European Union: Negotiations (European Union Committee Report)

Debate between Baroness Falkner of Margravine and Lord Whitty

Monday 16th March 2020 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank the noble Earl, Lord Kinnoull, and his committee for producing this report. It is very timely and clear. I will be supporting my noble friend Lady Hayter’s amendment and I thank her for tabling it. I will say something towards the end of my remarks about the whole issue of accountability.

I also thank the noble Lord, Lord Kerr, even though he has largely pre-empted some of my more important points. Like him—and the committee, rather more delicately—I regret that there has been a departure from the spirit of the political declaration. There has been a bit of a departure by the EU, one has to say, but a very substantial departure by the British Government from a political declaration that was, after all, signed by this Prime Minister. That is serious enough but, as the noble Lord, Lord Kerr, has just said, even more serious is the apparent departure from what is already in a signed treaty in relation to Northern Ireland and the protocol in the withdrawal agreement.

My main remarks will be about trade, which is, after all, the most important dimension of our joint relationship, although it is not the only one. I had to look back; it was as long ago as December 2016 when the committee I was then chairing jointly produced for the then EU Committee a document entitled Brexit: The Options for Trade. I had another look at it over the weekend. We were very prescient and far-sighted in the options we looked for. We accepted that Britain would be outside the EU and that we would leave in formal terms the customs union and the single market. I remember saying several times in this House and elsewhere that, in that situation, frictionless trade is a relative term; you have to look at the different implications of the different arrangements.

We looked at a number of arrangements, ranging from membership of the EEA through to trading under WTO rules. It seems to me that all those outcomes might still conceivably be the case. We are no further ahead. In effect, in the latest Council decision, the 441-page treaty which the noble Earl, Lord Kinnoull, has clearly read—he might send me one of his four copies, even if it is in French—the EU clearly goes for the option of something very like an association agreement. In fact, in treaty terms, it will be under Article 217 relating to association agreements.

The British option, as far as one can interpret it, is much closer to the arrangements with Switzerland, as the noble Lord, Lord Kerr, has said. They are looking for a trade agreement but also a whole suite of other agreements. That was an option that we looked at but largely dismissed. It could still be a form of free trade agreement, similar to that agreed with Canada or Japan, or to what the Government used to talk about—Canada-plus-plus-plus. That has been relegated to just one “plus” in recent ministerial announcements, but all those options are still there, as is the bare-bones agreement of limited clauses and effect that was once referred to by David Davis; or it could be on WTO terms, as I say, which is now known as Australia. They are all still available, although the one that we identified at the time as the easiest and least disruptive course to take—namely, to join on EEA terms: the Norway option—although we did not actually advocate it, has been clearly rejected by the Government and, in effect, by the EU. So there are still a lot of potential outcomes between now and the end of December.

It is three and a half years after our report, after two general elections, two Prime Ministers, three Governments and four Secretaries of State. Until very recently, the only continuous presence was that of the noble Lord, Lord Callanan, on the Front Bench opposite—I am pleased to welcome the noble Lord, Lord True, in his stead. There have been many changes in the British political situation since we produced that trade report. However, there has been no serious progress regarding relations on this key issue between ourselves and our largest and closest trading partner.

Do the Government mean what they say about wanting a Swiss-type suite of separate agreements with separate Governments? That has caused many ructions between the EU and Switzerland, and it is a relatively small part of EU trade compared with the EU’s trade with the UK. I am not sure why we need that suite. In the British government documents and the other pronouncements there is, for example, a reference to a bilateral aviation agreement. I hope we have one, otherwise aviation range will fall on 1 January. There was a reference in the timetable for the trade talks—before the virus slowed them down a bit—to talking about a separate aviation safety agreement and a general aviation agreement. I have a Question set down for later in the week about the European Aviation Safety Agency. The situation there, as both the airlines and the aerospace manufacturing industry recognise, is that if we are not careful and do not continue to act very closely with EASA, the airlines will be faced with a situation where their aircraft, their components, and the qualifications of their personnel may be legal at one end of a short European hop but queried at the other end. If we want to diverge, there are consequences. If we do not want to diverge, why do we not say so and reach some sort of association agreement with EASA?

