 Welcome everyone to the 26th meeting in 2018 of the Delegated Powers and Law Reform Committee. We've just got one item of business to decide first, and that's a decision on taking business in private. It's proposed that the committee takes items 7 and 8 in private. These are items of the evidence that we're about to hear from the Cabinet Secretary on the Trade Bill and on further evidence received on the Prescription Scotland Bill. Does gyda glawr y gaeligol am fy codelau. Felly, I will move on to Origin officer item 5, which is the Trade Bill. This is our second evidence session on the legislative consent memorandum for the UK Trade Bill, and we have before us Michael Russell, the Cabinet Secretary for Government Business and Constitutional Relations. Welcome again, Mr Russell. He is accompanied by Graham Fisher, who is a solicitor for the Scottish Government and Stephen Sadler, head of trade policy team at the Scottish Government, so welcome to you. One of the committee's roles is to look at the LCMs that contain delegated powers and report to the relevant lead committee, so our questions today are focused on the delegated powers in the trade bill. Cabinet Secretary, I think that you may have an opening statement before we move to questions. Thank you very much, convener. I just want to say a word or two about the bill. We are looking at the trade bill, which does require the consent of the Scottish Parliament. However, as I said last week to the Finance and Constitution Committee, events on legislative consent for the withdrawal act have effectively overturned 19 years of constitutional convention and practice. The UK Government sought the Parliament's consent on that occasion. It was refused, but the UK Government proceeded with its legislation. We are therefore seeking urgent discussions with the UK Government on how to strengthen and protect the soil convention. We will be looking again at how we can embed the requirement for the Scottish Parliament's consent in law and to strengthen inter-governmental processes. In the meantime, we have made it clear that we will not be bringing forward further legislative consent motions on Brexit bills. We will work with the UK Government to develop the trade bill to ensure Scottish interests are protected as far as we can, but we will not be inviting the Parliament to consider the issue of consent legislation if the UK Government reserves the right to set aside that view on all bills for Brexit. The trade bill is designed to operate alongside the EU withdrawal act to help to ensure continuity in the UK's existing trade and investment arrangements. You know that clause 1 provides powers for UK and Scottish ministers to make regulations, clause 2 provides powers for UK and Scottish ministers to make regulations to implement qualifying international trade agreements. The UK Government has said in most cases that the implementation of any obligations within existing international trade agreements will, however, be dealt with through the EU withdrawal act. It has identified certain circumstances where that will not be possible, and it is the provisions in clause 2 of the trade bill that are intended to bridge that gap. The LCM that we submitted last December set out the concerns that we had with the bill as introduced. Since then, I am pleased to say that there have been some changes made and the bill to be considered in the House of Lords later today is better than the one that was introduced. We still have significant concerns in two areas that are set out in correspondence between Derek Mackay and Liam Fox before recess, and I think that you have had access to that letter. The first is a direct read across to section 12 and schedules 2 and 3 of the EU withdrawal act, which, among other things, gives Scottish ministers powers to fix retained EU law. Since currently standing in the trade bill, as with the EU withdrawal act, Scottish ministers will have the power to amend direct retained EU legislation in areas that are otherwise devolved, but not where section 12 framework regulations have been made by the UK Government. Our other concern is relation to the trade remedies authority. The TRA will have an important role in the development of UK trade policy. It will undertake trade remedies investigations across the UK, which will inevitably touch on devolved areas of significance to Scotland. Its decisions could have substantial impact on businesses and consumers, yet, despite repeated representations from us and from the Welsh Government, the trade bill still does not provide a role for the devolved administrations, for example, in relation to the appointment of board members. We are therefore going to continue to press for the bill to be amended to address those points. I am going slightly off script, but you mentioned inter-governmental relations. As you know, myself and some other conveners sit on an inter-parliamentary Brexit forum. The next meeting of that forum will be in Wales. I would expect that we may come up with recommendations on how the Government should proceed in future. I guess that you are amenable to having a meeting with conveners after that. This is a very live discussion. The Welsh Government published proposals last year for discussion. We have published in our trade paper last week some proposals. Our original Scotland's Place in Europe paper in December 2016 outlined areas of devolution where we thought there needed to be changes. The PAC Act Committee, with which you are familiar, I think that Bernard Jenkins sits on your group or is involved with your group. Bernard Jenkins's PAC Act Committee report is very germane in this regard and looks at the difficulties. The GMC plenary, except the last GMC plenary, accepted that the inter-governmental relations should be reviewed, but nothing has really happened as yet. I will be making proposals this week to David Lidington for issues around the Sewell Convention. This is a very live discussion. I was also at the British Irish Association's annual meeting in Oxford this weekend, where again this issue was one that caused a lot of discussion. I think that most people, from whatever part of the spectrum, accept that Brexit has been too heavy a burden for the current devolve settlement to bear. There are things that don't work and aren't working and how does that work