European Union: Trading Arrangements

Thursday 30th January 2020 Lords Chamber

Question

11:22

Asked by

[Lord Pearson of Rannoch]

To ask Her Majesty’s Government what plans they have to offer the European Union a new treaty, subject to World Trade Organization jurisdiction, which would continue the United Kingdom’s existing trading arrangements with the European Union.

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, the Prime Minister’s deal set out in the political declaration the framework for a comprehensive and ambitious free trade agreement with the EU. We will of course leave the EU tomorrow, and we will then begin discussions on securing a new relationship.

[Lord Pearson of Rannoch (Non-Afl)]

My Lords, I am grateful to the Minister for that reply, but I would have thought that the Government may need something like this if the going gets rough in the forthcoming trade negotiations. For the record, will the Government confirm their recent Written Answer saying that, if we end up trading on normal WTO terms, EU exporters will pay us some us some £14 billion per annum in new tariffs whereas ours will pay Brussels only some £6 billion —an annual profit to us of some £8 billion per annum? Would this offer not therefore be generous to the EU and, if accepted, get rid of the Irish border problem, the need for much of Operation Yellowhammer and masses of lengthy trade negotiations? Would that not be cheap at the price?

[Lord Callanan]

I thank the noble Lord for his interest in these matters, but the whole point of a free trade agreement is that it is an improvement on WTO terms. The reason that many nations around the world want to adopt them is that people do not want to get into paying tariffs and quotas, which are an impediment to free trade. We are confident, given the agreement and the political declaration, that we can reach an ambitious free trade agreement with the EU before the end of the implementation period, and that is exactly what we will be doing.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I thank the noble Lord, Lord Pearson, who has managed to bring back the noble Lord, Lord Callanan, who had already taken his leave of us last week—well done. I thank him also for his support for continuing the same trading arrangements with the EU as we have now. We agree. The problem is that the Government want to break alignment, and if you break alignment then you cannot have tariff-free, easy trade. Is not the noble Lord, Lord Pearson, right on this one occasion?

[Lord Callanan]

It is of course always a pleasure to be back in front of this House. By my rough calculation, this is my 50th Oral Question in front of your Lordships, who are always extremely inventive in the points they raise. The noble Lord, Lord Pearson, is right that we want to have a free trade arrangement with as little friction as possible. We accept that we are leaving the single market and customs union, we are not going to go for the dynamic alignment that the Labour Party is urging on us, and within those constraints we want an ambitious arrangement with as few frictions on trade as possible.

[Baroness Ludford (LD)]

My Lords, will the Minister provide the noble Lord, Lord Pearson of Rannoch, who thinks that the UK can keep existing trade arrangements with the EU, with a list of clubs—gentlemen’s, sporting, golf, dining or whatever—that allow people to resign and stop paying the subscription fee but still enjoy all the benefits and advantages of membership?

[Lord Callanan]

I will leave the noble Baroness to have her own conversation with the noble Lord, Lord Pearson, about the benefits or otherwise of various clubs that the two of them might wish to be part of.

[Baroness Ludford]

Not the same one.

[Lord Cormack (Con)]

Can my noble friend think of a club which the two might wish to be part of?

[Lord Callanan]

I thank the noble Lord for his question. I suspect that the answer is that they are both part of one of the most exclusive and enjoyable clubs in the whole of London, in this House.

[Lord Pannick (CB)]

There will need to be a disputes resolution body to resolve disagreements between the EU and the United Kingdom. The Government’s position, which I understand, is that it cannot be the European Court of Justice, but what body is going to perform this task?

[Lord Callanan]

I thank the noble Lord for the close interest he takes in dispute resolution. Perhaps he should be declaring an interest, with his long experience of both litigating for, and resolving disputes with, Her Majesty’s Government. Of course, he raises an important point. He is right that it cannot be the European Court of Justice, and we will want to discuss with our European partners a proper, independent arbitration process for any disputes that arise, although we hope that none will.

[Lord Wallace of Saltaire (LD)]

My Lords, at the time of the referendum, Boris Johnson, now our Prime Minister, assured voters that frictionless trade would continue. That has now been completely forgotten, and he has said recently that we have to accept that there will be barriers to trade as part of what we have to get used to. Is the Minister’s commitment on dynamic alignment the same sort of possibly short-term commitment as that which Boris Johnson made three years ago?

[Lord Callanan]

No, our commitment is that we will not be entering into a process of dynamic alignment; we think that decisions on future laws governing this country should be made in this Parliament, and we will not be subcontracting that job to the European Union.

[Lord Newby (LD)]

My Lords, I understand the Government’s position on dynamic alignment, but have they made an assessment of the cost to exporters of the additional controls and checks that will be required once we are no longer committed to such dynamic alignment?

[Lord Callanan]

We have not concluded the future relationship yet, so we do not know what impediments or otherwise there will be to free trade. Our aim and ambition is to make sure that there are as few impediments as possible. We want unfettered access to EU markets, as indeed the EU will want access to our markets—that is the whole point of having the discussions. We will be seeking to secure an agreement without any tariffs or quotas and with as ambitious a relationship as possible, and I hope we will have the support of the Liberal Democrats in doing that.