happen or is it really going to be as dire as as many people believe I think if you were looking at it particularly let's focus on goods briefly and I have to say actually that just just so it's for the record I think about 40% of our members have done contingency planning another 40% say they're not going to do it until they know what they're adjusting to and these tend to be the smaller companies who as one member put it to me you know spends 50% of his time dealing with known quantity compliance issues and the rest of his time trying to run his business so while there are some things I think that you can anticipate under debut terms there's a lot that you can't and if I just take goods for example the if you listen to logistics in the transport industry who really know what's required to move their products across borders they are probably the most vocally unhappy at the moment and I think the reason for that is from the UK's and some of the for example simplified procedures that are being brought in to mitigate disruption at least in the areas it can control on imports have been brought in very late like for February you're not giving traders much time to actually overhaul their own trade management systems so the concern I think and you hear it from them in particular is not about the new controls which I think are more applicable going into the EU than coming in because the UK has more leeway to relax some of those to a certain extent it's more about the disruption potentially coming from traders who are not used to these forms and not used to the procedures and therefore do not have correct documentation those reports about the Netherlands basically creating the effect that sort of tantamate to a lorry park to basically because they're anticipating people not having correct information and needing to be pulled aside that's where I think the particular concern about disruption comes from and you won't know that until the day I feel there will be two different components to what's going on I think the first thing I want to say is it's really important to point out problems because only if you point them out can you tackle them the discussion that criticises people that point out problem I find highly unproductive because we need to know where the problems are otherwise we'll be surprised by them I think every single administrative change if there's a new form in a well existing administration creates problems there are people who have not seen the form there are people who don't know how to fill out the form that's utterly normal and why would it not happen now when you change a lot of forms so there will be initial problems that can at times be grave in in the terms of more lorries being pulled aside more delays some customs official being confused by what they actually have to demand because they haven't read the briefing papers that will last for a little bit like any radical change and then you'll get over it and you'll be in a new normal that new normal will be at a lower level with more controls with more difficulties but also with again a steady flow with more difficulties as these things go yeah I I essentially agree with that I mean systems when they work smoothly don't take very much to be badly disrupted there are recent examples five hour delays in the euro star because of a little strike or you might remember the US administration's new immigration rules some time ago which caused immense hold-ups at the airport I mean it really doesn't take very much a new form I think would essentially do it but that is different as Holger was saying from you know the underlying friction that you would get from proper regulatory change and you talked about you know 40% of businesses being prepared for some aspect and you talked about maybe 30% of companies moving around to try and find new locations potentially because that will mitigate some of the difficulties they face but that still leaves a massive amount of businesses in in a very difficult and a very unknown situation as to what might happen to them as they move forward and views on that yeah I mean I think I am just most concerned about lots of businesses getting caught up by nasty surprises I think in a way that may be more relevant but maybe not so immediate for services because I think understanding particularly in the areas where there isn't a lot of harmonized EU law it may take some companies by surprise it may take some time to be to be a bit of felt depending when you're trying to change a contract a cross-border contract you know lots of businesses have been sitting down with their suppliers and their customers in other countries you know but for example some companies do not have what we call in code terms in their contracts which makes clear where the responsibility lies if something goes wrong effectively and if that hasn't really been dealt with you could have unpleasant discussions down the track so it may not be immediate it may be a gradual realisation of the problems as they arise and we touched on the sort of temporary measures that will be put in place and the rollover and all of that that's attempting to be supportive if we're in that position but really how realistic is that we've already heard today about some of the crises that may happen in some sectors and in some industries about how they're not in that situation and they're not prepared but as I say business will still go on but it'll be in a different format in a different way I think the temporary nature is a big concern and probably one of the more sources of frustration of business rather than the change itself that may come on the day is how many times it's going to be redone effectively because you know the whole point of the implementation period under withdrawal agreement is to keep everything the same and change once I think that there is a an impression that is given on leaving without a deal that that is the end or that provides certainty considering it's very likely the UK would continue to negotiate with the UK and change its temporary measures I think people should be disabused of that notion I wanted to say some of the temporary measures will as always work better others will not work as well for example the what from what I've read about Northern Ireland in the public DIT announcement I don't see how this will work for long yes thank you very much convener a lot of things I would have liked to touch on such as imports via Ireland transparency rollovers and priorities have already been covered so police committee members are thinking