 Welcome to the 12th meeting of the Constitution, Europe, External Affairs and Culture Committee. It is currently conducting an inquiry on the UK internal market. The aim of the inquiry is to consider the implications of the UK internal market for Scotland, including how devolution will work going forward. Our first agenda item is a panel on two panels this morning. Felly, r clapping cais i ddarparu trefod lle Fa poed roi'r iawn o wrth ni. 1. Ar Python i gywaith ni, fue lining, ger rallби ericordau que la o hwn i ddau tramwyr i gael maen nhin. 2. Byddwn i rigraffu bairai'n L warnings a his немf. Can you explain to the committee what this would mean for competitiveness of Scottish businesses wishing to trade in Northern Ireland? Yes. Hello. Good morning. As I understand it, the Scottish Government has the policy to maintain alignment with you law at the greatest possible extent. The point that I was making in my evidence is that you can replicate or interpret it and apply it in the way that it is interpreted and applied by the European Court of Justice, but that will not remove the need to demonstrate that you comply with you law when you are trading with you when you are exporting goods to the EU. Of course, that would have supplied to Northern Ireland. The goods sold to Northern Ireland to the extent that Northern Ireland remains subject to the EU customs and regulatory regime. So far, as things stand, since at the early stages of the post-Brexit period, there is very limited regulatory divergence between GB and Northern Ireland and the rest of the European Union. There is a very good paper that is written by one of my colleagues here at Queen's, Lisa Clair Whitten, where she was able to show that so far, actually, that there have been no real substantive amendments to EU law that is listed in the annexes of the protocol. Most of the changes have been technical in nature or cosmetic in nature. However, of course, as time goes by, regulatory divergence is inevitable to the extent that Northern Ireland is tied into the EU regulatory framework. The greater the regulatory divergence is, in theory, theoretically, the greater the competitive advantage that Northern Ireland will have, purely because of the dual market that it has, thanks to the combined application of the market access principles of the Internal Market Act and the protocol. Under the protocol, Northern Irish goods get this unrestricted market access to the single market, which has hundreds of millions of consumers with them, and parallel to purchasing power, but also Northern Irish goods are able to have unrestricted market access or lease benefit from the market access principles under the Internal Market Act. Even though there may be subjects to completely different rules for the rest of GB. I mean, I'm happy to provide some examples just to illustrate how that would work, but I might want not to spend too much time talking. We can maybe come back to that. I don't want to take up the whole time. If I could move to a question to Mr Lehanie. In your paper, you state that the UK food produce is now treated as a third country status when entering into the single market, and this has created a huge burden on GP exporters. Can you expand on what the impact in your view has been on food producers in Scotland? Hi, good morning. The impact here is that any food exporters in Scotland or anywhere in GB have to comply with sanitary and phyto sanitary legislation to export those goods, whether it is to Northern Ireland or anywhere in the EU. Now, that could be seafood, dairy, produce or bread. That means that you need export health certificates. At the moment, we have a grace period for chilled meats that can come into Northern Ireland still, so things such as a sausage roll that can still enter Northern Ireland. Technically, it shouldn't, but we have a grace period for that at the moment. There is quite a lot of paperwork that requires a veterinary sign-off and also the pre-notifications with the DEFRA system for arriving into Northern Ireland as well. Our environmental agency here is ANDERA, and they are responsible for controlling the port of SPS products, like food produce, into the three ports here in Northern Ireland. That requires full checking of all paperwork, and for a certain percentage of those goods that come into Northern Ireland, that may also require a physical inspection. At the moment, because of the third country's status, you would normally see, without an agreement on food alignment, you could have checks up to maybe 30 per cent of goods coming in. That is unfeasible at the moment for the number of lorries that arrive into Northern Ireland daily. We are probably talking about about 1200 lorries a day arriving to Northern Ireland, and about half of those come in from Scotland at the port of Cairnryan. Wouldn't it be feasible to have that number of checks right now? Checks are probably going around about the 5 per cent level, but we definitely need some type of agreement on those coming in at the end of the grace periods, because I think that we would struggle to comply with that. In conclusion, really, there is a lot more paperwork, and obviously, with the administration and staffing costs that takes for those exporters. I am going to move to questions from Gettie, bringing in Dr Allan. I am interested to hear Mr Lahane about your mentioned trade with Scotland. I am also interested to know what the impacts of the current situation and any changes to that situation would be through protocol 16 and withdrawal and all the rest of it. I am just interested to know about the trade that you have with the Republic of Ireland and how that fits into this jigsaw. If we look at trade first of all, we can see, because with the protocol, there are the positives and the negative consequences at the moment. Trade with Northern Ireland and the Republic of Ireland has been very healthy this year. We have the statistics from the Central Statistics Office in the Republic of Ireland. That shows that Northern Ireland exports for the first six months of this year grew by 77 per cent. That was an increase of nearly 800 million euros of new business. A lot of that new business going to the Republic of Ireland was probably southern Irish businesses sourcing goods that they may have sourced from elsewhere in the UK prior to the first of January of this year. We have also seen a 43 per cent increase in imports from the Republic of Ireland into Northern Ireland as well in the first six months of this year. That has shown the benefit of that dual market access with the single market for Northern Ireland. Unfortunately, the Office of National Statistics does not have the stats yet for trade between GB in Northern Ireland yet. However, exports remain steady from Northern Ireland to GB. There are no barriers in that at the moment. It is difficult to say what impact we have on goods coming from GB to Northern Ireland without those official statistics. I would say that freight volumes through the Port of Cairn Ryan in Scotland, which goes to Northern Ireland for the first six months of this year, are up 16.9 per cent. Cairn Ryan has seen quite an increase on freight volume going through the Port. That could be down to healthy imports coming from GB to Northern Ireland. I would say that we have a lot more holliers avoiding the Port of Dublin and Holly Head, and they are coming through Cairn Ryan instead. At the moment, we have grace periods for goods coming into Northern Ireland. If you are moving goods into Dublin, it is fall third country status. It may as well be Calais, where you are sending the goods to. Dublin has actually seen a decrease at the moment of 21 per cent on volumes, but the worst hit of all has been the Port of Holly Head in Wales. They have seen their freight volumes fall by 33.3 per cent, because they relied on that traffic from Holly Head to Dublin. That shows what has actually happened. A lot of freight traffic that used to move between GB and Northern Ireland, the fastest route to market, if you are wanting to get to London or even to continental Europe, was via Holly Head Dublin. A lot of holliers are now avoiding that route and have now moved north to either Delfast Liverpool or Delfast Larn in Cairn Ryan. As an industry, without asking anything, it is commercially confidential. Are you having to make contingency plans about what might happen if article 16 is triggered? It is something that is known in the industry 1's article 16. We see that as a board disruption. It would create certainly a lot more lack of stability and clarity for businesses in the long term. It would call into question the trade that we have with the EU. I suppose what article 16 does at the moment. If you have a trade barrier from Great Britain to Northern Ireland, that affects the consumer, because 75 per cent of the freight that arrives into Northern Ireland on the ferries from Scotland is destined for retail. It could be new cars, it could be yoghurt, it could be clothing, it could be anything. That affects the consumer. However, our trade between Northern Ireland and the Republic of Ireland, 70 per cent of the freight that moves across the border, is what we class as intermediate products. It is ingredients and components. If you put a trade barrier, which article 16 could do, that puts pressure on manufacturers and exporters in Northern Ireland. It is a lose-lose scenario that we have. At the moment, we are focused on making sure that there is a negotiated outcome between the EU and the UK. We want the article 16 to be avoided at all costs, and we want the protocol to work. The protocol certainly is not perfect. We have said, basically, since January 2020, before its implementation, that it was not perfect. It needed refinement and mitigations agreed between the EU and the UK. We, along with other business organisations, would engage quite heavily with the European Commission and the UK Government on reaching those agreed mitigations. We have heard one view about article 16. It would be fair to say that there are mixed expectations about that issue in Northern Ireland, and are you able to see anything about the range of opinion that would exist about that and about the prospect of article 16 being triggered? Public opinion is what I am thinking of here. I should clarify that I am a law scholar. I am also Portuguese. I am not sure that I am particularly qualified to speak about political preferences and opinions here in Northern Ireland. I am not sure that I would want to either. That said, it is a very interesting question because right now, at Queens, we have an ESRC-funded project, Brexit Governance, focusing on the application of the protocol. You may have seen a news item on this. There was some polling that was recently produced by Queens on this issue, which showed that largely speaking, Northern Ireland electorate was not particularly in favour of triggering of article 16. The reason for that was that Mr Dany was outlining in his previous answers. In terms of what article 16 would entail and what the potential retaliatory measures would be, I do not know if that was part of your question, but again, that is half the answer. Certainly, that would be of interest to you. I think that there is a lot of misconception in terms of the media coverage about what article 16 entails and practice. Quite often, you will find a lot of conversations about the suspension of the entirety of the protocol or the major components, the entire trade component of the protocol. That is not an accurate representation of what article 16 is. It is about suspending certain obligations on the protocol subject to certain fulfilment of certain conditions. In terms of what the suspension could be, they are limited in their scope in that they can only be justified in so far as they are intended to address a specific issue. It should be the least restrictive measure possible and the one that least disturbs the functioning of the protocol. We are not talking about full-blown suspension of the protocol or even whole-sways of the trade-related obligations of the protocol. We are talking about the very targeted measures. Of course, they have to be justified. We have to show that either there is evidence of trade diversion, I am aware that there is anecdotal evidence that this is happening, but that is not the same thing as actual evidence that the protocol is leading to trade diversion. We have to show that the protocol has somehow led to difficulties of a serious economic, environmental or social nature. It is always important to remember that there is a good faith requirement enshrining the withdrawal agreement, which means that you cannot use article 16 of the protocol as a pretext to avoid your obligations under the withdrawal agreement. The reasons for the suspension of the protocol have to be genuine. It is unlikely that a minor trade diversion that can somehow be linked to the protocol would fall under the scope of article 16. In terms of what