The same applies to many of the other EU agencies, which, during the course of several different withdrawal Bills, I raised in the House. Mrs May, when she was Prime Minister, recognised that there would need to be some separate arrangement on aviation, as she did on chemicals. We had a Question today from the noble Lord, Lord Fox, and the Government were not at all clear on what arrangements would be made for that vital industry. Environmentalists and the industry itself are deeply concerned about the capability of the HSE and air authorities to reproduce the arrangements in the European Chemicals Agency. Indeed, even if we manage to duplicate those arrangements, it is a double administrative cost and charge, and a potential delay for our chemicals-based sector and the industries that use chemicals.

If we are going to have separate agreements on separate areas that are covered by such things as the aviation or chemicals agencies, now we ought to be particularly concerned about the medicines agency, which was of course based here and has already left—and there are many others, for example on food safety. If we are to have a separate agreement on fisheries, the EU will insist that that is reached before we reach a general agreement. Indeed, because of the timing of this, the Government seem to be going along with the view that we can reach a fisheries agreement by June. I think that is unlikely. It is equally unlikely that we will reach a financial services agreement by July. The noble Lord, Lord Kerr, and my noble friend Lord Hain spelled out the ambiguities in meaning of the Northern Ireland protocol and whether we can reach mutual understanding on that in time for this to be all agreed, broadly speaking, by September, and ratified through the European Union and ourselves by December. It is about time for the Government to recognise that, leaving aside the current serious difficulties because of the coronavirus, the timetable they set themselves was never achievable and is certainly not achievable now.

Other issues, such as the level playing field—where we started from the position in Mrs May’s Chequers proposition that we were talking about a common rulebook but ended up with the Government making a virtue of maximum divergence—and state aid, also need to be resolved. There is certainly deep anxiety among our former partners in Europe that there will be heavy state intervention to support competitors against their own industries. Not that long ago, during the election, it was regarded as a very leftist position to look to subsidise British industry—people were worried about Jeremy Corbyn breaching the state aid rules in that regard—but now, with this big-state Toryism, the Government in Brussels and Governments throughout the continent are worried about this Government causing unfair competition. These issues are not easy to resolve and are unlikely to be resolved in the timetable currently announced—but they need to be resolved.

My last point is on accountability to Parliament, which is the main point of my noble friend’s amendment. I understand what the noble Baroness, Lady Noakes, said about the political situation having changed but, like the noble Baroness, Lady Falkner, we are not asking for the exact equivalent of the European Parliament. We are simply asking that both Houses of Parliament are kept informed on the progress of these negotiations and can comment on them.

The strange thing is that, in discussing the potential trade treaty with the United States, the Government have, in effect, given that guarantee, at least to the House of Commons. When we talk about a prospective treaty with the United States, they are prepared to be accountable to Parliament; when we talk about a trade agreement with our largest and closest neighbour, they are not. That needs to be addressed; Parliament needs to assert itself in that process. I support my noble friend’s amendment.

[Baroness Falkner of Margravine]

Does the noble Lord agree that there are many routes for Parliament to carry out that scrutiny? One route could be a Joint Committee of both Houses or a dedicated Select Committee—possibly even an extension of the European Union Select Committee. It does not have to be a replication of the European Parliament’s powers but can be something where scrutiny is undertaken adequately.

[Lord Whitty]

I thank the noble Baroness. I agree. We need the principle of scrutiny; the form of it we can debate. We can debate the correct structure within our two Houses but, without the principle being conceded by the Government, we are in an anomalous situation in relation to Europe and to what has been promised on this side of the pond in potential trade negotiations with the United States.