along the same lines capacity was also touched on and I know Ms Rennison talked about numbers not being necessarily an issue but what about the ability and experience of the people that are actually carrying out these negotiations and the political support that they have behind them is that an issue yeah again I cautious because I'm not within government so I don't want to speak to what is going on within government but all I can say is from engagement and looking at it from an externally there is a concern about doing so many things at once particularly once we get into the next phase that's obviously complicated if you are in a no deal scenario and you're having to do mitigating measures plus negotiations with all these countries that you are maybe not able to roll over the deals with plus third new new new new arrangements again there are a lot of civil servants who have maybe not necessarily purely on trade but been working negotiating with the EU within the confines of the EU now that is a very different setting obviously to negotiating from the outside but there is a fair bit of experience there the one thing I think is worth raising is and again I can't speak confidently to what's going on with the government but they're having questions raised about the openness towards accepting external advice or people who have worked on these before I think there is maybe a tendency within government to rotate people and maybe potentially in a version to bringing in people from the outside that may and that's as far as I'll go with that because I'm not in government that may be a function of salary that may be a function of wanting to keep things in house that to me is a concern for at least trade negotiations with the rest of the world I would also want to add besides the experience I think it's really important to have the right procedures in place the further you move away from trying to just get what you already have and reproduce it the more you will be as a negotiator at a loss of what it actually is you want and then you need to you need partners in industry to be to talk to them and to say look you know I'm negotiating a concrete number for rules of origin I need to know what our industry does and those procedures have to be in place and there has to be a capacity to openly consult with industry and to make sure that if you consult with industry it's actually representative of the country's interests rather than you're being captured by one particular person that you talked to. Yeah and I mean there's complexities obviously in how these deals are actually negotiated in terms of the lateral trade agreements already agreed not that there's that many I mean are they seen by you as a panel to favour producer interests particularly exporters or consumer interests? The currently existing agreements? Yes the ones that are being signed the current trade agreements have been signed. So from what I have seen my personal judgment is that they're actually largely really trying to just reproduce the agreement that existed before wherever possible and then at times cut the parts that cannot be reproduced. So whatever they do they try to do the same thing that was done before by the EU agreement. I think there's often an issue in the consultation processes that sorry to say that but that industry doesn't want consumer interests on board in consultation processes that has certainly been a large discussion in the US and we need that discussion here to say in the consultation panels that the trade negotiators will have access to we also want consumer interests present for the future. I don't think it's such a large concern at the moment because most of the agreements really try to just reproduce actually for some agreements it's more problematic like Norway because you can't really reproduce that. Yes I don't think any of us share Boris Johnson's attitude towards business but I think it's also important that the public are reassured that their interests are also being defended in terms of these agreements going forward. Also I mean from a director's perspective is there a feeling that the government is looking at this kind of in a broad brush way or are the favouring particular sectors or industries do you feel in terms of these agreements? I mean I hear obviously what's being said about trying to replicate existing agreements but in terms of developing new ones and going into unknown territory. I don't think they've gotten that far you know it would have been I'm trying to make allowances for the manic nature in which all this is being done having said that it would have been ideal you know there was a white paper from the department for international trade. I think for most people who work on trade policy speaking for myself at least I found it slightly basic it didn't really you know if this I always give the sort of counter example if you look at what for example the New Zealand government produced a couple years ago it was a very detailed sort of outcome of consultation with lots of different stakeholders about the strategic agenda of what they wanted to do with their trade policy. Now to some extent going into the detail is slightly difficult if you don't know what alignment you are going to maintain or not with the use so I think you have to make that there there is a sort of inevitability about that to a certain extent having said that you know you ask the question why how and why did we pick Australia New Zealand in the US and looking at the CPTPP this sort of mega regional agreement in the Asia Pacific. I don't know you know you need to sort of be clear about who what is your agenda who do you want to do trade agreements with and why in what areas does it make sense to focus more on intellectual property for example what do you want to do with China for example is that a long-term aim you need a lot more detail than I think what then what's been provided for in the white paper but the simple answer to the question yet is I don't honestly think that the government has gotten that far or if they have it hasn't been very open we know what the US trade agreement US trade negotiators objectives are we have no idea what they are from the UK's been. Yes well I mean Dr Estermire in paragraph 18 you talked about in your document your submission you talked about the lack of transparency but do you feel as in the same yourself Dr Bartels you feel as a lack of strategic thinking going forward I think there's there's a there are a number of huge problems at the moment and I'm not entirely optimistic