happens if the UK triggers article 16 of the protocol, there is a whole procedure in place. The first thing to note is that the UK cannot trigger article 16 from one day to the next. It first has to notify the EU its intention to do so. That triggers a one-month consultation period. It is only after that one-month period that, if they are not able to reach some sort of resolution agreement, the UK will be able to suspend a part of the protocol. The EU then has the option to take rebalancing measures. Those rebalancing measures are not automatic. They are subject to a consultation period. Again, they are limited in terms of what they would cover. They have to be limited to what is strictly necessary. They have to be applied in a proportionate manner. There are other options. For example, if the EU thinks that the UK has unlawfully triggered article 16, it could initiate, before the dispute settlement mechanism established by the withdrawal agreement. Again, that is something that will take time. You would have a consultation period. You would have the actual arbitration possibility of preliminary questions to the European Court of Justice. You would have a ruling that would, if the UK triggered article 16 unlawfully, require the UK to remove that measure. If the UK does not remove that measure within the reasonable period of time, the UK could request the arbitration panel to impose financial sanctions on the UK. If the UK does not pay the financial sanctions and does not remedy the situation, you can resort to retaliatory measures under the TCA. That would essentially mean a reimposition of tariffs on the UK as a whole. Again, those have to be proportionate. The last thing that I will say, and I am aware that I have been talking for a while now, is that there has been talk about the possibility of suspending or terminating the TCA as a whole. That is an option that is available in the TCA. The first option would be to notify the EU for the EU to notify its intention to suspend or terminate the TCA in its entirety, but that would require a 12-month period notice. The other possibility is to argue that unlaw for triggering of article 16 of the protocol constitutes a substantial failure by the UK to uphold the rule of law, in which case there would be a one-month notice period for the potential suspension or termination of the TCA. That would be covered under the essential elements clause. The wide range of measures that can be put in place, all of them are subject to procedural requirements. I ask how people plan ahead, particularly businesses. Several of the respondents we have had to our questions say that we will have a race to the bottom in terms of standards, but in the paper that you have sent us, Mr O'Ruho, it is clear that both Northern Ireland will align with EU standards, and the Scottish Government is committed to keeping pace with EU standards. Can you say a bit about how that impacts on the wider UK internal market, and how you see alignment with EU regs impacting going forward, given that Northern Ireland will have that opportunity? How do we, as parliamentarians, have accountability or transparency, given that a Scottish Government and Scottish Parliament are not involved in the transparency process through the meetings that take place between the UK Government and the EU? I realise that that is two questions. I will try to answer the first one, and then maybe you can remind me of the first one. The question on democratic accountability goes back to another question, which is about the democratic accountability of the protocol and the governance structures that are established there. There are a lot of criticisms level at the protocol in that regard. When a new EU act is adopted, which could fall under the scope of the protocol, the procedure is that the EU has to inform the UK in the context of the joint committee, which is the main body in charge of implementing the protocol. Most of the work happens lower down in the joint consultative working group, which is a body composed of EU and UK representatives, and that is where the real technical discussions on rules actually happen. That applies to both proposals to amend legislation that is already covered by the protocol and new EU legislative acts. There have been criticisms leveled at the operation of the joint consultative working group. First of all, deliberations are confidential. There are questions concerning the extent to which Northern Ireland representatives were involved or not, in particular stakeholders, who were not involved in any way or form, which is very problematic when developing regulations. You need technical expertise to share the decision-making process. Some of the concerns have been that the EU has tried to address them in the recent proposals, the non-papers that the EU may have seen. The EU is proposing lifting confidentiality, creating structural dialogues, which include Northern Irish stakeholders and strengthening ties between Northern Ireland Assembly and European Parliament. However, with some way off the decision-making influence that other third countries pursue dynamic regulatory alignment with the EU, for example, the EEA states, with some way off their level of input and influence in the decision-making process. For example, they have the right to be informed in terms of any plan new EU legislation. They have an observer status in relevant European Commission committees, commentology committees. There is an obligation on the European Commission to consult with technical experts from the EEA in the same way that it consults with the EU, so there is a world of difference there. To go back to your question, how can you bridge that gap in terms of Scotland having some sort of influence in the decision-making process in order to give a veneer of democratic legitimacy? It is difficult to see how you achieve that, given that Northern Ireland, which is subject under the protocol to these laws, has already a very limited influence. There are indirect ways that you can do that through diplomacy by investing in Scotland's regional offices in Brussels and through lobbying, but besides that it would really be about strengthening intergovernmental relations between Scotland and Northern Ireland, which I am aware is already very good, in the parliamentary relationship and seeing whether, in the context of existing corporate formats, intergovernmental corporate formats, or perhaps in the context of the common frameworks, which are fairly problematic right now, whether there would be an opportunity there to have regular discussions with UK and Northern Ireland representatives, who are involved in those discussions. That is really helpful, thanks. The first bit of my question was about the alignment with EU regulations, which triggered the question about how you get this transparency. You have got the alignment with EU regulations in Northern Ireland. Scotland is committed to doing that as well, but there are tensions, which many of the commentators have given us. How do we monitor what happens in terms of divergence? People have said that the standards will go down, but you have got Northern Ireland and Scotland wanting to stay aligned with the EU. How does that impact on the rest of the UK market, the internal market, that the legislation is aspiring to deliver? As far as the internal market act is concerned in relation to Northern Ireland, you have to establish a distinction between two types of trade flows. You have Northern Ireland goods, which are being sold in GB, for example, in Scotland. They benefit from the internal market act and the market access principle, and they have a fairly unrestricted market access to GB. There are some restrictions, but as the next panel will no doubt discuss, those exceptions are fairly limited. Northern Ireland, despite the fact that it is subject to the regulatory regime, will have a fairly unrestricted market access to GB. However, you have goods from GB coming into Northern Ireland, who, to be quite frank, the internal market act is irrelevant. Their regulatory status is defined by the protocol. Under the protocol, as you already know, Northern Ireland is subject to EU internal market rules and EU customs rules. They will be subject to obstacles to trade. Irrespective of whether Scotland diverges or not from EU rules, there will be checks, customs declarations and procedures. There will be regulatory compliance checks, because, as I explained before, the fact that you have the same rules does not mean that the regulatory compliance checks do not happen. It just means that the regulatory burden on Scottish traders is reduced because they do not have to comply with two different set of regulations in order to have access to the EU and Northern Ireland market, but they still have to prove that Northern Ireland is in compliance with EU rules. Of course, there is the other thing that is possibly the potential application of EU tariffs, where goods coming from Scotland are deemed to be at risk of being moved on to the European Union. I am just going to bring as, Mr Lahaney, if you have any questions, any comments on those questions, maybe in terms of the uncertainty that this creates? Very quickly, businesses here just want certainty at the moment. For the past probably two years there has been a lot of uncertainty. We have a lot of foreign direct investment. It is cautiously waiting to see what happens with the protocol. We did have a major announcement here in Northern Ireland two weeks ago with a large multinational business. Invest in something like £200 million plans to build a new factory in Belfast, and one of the reasons was that for the dual market access. They make tins for the beverage industry, so they said on their statement that it would be the ability to export those goods to the rest of the UK and the European market. We also had a major pharmaceutical company here making an announcement of creating something like 1,000 new jobs in Northern Ireland. In the pharmaceutical industry, what was quite important for them with the Northern Ireland protocol, if you are pharmaceutical business in Northern Ireland, you have the ability to sign off medicines that can be sold in both the UK and the European markets. That business is coming out al-MAC and has set as a major selling point for those. If we can get more certainty, if we can get the protocol tied down and that agreement, we would hopefully get more announcements like that in the near future. It is a follow-on question to the ones that Ms Boyack was asking. In your evidence, you talked about the qualifying goods and possible changes in that that had meant to be brought in in October 2021, but have been delayed. Can you expand on that a bit? Mr Lehanie, have you got any comments on that, too? Yes. I previously said that when it comes to Northern Ireland goods that are being moved on to GB, they have an unrestricted market access, but there are limits. One of those limits is that, supposedly, only Northern Ireland qualifying goods would benefit from the market access principles. The UK defined what constitutes a qualifying Northern Ireland qualifying goods last year. I hope that I do not forget that it is any good that is in free circulation within Northern Ireland that is not subject to any customs control and any good that is subject to processing in Northern Ireland. Essentially, any good that is lawfully present in Northern Ireland can be considered to be a qualifying good. The issue with that, of course, is that it means that it is fairly easy for, for example, rules from the Republic of Ireland. Typically, if they were to be exported to GB, it would be subject to the TCA regime, which is far more cumbersome and anonymous. You will have to, for example, comply with rules of origins and you will be subject to increased customs checks. It is fairly easy for goods from the Republic to simply be moved on to Northern Ireland and be stored there or packaged there and then moved on to GB and piggyback on the protocol. Sorry, piggyback on the internal market and benefits from the principle of mutual recognition enshrine in the internal market act. Of course, the UK was aware of the very broad definition of Northern Ireland may lead to certain abuses, but it opted for this very broad definition because, just like the Great Spirits, which are currently in place and the suspension of customs checks on EU imports, the idea was to minimise great disruptions resulting from Brexit, from the end of the implementation period, so that you would not have a very abrupt and sudden shock and rather that those economic costs would be phased in. However, the plan was to tighten up the definition to ensure that only goods that are generally linked with Northern Ireland can benefit from the internal market act. There was also the possibility of Northern Ireland goods that were destined for the GB market but were routed via Dublin for them to also be covered by the internal market act. But so