again? I know no secret that I believe in independence but I also believe in functioning systems between Governments while they exist and that needs to be addressed. I think that the urgency in this is coming from the Welsh and Scottish Governments. It would be good to see an urgency from the UK Government too. That's very useful and we'll have further discussions about that, but we'll go on to the matter that we're here for. Last week, the UK Minister of State said that the intention under the general procurement agreement was to bring forward duplicate arrangements as to what are in place at the moment. Does that mean that there has been the opportunity for substantial changes to be made in Scotland that diverge from what we have at the moment, given that the procurement is devolved? I think that that depends on the GPA rather than on the devolved Administrations. We can indicate what we believe to be desirable changes and indeed some of that was presaged in our own continuity bill. More of it is indicated in our trade paper where, for example, we look at issues such as human rights, trade union rights, environmental rights, climate justice and say that they should be part of the process. Indeed, it's interesting to note that I think that the Commons Foreign Affairs Committee today has a report that is saying that they believe rights-based negotiation and trade should be part of it, but that will depend upon the GPA itself. Of course, the EU conditions in that can be altered by the will of the EU members, changing the EU regulations, which of course expand and build upon the GPA regulations. I became to see that change too. The difficulty for us will be getting our voice heard, because I don't think that the UK Government is very keen that we are a part of this, and I think that they will try to ensure that that isn't the case. Previously, you've written extensively about your support for free market economics and neoliberal economics and how it shouldn't be barriers to that type of economic approach. For example, could we see changes in Scotland that would prevent, for example, the continuation of being unable to pay public contractors living wage in procurement? Or, you know, we don't need to go down the whole charade of tendering for ferry or other services? I'm as ever delighted that you continue to be a fan of my writings, but clearly I keep having to refer you to the opening chapter of that book, which indicates that the book was not about that. But never mind, we're not going to dispute about these matters here. This will indeed, but there's no point in having this conversation again. It is on the record in many, many places, and I look forward to reviewing some of your own books, I have to say. The reality of the situation is that I think that I'll contract out the reading of them in these circumstances. I'm sure I will. I think that we could probably go too far on this, convener. Let's move on, shall we? I am very keen to see the best possible systems in place. You refer to ferry tendering. My own position on that, as the MSP that represents more ferry routes than its constituency than any other, was absolutely clear and consistent in the beginning. I'd rather there hadn't been a tender process. I think that the tender process was a distraction. I'd like not to see a tender process in future, but during the tender process I was four square behind, not just the CalMac itself but behind the trade unions. I spoke at events to say that. As far as I am concerned, we want to have a progressive, modern approach that involves all those issues. I know that you and I don't often agree on things and I think that perhaps you enjoy that, but on this occasion I want to be on the same side as you to make sure that those things are within our ability to influence in public sector procurement and in public sector contracts and tenders. I would want to make sure that that happens. Anything that we can do, we should do. It would be better if we could legislate for all those things ourselves. I would like to be able to do so. When we pursued some of those issues through the public procurement bill when it came through, they were rejected by the Government. With this change, there is more opportunity for us not to have that situation. I don't know whether that change will produce that, because what is going to happen is that the UK Government is trying to replicate those structures. In the case that Scotland was negotiating in its own interests, we would be endeavouring to do so. In terms of parliamentary scrutiny, there is an indication that negative procedure would be used for much of that. Do you think that that is adequate? No, I would like to see substantial scrutiny of those matters. One of the difficulties in the trade bill has been trying to push those issues forward, but I would like to see substantial scrutiny in those matters. In the bill, clause 1, 1A and F provides that UK ministers, all the devolved authorities, also have a power to make such provision, as is considered appropriate. In consequence of any modifications to the list of central Government entities in the Government procurement agreement to be used after the UK has acceded to the agreement. It appears that modifications could be needed due to machinery of government changes, and that is mentioned at paragraph 50 of the delegate's powers memorandum. Could you give us any further information as to how the Scottish ministers might use this power? I couldn't, but I am hoping that one of the people with me can give me that information. If they can't, we will have to write to you about it. We may have to do a combination of both, but when you took evidence from UK ministers and UK officials last week, they put on record the fact that they would want to be working closely with Scottish Government officials on matters like that, particularly with the entities provisions. That is something that we are continuing to discuss with them. We haven't got to a position yet where we have been swapping lists or anything as detailed as that, but it is something that we would want to consider with them and, obviously, bring that back to Parliament. We will feel free to write to us. We will write to you on the detail of that question, and it is clearly an important one. That is fine. Stuart McMillan. Thank you. Good morning. Good