they can be resolved so for example there have been public calls for some new trade agreements how can you currently in this environment have the time to sit down calmly and to reflect about what you want from a traded agreement with New Zealand when you're trying adapt your business to brexit and coping with all of the other things on top so yes I would say there has been a lack of strategic thinking and there has been a lack of debate about what it is the country really wants and there's been a replacement debate instead of debating what are the food standards what are the animal welfare standards there has been a debate about do we want an agreement with the US or do we want an agreement with the EU in the abstract without ever saying what does this mean concretely and and I think that's highly problematic going forward I have to disclose I've been quite heavily involved in training trade negotiators so I need to be careful about what I say I want to be fair and accurate some of these I would say that it's an it's a situation that in its complexity is probably unparalleled in any country in the world it's a huge area to get on top of all at once so for instance the government is proposing to negotiate or renegotiate in parallel you know well I mean the the data is now out more than a dozen agreements all at the same time without in addition as Holger was saying and in anticipation of this having worked out basic domestic policy questions because it hasn't had to do that so for instance we don't know really what the UK's agricultural policy is now how can you negotiate a free trade agreement where even though agriculture let's face it you know in economic terms is overall not much right it's less than 1% of the UK's GDP I think 0.6% of course depending on where you are it can be more right depends on your constituency but overall agriculture is relatively small like very small in fact but it is the major hold-up in any trade negotiation you need to know what your policy is and what your flexibilities are and what your choices are going to be so that needs to be done before you embark on a trade negotiation let alone more than a dozen trade negotiations all at the same time and then all these other questions that we've been covering today now that's one pressure that I think any government would struggle with in addition of course the UK is doing this from scratch there was three years ago virtually no knowledge in the government about trade I gave a talk in 2015 I think it was and all the people who are interested in trade or who at least were free enough you know free enough and interested enough to be free to come and talk listen to what I had to say you know it was a handful of people who really had any idea now I have to say that in the last three years that has improved impressively it has been three years in 2016 matters were extremely dire but it's now 2019 and I have to say the that time has not been wasted people have learnt I would say the outstanding issues that are problematic are first of all salaries now if you're going to there's still a need to buy buy in people with information that means you've got to pay them where is this information who are the people who actually know this stuff people who've been working in this area well there are either academics and there are a few of them I mean you know half of them are here today in the country just about I mean a few more but you know if we include other people who are on the table there are and they've got academic jobs then you have people who work in for other countries well they're going to continue to work for other countries because that's their job then you've got people who work in law firms and they earn money now to attract all of these people you're going to need to pay money and you can see for instance with the attempt to recruit people to the trade remedies authority or for that matter to DIT and so on people are just not coming because the salaries are not high enough and that you can see reflected in the fact that most people who work in these departments are young right it's starter jobs for a lot of people so that's a challenge you just need money and money would fix some of this maybe not all of it then in addition I would say what I've seen is two other problems that the government needs to cope with some of them inevitable one of them is coordination between government departments you get certain areas like services where you have you know five six seven government departments who all want to control this or tariffs who controls this between DIT and HMRC or you have you know with agriculture even tariff rate quotas Defra has a dedicated TRQs team that is interested in you know rectification of WTO schedules which one might have thought would be the sort of thing that DIT would do then of course you've got the FCO I mean when it comes to the trade agreements you've got a split between the FCO DEXU DIT who am I forgetting there is a Bayes has an interest I mean you know you've got lots of government departments all dealing with different FTAs different aspects of them even taking the lead on them in different ways so there's a coordination issue again every government struggles with this and they and it's difficult if you don't have the negotiator with an important role around the table that's why some countries bundle trade with foreign affairs it's not so much that trade is foreign affairs there's an element of that but it's largely because the foreign affairs minister counts around the table and is able to overrule other cabinet colleagues in order to get a trade point across otherwise you can't negotiate with anything so there's that and then there's a peculiarity I think of the UK civil service which I might sound a little bit like I'm feathering my nest and Holger's nest and our other legal colleagues but I find it surprising that the UK civil service has a not surprising maybe in terms of where it comes from but surprising that this is still very much seems to be the culture a culture of generalism now the problem with generalism is that it works fine when you're dealing with domestic policy because you can pull in experts as you see fit and of course without a written constitution in this country you don't really need legal experts because everything is policy at the end of the day right and if you don't like the policy you change the law and you know there is a really different approach to the role of lawyers and other experts in the UK civil service than you see in other countries particularly