far, there is no narrow definition and there is no explanation of the UK Government in terms of how that would work in practice. We were expecting a definition and guidance in October this year, but the UK Government said that because of the on-going protocol negotiations, it was going to wait on that for a while. It is an issue that we have no clarity on, but, from a Scotland perspective, there is a potential risk in that it is possible that goods that are not truly originating from Northern Ireland could access their market through the back door, through the Northern Ireland protocol and the internal market act, rather than simply being traded under the terms of the TCA. I suppose that the question ties in with the comments that you were making earlier about risk versus knowledge as to how you are going forward. It also ties in a bit to your point that we were making about the change in routes, not no longer Holyhead to Dublin. I think that what Billy says covers the point very well, but it also raises a lot of questions. We are talking about 450,000 lorries, transit between Northern Ireland and Cairnryan in Scotland. We have asked that question and Billy alluded to it there as well. How do we ensure that Northern Ireland produce is destined for the GB market and that it has purely unfettered access to the GB market? How do you differentiate what is Northern Ireland goods and what is Republic of Ireland goods? We need that Northern Ireland qualifying. What will be the status to prove that? That has some concerns. From 1 January, the UK border operating model comes into effect. Only customs controls will be enforced first of all. That is relatively straightforward. Where things may become a little bit more complicated will be next summer, when the UK starts to impose its sanitary and phytosanitary controls. There will be a requirement for the Government to have some type of infrastructure at Cairnryan or that vicinity to check occasionally loads coming in. Not only do Northern Ireland goods use that port, but they will also have goods from the Republic of Ireland. Billy alluded to that there is the potential for goods that are not Northern Ireland qualifying but to be marked as their origin as Northern Ireland. There will have to be some type of responsibility taken by the UK Government, by DEFRA, by border force and so on, to ensure that that is not being abused and that Northern Ireland goods are only taken advantage of that unfettered access. Can I stay with Mr Lennie and ask him about looking forward whether he sees trade barriers going up across Europe and across Ireland and the UK or whether he sees them going down? We had some evidence that suggested that there might be the creation of a common veterinary area that would help with transportation of animals across Europe and regulations associated with that. That would be outside of the European Union as well as inside the European Union. Where do you see that picture? Probably for us, we would like to see greater alignment with the UK and the EU. A veterinary agreement would be ideal for us because it minimises a lot of those SPS controls. To put it in context, New Zealand has a veterinary agreement with the EU, which means that New Zealand lamb coming into the European Union is subject to a 1 per cent risk profile. For every 100 containers of New Zealand lamb that lands in, one on average is inspected, which is pretty good for them, but that is because New Zealand has to comply with the standards on that. For us, it goes back to the question about the TCA between the EU and the UK. Are concerns really regarding article 16 would be that, if it led to maybe the breakdown of the TCA, it might take the European Union up to three or four months to introduce tariff barriers on GB goods, UK goods. What would be of concern to us would be the non-tariff barriers that the EU could implement pretty much within a matter of days. That would be things like greater percentage of checks of UK goods arriving into the European Union and the requirement for export summary declarations for goods destined for the UK from the EU. At the moment, that has not been enforced, but it could be pretty much enforced at Calais, Ebruja, et cetera, and Dublin in the event of that TCA breaking down. What all businesses want is just that agreed outcome and hopefully over a matter of time that TCA is just becoming a little bit more firmer and a little bit more closely aligned. Do you see there's a political will to remove trade barriers? I think, you know, speaking to the commission, certainly there's an appetite there to minimize. We see barriers as just added costs for consumers, certainly in Northern Ireland. We want minimal barriers because Northern Ireland consumers have half the discretionary spend as consumers in GB. That comes down to the Government here, what they wish. If they think that there's trade deals that can be got elsewhere that we can get cheaper food, they may think that raising barriers in other places means cheaper food for consumers. We don't know yet. We ideally just want to see agreements in place that minimises data for administration, for customs and for SPS. If you walk away without any agreement, it just means food produce moving between the UK and the EU is treated as third country. It will be treated like food coming from outside the EU, which has the highest barriers to overcome. Can I also ask about the domestic regulatory agenda as well, which is something that's concerning us, because you've got the protocol on one side, you've got the internal market act on the other. How is that affecting the discussion of domestic legislation at Stormont? Is there a nervousness about innovating? We've had a discussion here in Scotland about banning the sale of peat products, for example. Is there a concern that any kind of innovation coming from Stormont might be seen to be caught between alignment with the EU but also fulling foul potential of the IMA? With Northern Ireland goods, they are in free circulation in the single market, so they will have to adhere to European standards. There will be the ownership businesses here that, when you produce goods in Northern Ireland, they are licensed for sale not just in the EU, but in the UK as well. That would be a concern with that dual approval status for the Northern goods. Transport is fully devolved in Northern Ireland as agriculture and environment. There are things for us when we're looking at it and I know that Scotland is heavily involved and well progressed with emissions and clean air strategy. That's something Northern Ireland has to consider with regards to the change to sustainable fuels on vehicles, etc. We want to make sure that our vehicles can be driven legally in the EU. We've got that land border to comply with. It might be a little bit easier in GB, where, as an island, people typically aren't sending their vehicles into the EU on a regular basis, whereas in Northern Ireland it's quite common for vehicles to cross the border every day. That's something that we're going to have to keep pace with European legislation on something, especially around vehicle standards, emissions and so on. I don't know if Mr Royer has any comments on that. Just one thing I would add is that, and it's something that I try to explain in my written submission, the situation here in Northern Ireland, as far as the regulatory framework is concerned, is extremely complex. Keeping up with all the amendments and changes both in UK level and new level is going to be extremely difficult, because you're dealing not just with UK law, you're dealing with retained EU law, you're dealing with devolved legislation, you're dealing with EU law that's currently covered in the protocol that may be added into the protocol. I think that it's a colleague here at Queen's, Professor Katie Hayward, who explained this, trying to keep on top of multiple spinning plates. Part of the issue is keeping on top of all the interconnected regulatory frameworks. To go back to something that Seamus was saying, in a different context, what they want is clarity and simplicity. What we have here is a system that's extremely complex, but to add the uncertainty on top of it makes life a business, but the devolved authority here is so much more difficult. Thank you, convener. If we park for a moment what might be acceptable to all parties, what, in your opinion, could be put in place from a legal perspective to improve the Northern Ireland protocol to Mr Eruja? The video panned off to Seamus, I wasn't sure any more. It's a very good question. When you look at the polling here in Northern Ireland, it's quite clear that the preferred solutions would be of the type that Seamus has already discussed. Mutual recognition agreements, veterinary agreements on SPS, perhaps also mutual recognition on batch testing with respect to medicine are all solutions that would remove most of the current trade frictions and have the added benefit of simplicity. The problem, of course, is that it would require regulatory alignment from the UK as a whole. As we know, it's not something that the current Government is particularly keen on. You will have seen the proposals that were published by the European Commission in terms of how to improve the protocol. The way that I describe them is that they are very practical proposals in that they seek to address concerns that have been voiced by industry in Northern Ireland on a consistent basis, whether it be the complexity of the goods at risk regime, the SPS checks or the difficulty in sourcing medicines from alternative sources of supply or non-GP sources. They are practical in that sense, but they are also limited in that, unlike mutual recognition agreements, they would not remove the need for—they would not remove obvious trade barriers and also they come with conditions. Whilst they might reduce some of the barriers to trade, they won't—they don't have the benefit of simplicity and they don't have the benefit of providing truly unrestricted market access. Thank you. If I can move on to Seamus Lehenny. Just feel free to comment on that question, but I also wanted to ask you a more practical one regarding is there any technological improvements to allow more frictionless trade that doesn't involve just no checks? Is there anything like whether there be QR coding, open data sharing among logistics firms that might be on the horizon or may be already ready to be deployed? That's a good question. There are a couple of logistics businesses that are voluntarily trailing some technology at the moment. Going back a number of years ago, you might remember the term alternative arrangements. I was on the Government's alternative arrangements working group and there were different ideas that floated about how you could make the Irish border work. Unfortunately, a lot of the technology relies on a central processing point for goods to arrive, and that's a port or an airport. A lot of the ideas were put forward for the Irish border, where you had several hundred road crossings over a small area, and the technology didn't completely do away with infrastructure along that border. I had a meeting with the Canadian Government last week. The U.S. border with Canada is around about 8,000 miles territory, but it only has 120 border crossings. Around 20 of those handle the vast majority of trade, and that's where the technology is used. The U.S. and Canada have such technological solutions in place. They have a trusted trader scheme for the big movers afraid to cross that border for the movement of parcels and so on, and so forth, rather than multiple declarations, one declaration per truck, etc. Going back to how we can make that work between GB and Northern Ireland, there are IT systems that can certainly give integrity. I suppose that the key thing is to give the European Union confidence that the integrity, if the single market is upheld, where it can see goods arriving in the Belfast, for example, they can see the origin, the journey and the final destination. It's all about minimising the at-risk profile of goods. What the EU is concerned about is that if 20 tonnes of beef arrives in the Belfast port from Cairnryan today, they want to make sure that beef, which could have originated from Brazil or the U.S. under a future UK trade deal, doesn't end up in France the next day. What we would like to use is technology by an approved retailer or wholesaler to show the final destination that it is for sale, etc., in Northern Ireland. Those proposals have been put forward to the European Union and to the UK government. They are aware of such systems. We would hope that, if we get those mitigations, the trusted trader schemes and, certainly, Marof Sefcovic has even been quoted as saying, the green lane status of goods arriving in Northern Ireland, technology can play a big part in that. My question is for Mr Lahini again. You referenced some of that in your earlier comments around the ONS data, which was published