afternoon, cabinet secretary. I have some questions just regarding clause 2 of the trade bill. Certainly, in the Finance and Constitution Committee's discussion of the bill on 21 February, academic experts who were in attendance raised concerns about the clarity and the potential width of clause 2, as it applies not only to international trade agreements, which are also free trade agreements, but also to an international agreement that mainly relates to trade. That is referencing clause 8.1. Also, an official appeared with the Minister for State last week. He explained that that expression will cover an agreement that is a trade as a majority of its content. Does the Scottish Government consider that the expression is appropriate without further definition in the bill, or do you have any particular concerns in this matter? We do not think that it is appropriate without further definition. This is a matter that has had some discussion. I think that what I should do again with your permission, convener, is write to the committee with a full exposition of why we do not think that it is appropriate, because it is a substantial technical issue in there. We will write to the committee with that. Clause 2. Last week, the Minister for Trade said that, in each case in which we negotiated with partners to roll over agreements, we will look for just that. As few changes as possible to provide certainty on this, I touched upon some of the questions from Neil Findlay a few moments ago. In terms of the Scottish Government's position, do you agree with that, or do you consider that the regulation under clause 2 might make some significant and different arrangements for Scotland? I think that the minister's view is very much a view that the UK Government takes of every single one of those issues, which is that there is an existing set of arrangements and they will simply be continued forward. Anybody who has any cursory involvement with trade knows that that does not happen. At the moment that something is up for grabs, it is up for grabs. An example in this in actual fact lies in that other Geneva-based organisation, not the GPA but the WTO. At the beginning of this process of the UK seeking independent membership, the EU and the UK approached the WTO jointly with a joint letter saying that we are looking to roll over the arrangement. It produced almost immediately a negative reaction from a group of key players, some of whom are old trading partners of the UK, saying, hang on a minute, that it can't work like that. The moment things are on the table, they are on the table. That has been a fear under the GPA that that would be the case. The House of Commons committee has also said that they expect substantive changes to be necessary. I think that the minister was expressing his policy intention. I don't think that he is expressing what is actually going to take place. Of course, if you were an optimist, you would think that the best changes could take place and we could go in and back for everything that we actually want. The reality is that every country will be doing that and every organisation will be doing that. If there is something that has niggled with a country for 10 or 15 years that didn't get quite the quota on something that they wanted to be, this is a good opportunity to change it. Also, balance of trade has changed over the years. I think that it is also significant that not a single rollover of a trade arrangement has yet taken place. In other words, there has been no indication that there will be a seamless rollover. There are some big questions in there. In the best of all possible worlds, in the Panglossian worldview, everything just gets rolled over. I think that it is unlikely. The final question is just about the issue of the trade agreements. Does the Scottish Government agree with the UK Government's position that it is more appropriate that the regulations should be introduced, or would you prefer any changes to take place via primary legislation? I think that the issue here is scrutiny rather than anything else. The issue is to make sure that if there is a debate and discussion about that, there should be that scrutiny. The transparency is important in this. That is also a wider issue that I know that the Finance and Constitution Committee has considered, which is the issue of what scrutiny should be applied to trade arrangements at every level. There has been very little democratic scrutiny at Westminster. In our new paper, we have argued for much stronger democratic scrutiny, and this is perhaps an opportunity to ensure that that takes place. Tom Arthur. Thank you, convener, and good morning, cabinet secretary. In your preceding remarks, you stated that, if I understood you correctly, you thought it would be unlikely that there would be a seamless rollover. The period allowed for with regards to implementation of the clause 2 regulations is three years. Do you think that it is likely that that can be achieved within three years? Therefore, do you think that it would be likely that the extension of this sunsetting period would have to be invoked? I think that it is almost impossible presently to know how long things will take, but three years would be a very optimistic view of what was possible. Let's remember where we are in the wider issue of Brexit. We are 198 days from requiring the exit agreement to be found. We're not there. The exit agreement is the start of a process, not the end of a process. It's the start of the withdrawal negotiations in the detail of the future framework. That is scheduled for the transition period if that happens, which is 21 months. I don't think that anybody believes now that that huge task can be undertaken in 21 months. If you look at all the associated activities, you're saying, will the transition period be extended? Is the transition period extended? Are there big implications for that? I just think that all the timescales appear to be completely out of kilter. Before we get into too many hypotheticals, as I understand the Department for International Trade, the UK Government has given a political commitment to consult with the UK Government on the use of an extension. However, I understand that the Scottish Government's position is that it would like that on the face of the bill, where it becomes a requirement to consult with the