in the EU and part of that is because they're used to constitutions other reasons as well when it comes to domestic affairs that's okay when it comes to international affairs that's not now the fco which is used to dealing internationally plays places a huge importance on law that's why the fco legal advisor is such a monumentally important figure in how the fco operates I haven't seen the same importance placed on lawyers and in particular trade lawyers or treaty lawyers or whoever it happens to be in the relevant government department it's not to say they're not interested in the law but from what I know lawyers are somewhat segregated in these departments they are not their front and centre they are seen a little bit like you know the way a defamation lawyer might be seen if you're running a newspaper or a tv station you know you you run things by them to make sure things are okay you get things implemented in legal language that's the wrong way around law is the language of trade it is the language of international relations and if lawyers are not there at the very beginning you'll be faced with a job of translate you'll be speaking the wrong language and having to translate into another language late in the day and I think that that is a cultural problem that has that the UK civil service has not yet grappled with thank you very much thank you just a couple of questions first of all on the issue of gdp and you just touched upon gdp a few moments ago dr Bartels figures are published this week regarding scotland's economic situation of unemployment reached a new low down to 3.4 per cent gdp up by not 0.3 per cent in the fourth quarter of 2018 and that's despite the backdrop of of brexit and with the huge uncertainty that we do face how do you how do you think the gdp situation will actually fear in scotland and also the UK I mean I'm afraid I can't really answer that because it's a little bit outside my scope of competence so I can't really speak to economic matters yeah I think I'd rather just sorry hand over that question business organisations tend to be more comfortable talking about the impact on businesses rather than trying to project ahead now I don't know if the question was relative to specific brexit scenario or no deal specifically um you know there are certain areas you know that if on the one hand just take it as an example um there are not within our membership but there are statistically less businesses trading with the u in scotland than there are as the UK average having said that scotland is also particularly I don't know for lion is the right word but free movement matters a lot up here I live here I know it does and so there are challenges that are more acute and less acute where they balance and trade off I'm not entirely sure and to some extent it also depends particularly in a no deal scenario on whether the effect is is temporary I think one of the difficult most difficult things we all know that generally speaking the erection whether voluntary or not of trade barriers under that scenario is not good for the economy I think everyone accepts that what you can't predict is what mitigating actions particularly in the medium term unilaterally domestically you put in place to to try and offset that do you want to comment I confess I'm also not an economist I mean I can see that this there seems to be also a general downturn in the world economy at the moment which doesn't vote well but nothing that I could add that you haven't read already okay well thank you second area is on the issue of the devolved administrations and some of this was touched upon in your earlier comments also in the UK document that's published in February just regarding the trade negotiations just I'm going to read out just a couple of lines from it one aspect was the the government of UK governments committed to working closely with the devolved administrations to deliver a future trade policy also the devolved administrations will continue to be responsible for observing and implementing international obligations in areas of devolved competence and we recognise that the devolved legislatures also have a strong and legitimate interest in future trade agreements that's quite clear and certainly from my UK government perspective in terms of the respect for the devolved administrations but in reality how is that how do you think that's working it's obviously a key part of the negotiations on the role of devolved administrations in the areas that will have been formally governed by EU law where these issues are not so great so agriculture and what to do with agricultural policy and how that relates to the role of devolved administrations in relation to agricultural subsidies is you know one of the touchstones I think which which shows that debate it's a pretty big debate I can't really comment on it too much what I can say is how this is handled in other countries which do have an independent trade policy and also don't have the particular overlay of EU law which so which would be a model for a UK that's no longer in the EU when it comes to trade policy now in general there are areas where devolved administrations are one way or another at the negotiation table sometimes even more directly and sometimes less directly why because even when you have and Canada is unusual in this respect so I wouldn't talk about Canada its constitutional setup is unique really but other federal systems a bit more based on say the US model the federal government has competence to deal with external affairs so what you deal you know how these in Australia is the same model on the US constitution in this respect Canada is the opposite so the way you handle the states in this scenario is is a little bit different it's much more pragmatic because theoretically the federal government can go off and sign a treaty and that's the end of the story and the states have to put up with it in reality what happens is that you speak to the states when you need the states in order for the agreement to be implemented and that's because they have legislative control over certain areas and that's where you would look at the devolution acts in this country to see what are those areas where the devolved administrations have legislative competence now generally speaking that's in areas of you know non-harmonised in a national sense regulation and when money is involved so procurement I mentioned earlier is because you know devolved administrations or states in other federal system they spend money and so you need them on board if you're