earlier this week, which showed or indicated that Northern Ireland was outperforming the rest of the UK and that this may be down to the benefits under the protocol. My question is, do you agree with that? Does it reflect what you are seeing on the ground, or is it simply too early to tell? I think that it is too early to say a lot was made about that. It could be where Northern Ireland was starting from a lower point, so we had less ground to make up than other regions. I have seen a region like the West Midlands that took the highest hit on that, but the West Midlands prior to the pandemic, etc., was performing very strongly, whereas the Northern Ireland economy has always been playing catch-up with a lot of the UK on that. Until we get the trade state stats for the UK, which probably will be published by January or February time, it is very difficult to see how Northern Ireland is performing in that context in the internal market. Certainly, our exports are holding up well, but it is about what is coming in here from the rest of the GB. We just do not have 100 per cent clear picture on that yet. Certainly, certain projects that have traditionally come in from GB are now harder or restricted to get here, and that has led to some substitution with products on shops in Northern Ireland, where you might have seen particular products from GB products and shelves here. There are now less frequency or you do not see them at all, and instead you may have products either locally produced in Northern Ireland or the Republic of Ireland substituting them. The stats from the ONS in the new year will give us a clear picture. In your submission to the committee, you mentioned the fact that the burdens are falling on GB goods coming into Northern Ireland. You also said that that will have a knock-on effect in terms of the consumer in Northern Ireland, because added costs will just add to the price. Are you seeing that yet on the ground? Is that having a practical effect? Certainly, the rate of inflation is affecting everyone at the moment. What we need to see is that retailers operate in such fine margins that, if they want to bring in a product here where there is increased costs because there are SPS controls and customs, they have to make the decision whether they stock it but at an increased price, or do they look for an alternative similar product, which they can maintain the price point that they have? I am not seeing anything yet. You probably need to hear from the retail sector about those impacts, so it is a bit too soon yet to give a clear answer on that. I am looking to save those further questions. I have a couple of final questions. Mr Lehanie, if I could ask you about something that you said about the increase in the use of the Port of Cairnrym and, obviously, a more freight company is choosing to use that from the GP and the impact that it is having elsewhere. Have you any concerns about capacity in that respect? Obviously, neither route from Cairnrym south or north A77 is particularly good at the moment, but what are the capacity issues at the port at this point in time? Is that an issue that you would be concerned of? Probably in Cairnrym. Anyone who is familiar with the port, there is a lack of space in their capacity. Last year, there was a contingency plan for Castle Kennedy airfield—I said that Stran Rar is a place where vehicles could be stacked, could be checked, etc. When the UK begins inbound fault controls in the middle of next year, there would be concerns from industry about the capacity to carry out those checks. That is something to consider and keep an eye on. We have not had any notification or information from Government yet, whether it is from DEFOR or HMRC about the capacity there. The A75 roads have long campaigns for the upgrade of that road. It was good to see in the union connectivity report that was published last week that the A75 was highlighted, so if there is going to be increased traffic, which we are seeing on that, it would be good to see work on the A75 progress. The last point is probably on capacity with the ferries. The ferries companies will certainly say that there is not a capacity issue on Cairnrym, both to Larn and Belfast, where there is a problem, however, that there is availability on those peak hour salons. Because more users are now wanting to use that route, trying to get space on, let's say, an 8 o'clock or 10 o'clock pm salons from Cairnrym to Northern Ireland has become increasingly difficult. That could have an effect on people being able to get the salons that they want. That is what retail requires. They want to get those loads into Northern Ireland late at night, early hours in the morning, to be on the shop shelves the next day. We do not want to see some type, if we know, of the prices going up on those routes, which again will affect the consumers here. It is about just that balance. People will say to you that there is not a capacity issue on the route. I would always drill down and look at the availability on the salons that are key to retail. If I could ask a final question of Mr Melo, our roll-show. You mentioned about the notice period around the withdrawing from the TCA. I am just interested in understanding, obviously. Earlier on, I said that what businesses are looking for is stability and certainty about what was happening. Everything around the proposal to perhaps invoke article 16 would lead to more uncertainty. I am also interested in Ursula von der Leyen saying that the EU has had a ladder of sanctions up to withdrawal from the TCA. I am just trying to understand if there is any notice period to some of those sanctions that the EU might take. Could businesses find themselves in a matter of days having to respond to changes? I mean, it all depends on the type of sanctions that are being considered. Before I was outlining the sanctions that are available either under the withdrawal agreement or the TCA, there are other options. There are more immediate sanctions, which could be more political moves. For example, there has been talk of holding back on adequate decisions on transfers of personal data or blocking UK accession to the Horizon Europe research programme, which would all be political moves that would be outside the context of the TCA or the withdrawal agreement, which could be used to exert pressure on the UK in relation to article 16. In terms of the sanctions that are covered by the withdrawal agreement and by the protocol, there are all procedural requirements, and there are usually consultation periods that are required, so none of them are immediate. For example, with the nuclear option, which would be the termination of the contract, you have a 12-month notice period. Where you are planning to terminate on the basis of the essential elements clause, you have at least a one-month consultation period. Those are the worst-case scenarios. I suspect that they have been put out there in the media conversation in order to use leverage in the on-going negotiations to make it clear that it is serious about that. I mentioned the rebalancing measures that would operate under article 16. The rebalancing measures have to be targeted and specific. We are not talking about major trade barriers. In terms of the retaliatory measures that would be covered under the TCA, you would have an entire dispute settlement mechanism that would be in place. You would need to trigger that dispute settlement mechanism. You would need to have a one-month after you would have to have two arbitration procedures before you can go and adopt the retaliatory measures in the shape of increased tariffs on the UK. None of them are immediate. All of them have deadlines and procedural requirements that have to be fulfilled before they can be applied. We had a couple of brief breaks and transmission there. I think that we have the gesture of what you were saying, but you might want to come back and clarify it. I think that we are okay in terms of understanding your point. Do you mention specific examples? That is always very helpful to understand. There has been a lot of talk around the situation for seed potatoes and farmers for seed potatoes in Scotland in the situation with that, which seems to be in a negotiation stage. I was wondering whether you could give us some specific examples of the types of products that might end up as part of the situation with the uncertainty and, as things are going forward, things that might happen to other goods. I am really sorry, but I think that we are probably finished with questions from today. I thank both witnesses for their contributions today and the helpful briefings to the committee prior to today's meeting. I will suspend for five minutes for a brief break. Welcome back to our second panel today. We will give evidence of the UK internal market. The committee will hear from Professor Joe Hunt, Professor of Lockhart of University, Professor Nicola McEwen, Senior Fellow of the UK in a Changing Europe, Professor Stephen Wetherill, Emeritus Jacques Delors, Professor of European Law at Oxford University and Professor Wetherill will be a bit late on-boarding, perhaps? Oh, he is here, thanks. We have everybody this morning. I am going to move straight to questions again and an open question for Professor Wetherill. In your paper, you state that the EU's internal market is designed to favour the claims of local regulatory autonomy over the claims of unimpeded trade significantly more than the UK's internal market. Professor Hunt and McEwen's papers state that whereas devolution prioritised political autonomy and the ability to do things differently, the UK internal market act prioritises unimpeded markets access. I wonder if you want to comment further on that. We are all telling the same story. Any internal market is based on a fundamental problem, which is that constituent elements within the internal market might regulate trade differently. Insofar as they regulate trade differently, that leads to obstacles to trade within that internal market. There needs to be a way to manage that tension between unimpeded trade and regulatory autonomy exercised by the constituent elements within the internal market. The way that all internal markets manage that tension is to put regulatory choices taken by constituent elements to their test. Is there a value in the local regulatory initiative, which is sufficiently strong as to override the interest in unimpeded trade in goods and services between the constituent elements of the internal market? Putting those constituent elements' rules to the test is the heart of internal market law. What is important is determining what factors can be advanced to justify local rules, even in circumstances in which they obstruct or cross-border trade within the internal market. The core is that the European Union is more generous in accepting possible justification for local rules that obstruct trade than is the UK. The EU internal market is more generous to local regulatory autonomy and more restrictive of trade within its internal market than is the UK's internal market. To reiterate Professor Weatherwell's points, we have a system that has written across certain elements of the EU approach but has done so in quite an idiosyncratic way and a way that the internal market act views devolution and the potential for divergence as an obstacle, as a potential irretent to the economic integration that is prioritised and privileged through the market access principles in the internal market act. We have something similar in the EU system in terms of the free movement market access principles, but they come with a much more developed set of grounds for justification for why local choices might be able to be sustained within a wider market. There have been some right across of the EU rules but not a full right across of those. We see with the internal market act that it comes from a different starting point to the common frameworks in terms of how they see managing divergence and devolution. They take different approaches to the devolution settlement. I agree with everything that the others have said already. I do not want to repeat that. I think that perhaps understanding the internal market act in the UK as an ideological project in a sense, so it is the same sort of ideological drivers that initially when we had these debates around devolution were skeptical about the effects of devolution creating divergences, creating barriers within the United Kingdom and we are seeing the same thing here, so it is privileging unfitred access for businesses across the UK as a value in and of itself over the value of regulatory autonomy and the potential divergence that emerges from that. One thing that I would add, which is another difference between the UK internal market and the EU internal market, is that, within the EU context, the rules and the regulations are co-determined by the EU institutions and by the member states. Clearly, that has not been the case in respect