Scottish Government with regard to an extension. Can you update the committee as to the Scottish Government's position? It remains our position. There needs to be a recognition of reality. Is there any circumstances that you can envisage where the Scottish Government would require an extension of the powers that the UK Government would not? Or is there any specifically devolved circumstances in which that would be required? I think that the provision to extend lies with the UK Government but does not lie with the devolved Government. Would there be situations that could arise whereby it would be required for the Scottish Government to extend an extension but not the UK Government? We are now going into arcane areas of possibility. I do not want to go into them. Officials need to keep a regular liaison on that. On the general issue of how long things take, there is an optimistic view again, as there has been a pull-over of things like that, which I do not share. However, the officials will have to keep close contact on those things. Arcane is what this committee is all about? Well, indeed. Mr Finlay, you wanted to come back in. You just said that the complexity of this is enormous. This is an attempt to unravel something that has only been going on for 40 or so years. Does that offer any reflection on the 18 months period that was assumed for another extraction from another political entity? I think that what it shows is that preparation is all. Therefore, if at any stage during the Brexit process, those proposing it had brought forward a 600-page white paper full of detail, then that would have been helpful and useful. However, as that did not happen, then clearly the consequences of that are now showing? You do not think that, given what you have witnessed here, that 18-month period was just as unrealistic as a three-year period. A serious point, preparation is all. The work that was being done was comprehensive, and I like to think that the competence of those involved was unquestionable, unlike in the present circumstances. There you are, Mr Finlay. Of course. Alison Harris. Do you consider that the bill could usefully include any further provisions to improve the scrutiny process for the Scottish statutory instruments to be laid under it, and indeed any instruments that should be subject to joint scrutiny at Westminster and in this Parliament? In particular, clause 5 provides for a report to be issued, which would give details of significant changes to the UK free trade agreement, as compared to the EU's pre-exit agreement with another state. In advance of laying any regulations under the clause by the UK Government, would it be useful for the scrutiny process if such a report, where relevant was similarly required in advance of any regulations to be laid by Scottish ministers under clause 2? I think that there is a specific point of whether the bill can do it, and I think that there are improvements to any bill that can do it. We saw that with the continuity bill, that there are improvements that can be brought in. The wider point, and therefore I would expect officials to be involved in those discussions and to involve ministers in discussions as required. On the wider point of scrutiny, particularly of trade, there is a very strong argument for saying that the trading arrangements that existed in the UK before EU accession will be very different now. There was a tradition that there was no great parliamentary scrutiny. There is still a view that there shouldn't be great parliamentary scrutiny. I think that, given the nature of international trade, it is dependent on some of the issues that Mr Finlay has raised in terms of rights, environmentalism, climate change. There needs to be greater scrutiny of trade and ethical scrutiny of trade, too, and in those circumstances I would envisage a much more transparent system. The judgment then would be what is in the bill transparent enough or not. It doesn't meet the standards that we have set out, and therefore we would want to continue to develop and change those. I believe that those are parts that have changed during the initial process of the bill, and they can change further. On the general point, I am keen to see greater scrutiny of all legislation, particularly trade legislation. I am really thinking now that it would be useful for the scrutiny of such regulations to be laid by the Scottish Minister under this bill if the SSI protocol, which the Scottish Government has developed with the Parliament for the Scottish statutory instruments under the European Withdrawal Act, could really be extended to those regulations. The bill provides for concurrent powers to be available to the UK ministers and the Scottish ministers to make regulations under clause 1-2. Do you anticipate that the UK statutory instruments would be laid under the bill, which have or include a devolved subject matter, and if so, are you able to give an indication of how many you think this might be? I am not, because I think that that will be a matter that will take some time to develop. It has taken, as I will say in my statement this afternoon, many months to get to the stage where we have an estimate of the total amount of mitigation that we require on existing SSIs. Quite clearly, we would want to co-operate with Westminster on this, provided our policy intentions were the same, and we believe that it was in our interests to do so. If we didn't, then we wouldn't. Are you able to give any indication of how many SSIs could be laid under the bill? I am just not able to do that. It is almost impossible to make that estimate. In fact, I will drop the word almost. It is impossible to make that estimate. We do not have enough information to allow us to do so. I am sorry about that. The UK Government can give you any indication of when they will be in a position to start providing such information. Any other members have any questions? We have raced through that session at Mr Russell, which will help you to prepare for your statement. Thank you very much. We will write to you as a result. We have a number of points that we have said that we will provide in writing. If the officials can make sure that we know about any commitments that we have made, we will honour those commitments. Thank you very much. I will suspend it to allow the cabinet secretary to leave.