going to be making commitments on procurement it's one reason why services negotiations are much more complicated than goods negotiations because services regulation often differs between states I mean imagine the UK going off to negotiate access to the legal services market in the UK without paying any attention to the fact that legal services in Scotland operate under a different legal regime you have different self regulatory bodies arranging matters that deal with qualifications and so on so there's you know just one example of where you would need the devolved administrations to be involved simply to make the agreement work and there's no point negotiating an agreement if it can't be implemented back at home so to sum it up I would say regardless of the formal role of devolved administrations whether you have a seat at the table or not the two areas where in practice devolved administrations really need to be consulted before a negotiation can effectively take place even if formally it can are where the devolved administrations spend money and where directly or indirectly they're in control of regulation just to to add to that I've just pulled out the paragraph that the Lord's EU committee wrote on the Faroe Islands FTA said the government's engagement with the Scottish government while negotiating these roll-over agreements has been limited and it did not share draft text with the Scottish government prior to signature of course the Faroe Islands agreement is particularly relevant for fisheries which my understanding is is devolved so it is to me rather clear that if you want effective devolution to work uh this isn't this cannot continue and in fact the government at least seems to have recognised that and has said it will change its policy in that regard but what we what we have here is also to some extent a constitutional arrangement that needs to develop the constitutional arrangement is foreign affairs is a prerogative power uh the UK is unusual compared to other countries in that ratification procedures theoretically are just also part of the government's powers and the only processes there are is a constitutional convention that the fco will demand implementing legislation where necessary to be passed before ratification takes place where implementing legislation is necessary and the crack procedure under crack 2010 which is a scrutiny procedure that can delay but that doesn't give an up and down vote on the treaty and up and down votes on trade treaties in other countries are usual and if you have devolved powers you will also need to to some extent include the devolved administrations i think it's very important for the devolved administrations to be engaging with a reform discussion here because clearly at least to my mind this is now something that is up for reform it very much is and you you obviously could be forgiven for asking the question obviously there has been this commitment to i don't know at what stage it will happen and you all might be more informed than I when this discussion about transfers of powers once we're out of the use i mean that happens back to devolved administrations happens now you would sort of expect that to happen before you go into a trade agreement with the third country i don't know if that's going to be the case i think not doing that may complicate it naturally the more that this isn't the tail wagging the dog but it's just a fact that the more that you have devolved regulations the more it complicates trade negotiations that doesn't mean you don't you don't do the devolution but it is a complicating factor and obviously everyone has now in mind what happened in belgium when the regional assembly was able to block that that might have been that may have been great for the regional assembly or that region it was not considered great by anyone else around the world really and so there is a little bit of a fear about you know when we talk about i think less i think the more that you involved of all administrations early on regardless of how you do that obviously there is some discussion about you know agreeing the mandate potentially but the more you agree or discuss early on i'd like to think that the less that that would happen at the end of the day i think it's a very much appreciated three answers and certainly dr testar mire also you may highlighted in paragraph 25 of your submission regarding the EU select committee highlighting this issue and the need for engagement and tally scott and ivy were in the in scottish parliaments devolution furthers powers committee in the last parliaments session and went through the whole discussion regarding the intergovernmental relations i think anabelle think you and the committee at the time as well and that this whole problem of intergovernmental relations and having that genuine dialogue has it's a perpetual problem and and i don't know if you see or are aware of of any improvements that are taking place there to actually assist and help with the trade negotiations and the and the trade issues between the between the devolved administrations and the UK government in this matter at least from from what what i've seen in parliamentary debate the government seems to have agreed that the the procedure or the lack of engagement was not okay and that they want to change this and also share draft texts with the devolved administrations you would expect that before any trade negotiation which is why when you see now part of that has been has been referred to is a gaming tactic the US publishing its trade negotiate objectives but it does make you wonder how quickly the UK is going to move to that and ideally you would prefer to have a discussion about transfers of powers before you get into that because obviously that will complicate or potentially infuriate for legitimate reasons people in devolved administrations because that commitment was made and if you rush a trade negotiation and and upset that completely it's going to make it's going to make the environment even more fraud obviously dr Bartels i mean clearly this is one of those problems that arises because everything is happening all at the same time for the first time on that point but the intergovernmental relations aspect isn't a problem that's happened because of Brexit it's been there for some time beforehand of course yeah i mean this is that's true i mean there are aspects of the constitutional settlement which are in flux and there's an ongoing discussion there but i think brexit has in the area of trade really raised this to to another