to the UK internal market act. It has been determined by the UK legislature, which has representatives from across the UK, but it was in the face, as you will be well aware, of the considerable opposition from the devolved institutions who will stand to be most affected by it. Last time around, we heard in committee about how trade may be reserved, but the impact of policy in that area is felt in devolved areas. Look at the road ahead. What areas of devolved policy might we have to prepare for change in? From trade agreements. You have been referring to trade agreements on this, generally. As far as it depends on how extensive they are, in the case of the TCA, because it was such a minimal trade agreement, it has some repercussions for devolved areas, but it is not that many. It depends on how ambitious and broad future trade agreements will be, but, again, following on from the point that I was making there, in other countries, perhaps with more federal systems, you tend to have the territorial and provincial governments involved to some degree in the preparations and in the negotiations and discussing the mandate for trade negotiations, not least so that when trade agreements are reached and when they may be implemented, there is awareness of how that might affect their own responsibilities. I do not think that we have that to the same extent in the UK. There are intergovernmental forums, but I am not sure how much of a voice devolved institutions have in those. It is one of the issues of lack of transparency around a lot of those forums and negotiations. Change tack back to the subject that I raised with the last panel. That might be one for Professor McEwn or Professor Wetherill, possibly. About the implications of article 16 potentially being invoked, I suppose—I think that I hear that if you like the diplomatic implications—how unusual that would be regarded in terms of the UK's relationship politically with the European Union and what that might mean? I think that I will leave that to the others. Okay, and that is Professor Wetherill. Make one or two brief comments. You have had a very good run through the content and the implications of article 16 in the previous panel, and I claim no expertise with regard to the sensitivities that arise in Northern Ireland. I cannot see that anybody feels that any good can come from the invocation of article 16. It adds greater uncertainty to a position that is already extremely uncertain. I very strongly underline what you have already heard in the first panel, that article 16 is no general fix-it to the problems that are raised by the protocol. It is much more narrowly written than that. It is also written in a way that is ambiguous. It is far from clear what, for example, the diversion of trade criteria into its invocation entail. So, article 16 is a way to add further confusion on top of a protocol that is already beset by confusion. You heard very powerfully in the first panel about the damage that is doing to business confidence. I am keen to ask about to follow up the questions on divergence and accountability, and I want to thank the witnesses for their briefings in advance. Professor Wetherill, yourself and others have given us submissions identifying pressures from the UK internal market to lower standards, but other evidence that we have had suggests that divergence could actually have a positive impact. For example, the Institute for Government suggested that it could enable the testing of effectiveness of policy implementation, evaluate success and collaborative learning, and FEDRA talked about the potential environmental benefits of divergence. Can you give us a sense of what you think the space is for us to evolve Governments to apply policy change within their competence? You have said that it is limited. What do you think the scope is to resolve any disagreements on those issues going forward? I am sure that Nicola and Joel want to say something about this as well. In principle, it is a very attractive idea that you can have regulatory experimentation, regulatory learning, regulatory emulation within an internal market. If you allow different constituent elements to do different things, maybe one constituent element will find the best way to solve a particular problem, and that understanding of the best way to solve a particular problem can be shared directly or indirectly with the other constituent elements, and they may follow suit. You may get a regulatory dynamic, even independently, of agreement struck between the constituent elements. The problem with the UK internal market act is that, if one constituent element chooses to experiment in its regulations by introducing stricter rules to products, let's say, than apply elsewhere, then those stricter standards are undermined by imports from another constituent element within the UK, which do not need to comply with the stricter rules of the experimenting constituent element unless those rules happen to fall in one of the very small areas where justification is allowed for local rules under the United Kingdom Internal Market Act. There is a dynamic within the UK internal market, which is antagonistic to regulatory learning because the constituent element that chooses the stricter rules may find them undermined by imports from another part of the United Kingdom where producers do not need to comply with the stricter rules either on their own territory or on the territory of the constituent element, which is the regulatory experimenter and to which those goods are exported. That takes me very much to the second part of my question to you, what is the scope for those disagreements to be resolved? You could think of something like changes on climate policy, which are not necessarily experimental but are definitely good practice. Where is the scope for devolved and UK Government interaction to resolve those issues? Jo and Nicolaas should speak then more than me about this and I've been talking too much, but the common frameworks approach was understood to be the way in which that sort of political mediation could be pursued. However, all the sense in the passage of the bill and subsequently is that the Government in London has far less enthusiasm for the common frameworks approach to solving those sorts of problems within the UK internal market than one might initially have expected and hoped for. I was indeed intending to follow up this question with other witnesses. Professor McEwan, I was hoping to come to you next just to follow on you also suggested in your submission that there would be benefits to divergence. One of the things that you highlighted was the difference between production of goods and use of goods and that potentially would relate to public procurement or planning requirements. Could you say a little bit more about that and pick up the issues that you've mentioned about accountability, whether it's inter-governmental and inter-parliamentary to transparency, something that was emphasised by many of the other respondents that we've had? Just for clarification, first of all, the evidence that I submitted was along with Professor Hunt and others as well, Professor Duggan and Professor McHeark, who are not with us today. So, Jo may want to come in on this as well. Just on the principles of divergence, I don't think any of us are in disagreement, including the other submissions that you made reference to. There are lots of potential benefits to divergence in principle. The point is that the internal market act and the scope of the market access principles, while they don't prevent regulatory divergence, they potentially prevent having the same effect that it might have had in terms of achieving the policy goals where that legislation is not in place. Potentially, that has a knock-on impact on the scope for learning, the scope for experimentation and the scope for seeing if something works, as we have had so far in the case of devolution. Where there is scope for permitting divergence to occur in ways that are void of those restrictions is through the frameworks process and, in particular, that additional element that came into the internal market act towards the end of its passage, where there is scope for common framework agreements to be excluded from those market access commitments. My understanding is that the Government has been working towards an agreement on how that will happen, so the tests coming up will be around single-use plastics, for example, or the deposit and return scheme. If those can be agreed within a common frameworks process—the resources framework that is not yet in the public domain—will that allow for those particular policies to then be exempt from the internal market act and the market access principles so as to allow divergence and the policies having effects throughout the territory, not just to producers within Scotland? Those are the real tests that are on the horizon, so we get a better sense of quite how limiting and constraining the act is or whether the common frameworks agreement process can be married with it finally in a way that still permits the kinds of divergence that some may want to see. We are still waiting to find out whether it will be the capacity for divergence. You also mentioned in your evidence the need for more not just inter-governmental transparency, but also inter-parliamentary transparency, and you have made a few recommendations. Do you want to say a bit about what those recommendations are that we should be following as a committee? I think that there are lots of different things here. First of all, with respect to the frameworks, clearly some of the frameworks are going to be really important quite quickly, and the resources and waste framework is one of those. I do not know if you have seen it, but it is certainly not published even as a provisional framework just now, but making sure that the US parliamentarians have early access to those frameworks and access to the kinds of negotiations that would potentially lead to common framework agreements potentially being exempt from the interim act. We just do not know how that is going to work. It does seem that there is an awful lot of executive authority given within the act to the Secretary of State. That all seems to me to be in the sort of political executive domain, which makes it difficult for parliaments to scrutinise effectively. There are other things in the act that empower the Secretary of State to make changes to the scope of the act after consulting, but not necessarily heeding on what they hear, but after consulting with devolved ministers. However, there is no curved out roll for parliaments within that. Perhaps you could agree with the Scottish Government that when they are part of a consultation process, that Parliament is very quickly also part of that consultation process. However, it is a very short timeframe of around a month in some cases for that process to take place, so it is really tight and it is going to be difficult for parliaments to get a voice. My suggestion was in terms of engaging with the other legislatures across the UK, because they will all be doing much the same as yourselves. There was some inter-parliamentary engagements and networking around the Brexit process and Brexit negotiations. Some of that would be good to see that being re-energised as we are looking at perhaps the domestic effects of Brexit, as the internal market legislation and frameworks process might be seen as that. Connecting with those other parliamentary committees to enhance the limited capacity that you all have for scrutiny and collectively perhaps to boost that. That is very useful. Can I just say, Professor McHugh, to let you know that the inter-parliamentary forum is meeting next Thursday, and Deputy convener, myself, will be attending in London. Sorry, that is very useful information. Professor Hunt, I wonder if you would comment as well about the action that is needed. I very much welcome the submission that you were part of, but we also had a submission from the Scottish Environment Link, which raised the importance of parliamentary scrutiny, and raised the issue of the importance of the accountability, for example, of the office for internal market in Scotland. Again, to come back to the question, I asked Professor McHugh and about parliamentary scrutiny, given that timescales are tight, but how we deliver better into governmental relations, but also scrutiny from inter-parliamentary liaison work. Can you say a little bit more about that in terms of your submission? Absolutely. Speaking from here in Wales, where we have particularly acute capacity issues affecting our own Parliament and a need to be able to effectively engage with the increasing amount of work that is going to be coming down the line to be scrutinising, holding to account the actions that are operating under those frameworks. We look at the common frameworks. One of the issues—we know that certain phases within that five-step process of making those frameworks—were some telescoping of those frameworks, of those processes. We are now at stage four for most of them, so they are shared with parliaments and other stakeholders, but there are reports that that engagement process to date has been more limited than perhaps would have been ideal. When parliaments are engaging with those frameworks, they are not looking at final decisions, policy decisions on particular issues. It is the framework for managing decision making. It is ensuring that there are depths built into how those frameworks work that enable an ongoing oversight and engagement of parliaments within that process. The framework itself is a done deal, and that provides an answer and a final output on a particular policy issue, but it is an ongoing living constitutional document. The challenge is there of building into that. If we then move to the internal market act and the office of the internal market that has been set up under that act, in terms of the reporting that the office will be undertaking—we know that there will be regular reporting on the state of the internal market—it is less clear—I do not know if the others have more insight in this than I do—in terms of those requests for information for guidance that the legislators might make to the office, whether that sort of intelligence is then shared more broadly or whether, in terms of reviewing whether particular policy choices might throw up problems from an internal market perspective, whether those reports are going to be more generally shared and transparent or whether it is a closed process. I am not clear on that. Throughout the entire system, whether we are looking at the frameworks or the operation of the internal market act, which we know has built into it, all sorts of opportunities for executive action to change the existing provisions, there are multiple points at which concerns arise about transparency and scrutiny opportunities. That is a very helpful answer. In particular, we might be interested in that issue about the closed process and to what extent there is any transparency on those issues from the office of the internal market. Can you finish by saying a bit about dispute resolutions? I mentioned that in relation to my first question to Professor Weatherall. Again, we are looking across the piece at how we have got this twintrack approach to managing the internal market through the common frameworks, through the internal market act. We do not yet fully know how that will play out in terms of the balance between that twintrack approach. Whether the common frameworks will come to be the general approach that is taken, and we have the internal market act as a fallback. Within the common frameworks, they do not all follow the same model, but there are built-in processes there for dispute resolution. They do not necessarily follow the same as with dispute resolution, but there is more of a co-owned, co-operative approach to creating those structures that do not yet exist. We know that there are moves through the intergovernmental relations review to try to improve and upgrade generally. Dispute resolution, we still do not fully know how the internal market act will be enforced and applied. We know that the OIM does not have enforcement abilities. A lot of this is going to be dependent on local regulatory authorities, depending on whether or not to prosecute traders for breaching local regulations. That seems to be the thrust of it. Those things might end up before courts and bring in matters of potential constitutional principle, but they end up not being approached as a constitutional issue. They might take us before the courts in a way that we do not know where those cases are going to end up. We do not know how far up the judicial hierarchy we are going to go. We do not know what potential consequences they might have for devolution. We know that, if we look at recent years, the cases that have been brought before the Supreme Court on devolution issues have not been particularly accommodating to the claims of devolved Governments and devolved parliaments in terms of the readings that they have given to devolve competence. I think that there are concerns around the potential of these things ending up before the courts. I would like to follow on those questions and question around the ability of the Scottish Government to drive effective policy reform and the ability of the Scottish Parliament to legislate effectively. I am interested in talking about the UK Internal Market Act and Devolution. I am interested in getting your thoughts on the subsidy control bill that is currently going through Parliament just now and how you think that could be impacted by the current situation. Professor Hunt, you are on screen just now. Can you respond to that question? If we move to this being a piece of Westminster legislation, that this is an approach that is taken that is not the collaborative output of the four Governments. We know that that was not the favourite approach and that was of the devolved parliaments and Governments. Can I give way to others that might have more detailed knowledge of the subsidy control bill? I do not have particular expertise on the contents of the bill, but I would say that clearly subsidy control was reserved in the internal market act, so it is not going to be the case where the consent of the Scottish Parliament is required, but it is one example of where reserved policy, albeit newly-deserved policy, will have an effect on the responsibilities of the Scottish Parliament. One of the downsides of the frameworks process is that there is lots to benefit and deplod in the frameworks process and the collaborative nature of it. One of the weaknesses of it is that it is fully focused on areas where retained EU law intersects with devolved competence, so it is all about devolved matters. There is no scope in that for engagement and collaboration on those areas of reserved policy that impact on devolved responsibilities. However, there is potential for the broader intergovernmental process to allow for that kind of engagement. You talked earlier about there being a twin track of internal market legislation and the frameworks process. I would say that there is a triple track and the third one being the IGR review. Those processes within UK Government in particular have been completely detached from each other with very different motivations, it seems to me, different dynamics at play, different characteristics, but they all connect. The IGR review that has been coming on since March 2018 looks like it might be coming to some sort of conclusion, probably not unlike the interim report that we saw earlier in the year. That provides potentially scope for the Scottish Government, at least, to try to influence those types of processes in reserved policy areas, whether it is around substance control or trade or external relations or other areas that have an effect on devolved competence. The challenge for you is to make sure that there is parliamentary engagement in the Scottish Government's positions. In line with the agreement that has reached the Parliament, it has been good at reporting on its activities in the IGR space, where there might be scope for development is enhancing the role of Parliament in shaping the Scottish Government's approach to IGR, not just in hearing about it afterwards. Thank you, Professor McEw. I will give you a specific question on your joint submission. In section 3.2, policy divergence can, however, produce effects that may be regarded as adverse. Divergence in public services generates distinctive rights and entitlements within the same country, which some may consider unfair. I wonder if you can expand a bit on that, because clearly that is a lot of where our devolved parliaments are legislating. That is not specific to the internal market act at all. In response to your general question about policy divergence, I might answer with a discussion that I often have with my students, where I ask the fairness question to the students in the room whether it is fair if, when they are from the same country as in the United Kingdom, some of them are paying 9,000 pounds a year and some of them are not. That is an illustrative example of policy divergence, which is perfectly legitimate in terms of the system of multilevel government that we have. It is within the competence of the different institutions to make their own choices on public policies. What it would mean is that citizens of the same country have different rights, entitlements and obligations. That is simply a feature of multilevel government. In as much as that system is accepted by everybody, presumably those divergences are accepted as well, but it is one of the effects of it. People may have different views as to how far they are willing to tolerate those divergences. Professor Weatherall, my initial question about the subsidy control bill, if you have any thoughts on that. No. In that case, may I throw back your final question that you gave in your submission? What sort of a United Kingdom is this? I would like to hear your thoughts on that. I know that it is a rather silly throw-away remark, so I probably should apologise for it. All that I was trying to do there was to bring out as vividly as I can, that the arrangements for the United Kingdom Internal Market Act are idiosyncratic, as I think Jo said. They are also asymmetric, and they bring about very different frictions and tensions, albeit that they bring about a lot of frictions and tensions. If your political preference is to have a United Kingdom that is as much as possible governed according to Westminster's preferences with minimal tolerance for divergence within the constituent elements of the United Kingdom, then, under the arrangements of the United Kingdom Internal Market Act plus the protocol, in Northern Ireland, you are really very distressed. I will point to the protocol, plus the UK Internal Market Act is to place Northern Ireland in terms of the market for goods in a regulatory jurisdiction that is not set from London but rather is set by the European Union. If your preference is for a United Kingdom that is as far as possible dominated by the preferences of Westminster, then, in Scotland and Wales, you are really rather cheerful because what the United Kingdom Internal Market Act does is, in significant respects, to undermine, in substance, the devolution settlement, which has been in place for several decades now because the result of the United Kingdom Internal Market Act is that English producers do not need to comply with stricter Scottish or Welsh rules in so far as those stricter Scottish or Welsh rules exclude them from Scottish and Welsh markets unless the very limited range of justifications and visage by the United Kingdom Internal Market Act apply. You have disappointment among some people in Northern Ireland, disappointment among some people in Scotland and Wales, but the people who were disappointed are very different in their motivations and their attitudes to the nature of the United Kingdom. My silly throwaway observation question what kind of United Kingdom it is, my answer is it is a really fragile one. It is one that is being threatened by anxieties, dissent but different kinds of anxieties and dissent whether one is in Northern Ireland on the one hand and in Scotland or Wales on the other hand. In a sense, it is just about trade, it is just about the internal market but it is about a lot more than that as all internal markets are because any choice about how to design an internal market spills over into political questions about how far to pursue unimpeded trade at the expense of the preservation of local regulatory autonomy. That is my rather long answer to the rather short question I finished my evidence with. Thank you very much Professor Weatherill. Thank you and can I move to questions from Mr Golden, please. Thank you convener. Clearly the internal market act applies equally, so but this also brings up some questions in terms of what existing legislation was in place that brings new legislation in the scope of the internal market act. For example, the deposit return scheme that the legislation was through in advance and therefore it should be able to be implemented without respect to the internal market act but in England and Wales deposit return would need to be implemented with cognizance taken of the internal market act which could lead to detrimental implications for England in that case and advantages certainly from a business point of view for Scotland. In this example and many others, clearly one solution is integration of common frameworks to overlay the internal market act but where that fails or where future governments of any of the administration seek to dispute those common frameworks. I wonder for your thoughts perhaps Professor Weatherill on what specific dispute resolution mechanisms can be put in place in advance to try and ensure that we comply with existing