level and i think it would obviously be useful to see how other countries have dealt with similar sorts of situations of course each situation is a little bit different from from others but one can try to get a sense of um what sorts of matters um a devolved administration would have a more legitimate claim to have a say in uh and and what not for instance an example that came up earlier in our discussion was the effect of um no deal dropping of tariffs to zero on a particular business now i have to say to my mind and i hope um it's all right to say this that strikes me as just a national issue i don't see that that's a devolved issue because that's just a business in the uk and there is you know formal representation um via um uk parliament for those sorts of issues that seems to me to be different from the sorts of issues where according to the constitutional settlement uh devolved administrations um have a particular role and i think it would be um uh you know helpful probably to to focus on uh on the problem from that point of view what is actually legitimately claimed and what is not thank you very much just just quickly to to follow up on that the committee's own advisor dr philippo fontanelli um in his his briefing for us points out the areas of devolved competency that are affected by trade agreements and they are extensive rules on public procurement rules on trade and agriculture and fisheries products geographic indicators as we've discussed environment protection sustainable fisheries forestry judicial cooperation against corruption and money laundering civil justice um a huge array of devolved competencies now we've talked about intergovernmental relations but we know that in trade agreements the eu parliament has a formal role at the moment we're now replacing that so what kind of role should this parliament have given that these devolved competencies are so extensive and that the way they impact on trade agreements and scotland's interests i just follow up it's a direct um uh follow-up from uh what i was saying previously depends on how you look at it i mean if the thing about trade agreements is that they affect absolutely everything all right so i don't think that um or rather let's put it a little bit more neutrally if your test is what does this agreement affect then you would have the scottish government negotiating trade agreements on its own because the effect of a trade agreement is uh is everything i mean trade can cover absolutely everything every time you pull out your wallet um a trade agreement is implicated in some way because you're buying goods or services that will have some international component so that's a very very broad test um i think um if you look at the experience of other countries they don't apply that test and that's why i am more conservative and i think um it's when the uh you know my approach would be to look at not what areas are you know where there's a common effect of a trade agreement and an effect in terms of what the scottish government might regulate because that would cover everything but rather um where does the trade agreement more directly affect the regulatory powers um of the scottish government uh or scottish parliament um uh in the devolved settlement and i think that's narrower i think in terms of the what can be done there there are a lot of models of course to consider from every single federal country that had to find its own settlement of how they deal with these negotiations to the EU itself which consists of member states that also have a voice and where the the outcome was often mixed agreements in which member states also become parties um the types of solution you can envision range from just overriding devolution altogether through the trade agreement and saying these are as soon as there's a trade agreement this becomes the central competence and also the implementation is done through the centre which is uh not very good for any devolution model uh to having a seat at the table which complicates negotiations quite a lot uh what is discussed currently in the reform debate on how to change parliamentary involvement in treaty arrangements are several points of entry if you want a point of entry concerning the mandate of the negotiation um and an up and down vote on the deal itself at the end you can't really have parliament amended because then you have to go back to the negotiation table and that's a real pain so the discussion is more an up and down vote and then rights of information and of being consulted and now you it seems to me reasonable rather than giving devolved administrations a seat at a table and complicating it to run this through the devolved administrations by establishing also a requirement to consult and why not to some extent also a requirement to get agreement from devolved administrations when you're negotiating that in their competences uh I think this this will need to be discussed in depth and what really makes these discussions more difficult is that there are all of these rollover agreements which pretend to be old agreements so to some extent there is an argument of saying we don't really need the same type of involvement there but I think that shouldn't diminish that there's the need to have a good debate and one thing to learn also from the EU experiences it is then vitally important for the devolved administrations to also have the relevant experts because one of the things that I think people found annoying in the CETAS story was that a lot of experts in the area of investor state dispute settlement had the feeling these are not always legitimate concerns but to some extent people reading these agreements from for the first time and suddenly getting a feeling of shock rather than reading them early on and getting that shock early on and being able to be informed I think I would probably follow um the slightly more conservative approach favoured by laun but that me that is I think it's everyone was very in the trade policy community affected by the the walonians experience and that has probably soured a lot of people's approach to um thinking it's a good idea to have devolved administrations to subject to constitutional requirements having an actual vote at the end of the process which is why I think it's so much more important even if it is potentially um uh you know a sort of a vote on the mandate I think the mandate is a better place to start than focus on the end point okay thank you very much for coming to give evidence to us today and we shall now move into private session