legislation and allow any of the devolved administrations to improve regulations or make legislative changes as they see fit? Yeah, if you look to the European Union for assistance and you really should because the European Union has had the job of creating, maintaining and sustaining an internal market for a long time what you find in the European Union is that the problems that arise because of the potential adoption of rules, regulations and technical standards that might differ by state and cause obstacles to interstate trade are managed through a process whereby a state that proposes to introduce a new technical regulation might impede trade must notify it to the commission in advance of bringing it into force and there's a defined standstill period within which the regulation must not be brought into force pending it's examination by the commission with the opportunity for views to be put forward by other member states so that an assessment can be made of whether the regulation should be treated as justified or not, it's not justified as it shouldn't be introduced if it is justified it might provoke the political impetus towards harmonising rules with the consequence that the rule will not be introduced until it's been reviewed in advance and any harm that might arise will ideally have been prevented rather than occurred. All that management system is missing from the UK internal market act. The UK internal market act assumes that a constituent element of the UK may introduce a rule and then find it challenged one way or another as an impediment to trade within the United Kingdom and eventually possibly years later maybe even decades later the matter will come before a court which will have to apply the internal market act and decide whether or not the rule is compatible with it and there will have been damage done to the markets in the intervening period. My several suggestions for reforming the UK internal market act but on the particular point that you raised uncertainty about what might happen the system needs a better firmer management system most of all there should be a pre-notification system so that proposed new regulations which might impede trade within the United Kingdom can be considered can be assessed for their worth in advance of their introduction. Thank you professor whether all that's very helpful. Would Professor Joe Hunt like to come in on that? Yeah absolutely just to to reflect again on the fact that you know in the choices that were made with the introduction of the internal market act there were already in place these processes and these procedures as Stephen says you know the technical specifications directive that has been in place and that has had you know that has applied across the UK and regulations made in Wales made in Scotland made in Northern Ireland those notifications were made that was part of the you know the policy making process so it's it's not just the missing that these things are being removed things that were already part of the policy process and we knew how these things worked and had an appreciation of them but you know we're now replacing that ex ante approach that you know that led to a greater degree of certainty about how these regulations would would then be applicable that you know we're moving from that and replacing it with as as Stephen said you know an incredibly uncertain regime that we're still trying to work out the dimensions of and the various ways that the different elements seem to relate. Thank you and Professor McEwen, do you have any comment or thoughts? Yeah I mean a couple of things so there is a glimmer of hope in the frameworks process in that frameworks common frameworks are supposed to establish ways of working that should allow for that kind of collaboration but a lot of that requires political will which may or may not be present and it is limited to the areas that are addressed within the sort of narrowly defined frameworks themselves so that won't capture the new regulations the the areas that don't connect to frameworks. The other thing I wanted to comment on you mentioned you're quite right of course that the internal market act applies to all of the legislatures within all of the laws made amongst the UK's different legislatures so it applies to UK laws too as much as to devolved ones but of course the difference is that there is an asymmetry here built into the legislation itself which made the UK internal market act a protected act within the devolution statutes so there is nothing that you and your colleagues could do about it in terms of your lawmaking capacities to make any amendments here. The Westminster Parliament is not constrained in the same way so if in principle in theory it was found that this was a frustration in terms of the UK Government being able to pursue and fulfil its policy objectives then it could change it in a way that you cannot and so yes it applies equally and yes it will create some challenges for DEFLA in particular perhaps in doing things in the way that they want to do it but the effects in the end are not the same because of the asymmetries built into the legislation. Thank you, convener. Thank you panel. Thank you. Can I move on, Mr Cameron? Yes, thank you very much. My first question is to Professor Hunt and Professor McEwen in relation to something that you say in your submission about common frameworks and you say that depending on their scope and content common framework agreements could commit the Scottish Government to shared or minimal standards and rules potentially limiting the scope for action of the Scottish Parliament and that's at paragraph 1.10 of your submission. Can I just explore that? What do you mean by that? I noted what one of you referring to downsides to common frameworks is Professor McEwen. What do you mean by limiting the scope of action for Parliament perhaps Professor McEwen followed by Professor Hunt? What I mean by that is if there is agreement within the common frameworks process to maintain certain standards or to do things uniformly or whatever it is that they agree to do, if that agreement is to do things in the same way across the UK so as to have a UK-wide system then in effect signing up to do things as if it applied to the UK as a whole in an area of devolved competence. That agreement would have the effect of minimising the potential for the Scottish Parliament to do something differently, should it choose to do so. It wouldn't have a legal constraint, the Parliament would still have the autonomy to do what it wanted to do but then it would detach itself from the framework. The good thing about the framework process is that it is a collaborative process, it is intergovernmental, so it is doing things by consent. Sometimes that might be consent to do things in the same way, sometimes it might be consent to do things differently and potentially then having a connection with the exemptions from the UK Internal Market Act. That is what we were trying to get across there. Does that clarify? Yes, it does. I wonder if I could ask Professor Hunt the same question and also if you could comment on, particularly given where you are, how the Welsh Parliament has dealt with common frameworks in your experience. In the last Parliament, I sat on the health committee and we scrutinised the common framework in terms of food hygiene and labelling. We heard evidence from the Scottish Government, we heard evidence from stakeholders and as a process, initially I think that we are probably the first committee of this Parliament to do that. However, as a process, it seemed to work relatively well. I just wonder if you have any Welsh view, if I could put it like that, in terms of how it is working. I just reiterate that we have the on-going issue with capacity issues within our own institute, within our own Parliament in Wales. There is an agreement that has recently been made between Plaid Cymru and the Labour Government to work together and one of the reasons is to increase the size of the Parliament to seek to better be able to manage these matters. Scrutiny and transparency of the common frameworks, as we said before, is not going to be a one-shot process. It is going to need to be an on-going engagement and an on-going accountability of the decisions that are being made under those frameworks back to Parliament. As Nicola has just sort of falsely outlined, we have got this on-going move of powers to the executives throughout this process. The whole Brexit process has been one of strengthening the role of the executives across the United Kingdom and that needs to rebalance that through building in mechanisms for engagement by the Parliament. A number of suggestions have been made to you around inter-parliamentary activity and, as you said, we have the inter-parliamentary forum, so really seeking to develop those routes. Can I ask all of you, gazing into the crystal ball, because I think we all accept that we are at a very early stage here, but looking to the future, do you foresee what will actually happen in practice is common frameworks being used in the vast majority of cases and the internal market act becoming a kind of fallback if that does not work or do you foresee something different happening? If any of you are able to answer that question, perhaps Professor Weatherill might start. Can I have any kind of crystal ball here? I can see the political incentives in Scotland and Wales to advance rules that are likely to be undermined by the UK Internal Market Act, because it demonstrates—which might be politically useful in Edinburgh and Cardiff—the weaknesses of being tied to this Government in London. I can see incentives, on the other hand, for this Government in London to use the common frameworks process very sparingly in order to use the market access principles as a way to promote a more deregulatory United Kingdom than one might have expected to be in place as a result of the devolution settlement. However, I do feel that I am in some danger of going beyond my brief, going beyond the reasons why you have invited me here this morning. This is very much political speculation, albeit on the basis of the legal structure that has been put in place for the UK Internal Market Act. Academics generally do not like looking into crystal balls, but I will give it a go. The alternative to the legalistic and centralising approach of the UK Internal Market Act is an intergovernmental one. That has some challenges for parliamentary scrutiny, but it is the most potentially devolution friendly approach to managing the internal market, to managing the economic union. Whether it actually works like that through the frameworks process, I have some doubts, partly because the frameworks are quite narrowly defined. As time moves on, we would expect to see more regulations that do not connect as easily to the frameworks and fall within the scope of the frameworks. There could be an intergovernmental process that is used alongside that to capture those other areas. That would be the other alternative that is the kind of system that we see in many other countries that are similarly trying to manage divergence and autonomy and economic union. That is a challenge for every multi-level system. I just do not see that being the path ahead within the current political context. We have not yet seen evidence of the political will to make that kind of system happen very effectively. Indeed, over the past few years, we have seen a lot of dysfunction in intergovernmental relations. It is very difficult from this vantage point to see that changing within the new future anyway. It would require an awful lot of political will and a change of political culture for that to be the path ahead. Having said that, I think that it is the path that helps to stabilise this if it is to be stabilised at all. There is no question in my mind that the approach taken in the UK Internal Market Act has had a destabilising effect on the system of devolution and on the UK's territorial constitution. Professor Hunt? My reading of the Internal Market Act and its introduction is very much—it was an insurance policy—in terms of what might be needed to manage international trade negotiations that should have the potential for policy divergence across the UK that might exist under the common frameworks if that were to stand in the way of international trade agreements. The Internal Market Act provides the tools that would have achieved the same purpose, but it clearly provides that ability for international trade agreements that the UK can negotiate on the basis of Great Britain. A lot of that depends on where we are with international trade agreements, on the cut across, the read across those agreements across those governance tools. We know the significance and the importance from a devolved perspective of having proper engagement in those processes of negotiating those agreements so that it feels like a collaborative approach rather than something imposed from the centre. It depends a lot on how that plays out. Thank you very much, convener. Thank you, convener. In many of the answers that you have already touched on, some of the questions that I was going to ask around inter-parliamentary scrutiny, I was wondering if there was anything more that a panelist would like to add on that. We did have a submission from the Institute of Government, which was suggesting the idea of policy-specific chairs forums to mirror inter-ministerial groups. I wondered if that was something that could work perhaps around circular economy or other areas where there are frameworks. I don't know if the panelist has got any more thoughts on what that sort of architecture of scrutiny looks like. The other point that is made quite strongly in your submissions is around this potential chilling effect on the development of regulatory innovation and new policies coming forward. I wonder if there is any evidence of that coming through already. There are obviously some policies that are already in train in the Scottish Parliament this week. We have just dealt with single-use plastic regulations that have come to committee for the first time. Is there any sense of where that is stifling policy development at this point? I have in front of me a cutting from The Guardian a couple of weeks ago, which is entitled, Kicking the Can Down the Road, New Delay Likely for Deposit Plan. It tells me that Scottish ministers are accused of giving in to lobbying from retailers and industry. A deposit and return system that would be introduced for good environmental reasons would be vulnerable to challenge for its effect on goods originating in other parts of the United Kingdom under the UK Internal Market Act. That might be an area in which one would look to find empirical evidence for a chilling effect at the UK Internal Market Act on Scottish Regulatory Activity. However, I only have a cutting from The Guardian. The Guardian is not always accurate, so I have no more detail or inside information on that issue than that. I think that it is very difficult for us from the outside to identify a chilling effect because inevitably that implies that things are not coming forward that might otherwise be. Certainly in your constituency of ministers, it would be really good to probe that. I noticed that the First Minister was at last week of the week before and raised some concerns about the changes to minimum unit pricing. Having some sort of constrained effect from the Internal Market Act, minimum unit pricing would be subject to the non-discrimination elements of the act rather than the mutual recognition elements as a point-of-sale issue, but it would still potentially be affected by it. There is quite a lot of uncertainty, it seems to me, about the effect of the act that might in itself be introducing some delays in the policy making process if not putting things into a long-term chill. However, from the outside, it is very difficult for us to identify that. I did want to come in on your previous question around scrutiny. I think that IFG recommendation is a good one in terms of shadowing interim ministerial groups, but potentially it would be an awful lot of work. It is not clear how transparent the interim ministerial forums will be in terms of what they are doing and what types of things they are discussing and how substantive that is. I think that that could aid parliamentary scrutiny to match and shadow that with your colleagues in other legislatures. One thing that might be worth probing a bit more is consent. Consent, as we understand it, in terms of sole obviously has a very clear role for the devolved legislatures, but consent, as it has written into the processes around the internal market act and potentially around common frameworks, does not have a clear parliamentary role. Perhaps doing an inquiry into not just sole consent and legislative consent but consent in general and the role of parliaments in being part of any consenting process that is established by internal market and similar processes in legislation could add value and could ensure that there is a role for parliaments in all of those processes. Professor Hunt wants to come back in. Reflecting on the suggestion that there may be a chilling effect that is applied and has been mentioned already, we do not necessarily know what has not been happening. I was taking a look at the document that Welsh Government and Plaid Cymru have recently issued, which sets out a plan of proposed policy commitments over the next few years from working together. I was looking through that to see whether any of those could potentially be caught by the internal market act. There is a talk of a community food strategy encouraging the production and supply of locally sourced food in Wales. That might be achievable under a public procurement framework. We do not know whether it would survive under that framework or whether it would be subject to the non-discrimination principle. We know that there are various exemptions that are available for non-discrimination, but that is suggestive of falling under potential discrimination. We do not know how that justification is going to be interpreted in terms of a necessary means of meeting a legitimate aim and who is going to be interpreting that justification. If it is having a chilling effect, it is not surprising because of just the degree of uncertainty that is at play throughout this. Just a final question. It is around how we have moved away from EU policy development processes. I have struck with the REACH chemicals regulations how involved different stakeholders were from industry to unions to environmental NGOs. How do you see that shift now? Obviously, we are out of Europe. There is perhaps a different policy development process. Which voices do you think are going to be heard, whether those voices come in, and how should parliaments engage with those stakeholders? I do not think that I have anything well informed to say about that. A lot will depend on the transparency of the processes, the extent to which the opportunities for input are structured. There is no particular reason why the UK would follow the EU's example, although it might choose to do so, but part of things could look very different very quickly. I do not have anything in particular to add. You have lots of experience with stakeholder engagement and the Parliament has a very strong track record in ensuring that it is not just the best-resourced stakeholders that have an opportunity to engage. More of the same. The European Union has a very well-developed, systematic approach to stakeholder engagement, a transparent approach that, in some ways, is a model to be followed and one that perhaps we do not yet see here. I appreciate that. It was just to follow up the question that Mark Ruskell asked, where you mentioned the procurement process potentially being impacted. In the evidence that we have, you have talked about where does regulations affecting the production or sale of goods are subject to market access principles, regulations affecting the use of goods or not? Does that not mean that procurement or planning would not be covered by market access principles? That is not impacting on whether a product is made in a certain way, but how products are used through government systems. Can you destroy a differential that is quite important to have on the record? I just wanted to check that I understood the representations that we have had, if you wanted to comment on that a bit further. We make that distinction within the evidence that we gave, and it is again recognising a distinction in the approach that the UK has taken from the one that the EU law applies. As Stephen reference, the EU has got 70-odd years of experience of working out how these rules operate. Closed categories of determining the sorts of obstacles to trade but it came very clear that a selling arrangement, rules on sale, rules on product regulation did not cover everything and that there were things that fell outside of those, such as product use. The EU regime has evolved to adapt to accommodate that wider range of measures. We do not know, because we have not yet seen the legislation in action, how product use is being defined. If there is an explicit statement to say that it falls outside, then again, that is a difference from the EU regime. There were cases that under EU law, that covered situations where something might be legitimately sold, but that it cannot be lawfully used. It is those sorts of issues that we were addressing in the evidence. How do those play into issues of public procurement? We have a framework there, and we do not yet know what that cut across will be between that framework and the internal market act. It is in relation to the position that we have come from with the internal market act that did not receive consent from the Scottish Parliament. There is a judicial review, which I believe is still ongoing in Wales. How precarious is all of that, depending on the outcome of that court case? We have talked a lot about the interparliamentary forum and the ways of scrutinising, but in effect, my understanding is that we have the power to scrutinise Scottish Government ministers' actions on those areas. As soon as executive power is used in an evolved area, we have no ability to call a UK Government minister to a scrutinising committee of the Parliament. Do you think that the scrutiny and transparency should be formalised, maybe with a change in law regarding those areas? How do you see, because even the interparliamentary forum is not a formal arrangement of the parliaments yet, how could that be firmed up to ensure that there is absolute certainty that the devolved nations can scrutinise on those areas? We know that the judicial review challenge from the Welsh Government will be from the council general. It is being heard in January. In terms of what we might find from that judgment, we have had experience recently of readings from the courts of devolved competence that are, perhaps, quite unexpectedly, narrow. We saw the reach of that, the Westminster Parliament's unqualified power to legislate in the UNCRC reference, for example. We have, again, no crystal ball. I do not necessarily see that action as being something that an awful lot of reliance should be placed on in terms of improving how this act plays out for the devolved legislatures. If the situation arises that there is an executive decision used that bypasses the frameworks and the devolved nations, what advice can you give to us as a scrutinising committee of the Parliament? How do we do that, or do formal arrangements need to be brought in place that would allow us then to scrutinise the UK Government's decisions in those matters? Our system of devolution is one that has not been one that has progressed through formalised, regularised processes that are very little underpinnings of any sort of statutory nature. There is a certain amount of working against the grain in getting those things established, and the question would be what would be the interest in the UK Government of opening those things up to those sorts of formal processes. Whilst absolutely there is every reason why that mechanism for accountability should be sought, I can imagine that there will be barriers along the way to getting that built in. There is already a formal agreement in place whereby you have the entitlement to be informed of the Scottish Government's participation in intergovernmental discussions and agreements, and the executive powers within the legislation would formally require some sort of consultation process to take place at the ministerial level. One option open to you would be to ensure that within that Scottish Government-Scottish Parliament relationship there is a formal process in place for you to have a role to play, whatever that may be. In terms of your responsibilities as a legislature, it is to hold the Scottish Government to account, but that does not prevent you from scrutinising the actions of other Administrations where they have an effect on your responsibilities. I was going to mention earlier that we talked a little bit about the office of the internal market and its function in terms of scrutinising the implementation of the act and of the market access principles, but nobody to my knowledge is tasked with scrutinising the impact of the act on devolution and on regulatory autonomy, and that might be something that you perhaps in collaboration with colleagues and other legislatures, perhaps in collaboration with the academic community might want to take on board as well, because that is also the other important dimension to all of that. Professor Wetherill? That is more helpful than anything that I could say. On that note, I shall bring the session to an end. I thank you all for your attendance this morning and for your submissions to the committee, which were very helpful. That concludes our agenda item, and I will now close the meeting this morning.