Trade Bill

Debate between Baroness Kramer and Baroness Hooper

Committee: 3rd sitting (Hansard - continued): House of Lords
Wednesday 30th January 2019 Lords Chamber

[Baroness Kramer]

I assure the noble Viscount that from the perspective of the dollar, far more of the transactions clear through New York. It is a bigger market. I know we often say that we are the largest, but if we look at the table comparisons, New York is frankly bigger. Certainly, dollar dominance is exercised through New York. The yen is less of a controversial player, and there are not a lot of renminbi. If anybody thinks that China is going to allow its currency to develop a real global presence and not be regulated, monitored and supervised by the Chinese state, they have missed any understanding of how China works. We are convenient but temporary, and we need to recognise that.

People talk about the growing market, but essentially the global markets function in the dollar, the euro and—in the future—the renminbi. They will not function in small African or South American currencies. Those are not players; they are minor currencies. Sterling is treated by the industry as a minor currency. There are two, and there will be three, major currencies that essentially underpin global activity. At the moment one is dominated by New York and the other by London—and the one dominated by London is the euro.

What worries me is that the think tanks that have been going through this process have an underlying conceit and arrogance, and imagine that somehow we are fundamentally and in the long-term superior, that no one else will have the capabilities that we have, and that in the end, Europe needs us more than we need Europe. But Europe works on a five to 10-year strategy to gradually bring back choice pieces of that industry—and we can see it.

I have a real question for the Minister in all this. The right-wing think tank came up with a solution called “mutual recognition”, which basically required the European Union to change how it made regulation and to change its legal framework completely. The think tank thought that was entirely reasonable. It was irrational, and has been abandoned. The Government have finally recognised that it was complete nonsense. There is now an idea that third-country equivalence could be the mechanism that will apply. However, we all know that third-country equivalence can be cancelled for no reason at 29 days’ notice. That is a very unstable way to provide access for a key industry.

Various attempts have been made, but little thought, effort, discussion or energy has gone into trying to find solutions. I am exceedingly worried about that. Looking at that global sector that I talked about, as I understand it, the European Union has provided an equivalence ruling for the London Clearing House for 12 months only. I am sure that it will extend the ruling beyond that—but it is a message. I understand that, as of this moment, no equivalence has been put in place for the London Stock Exchange. Again, that may come, and it may come very much at the last minute. But there is a deep message in all this. I make a real plea to the Government to take our amendment seriously and to recognise that they will have to get totally engaged and make some real compromises—I suspect around their own red lines. If they do not, they will be making absolutely sure that, over five to 10 years, significant parts of the industry will be sucked back into very capable hands in Frankfurt, Paris and Amsterdam.

This is not an instant crisis, although there may be some areas of instant crisis. But it is an area where the Government need to move now, and not lock themselves into a position from which they will see this industry, not perhaps disappear altogether, but lose its global leadership, when they could, with more intelligence and flexibility, have provided some degree of protection.

[Baroness Hooper (Con)]

My Lords, I apologise for being tail-end Charlie in this discussion—at least, I hope I am. I agree that this is a very important group of amendments. I shall concentrate particularly on Amendment 39 because that is the overarching amendment giving mutual recognition of qualifications, which has been so important for frictionless commercial activities and relationships throughout our membership of the European Union. I trust and hope that the mutual recognition and—dare I say it?—harmonisation to some extent of professional qualifications will be able to continue, to give the continuity to which my noble friend Lord Lansley referred, but also, for example, in the field of education, where university qualifications and degrees have been based on mutual recognition of qualifications and the ability to work in professional fields in more than one country.

My own interest in this is that as a solicitor I went to work in Paris in 1973, a year after we joined the European Community. Although I did not need a carte de travail—a work permit—at that stage, I still needed a carte de séjour, but that was progress. There have always been particular difficulties for the legal profession simply because of the difference between the common-law system and the civil law system. That has led to a different approach to our understanding of what we have been trying to do within the European Community throughout our membership.

I may not be up to speed on all the detail. There may have been discussions, and possibly solutions, about continuing the recognition of professional qualifications, but I am not aware of them. I am surprised that the Law Society, for example, has not provided any briefing in this respect—at least not to me. Still, I would like to hear what the Minister has to say about this. At the next stage of the Bill I would hope that we could be given more certainty about what may happen in future. I am curtailing my remarks because it is a late hour, but I feel that this would be so important, not only to British and Scottish lawyers—I look to my noble friend Lady McIntosh in this respect—but to all the European Union lawyers who have set up offices and are operating in London and other parts of the country, making our commercial activities ever more possible.

Perhaps, as a sort of PS, I might refer to Amendment 48 and the tripartite agreement. I am not sure how this applies to polo ponies. As your Lordships will know, I take a great interest in Latin America and Argentina. Polo ponies are not only from South America and the UK; they have passage rights within the EU. I do not think the tripartite agreement itself applies to polo ponies but I hope that any consideration of this element of the debate could include that important aspect.

Trade Bill

Debate between Baroness Kramer and Baroness Hooper

Monday 21st January 2019 Lords Chamber

[Baroness Kramer (LD)]

My Lords, I want to raise what probably feels like a niche issue from a slightly different angle; it seems relevant when we are talking about amendments dealing with the regulation of performance and the environment. If I may, I will do so through an example, although I think that the example probably applies in many other areas.

When I was a Minister at the Department for Transport, I dealt briefly with a niche industry in the UK: specialist car manufacturers, sometimes known as small and ultra-small volume manufacturers. Noble Lords will know their names: Lotus, Williams, Aston Martin and so on. The industry is almost uniquely British; a few Italians may play in the same arena, but globally the industry is essentially British. It has managed to thrive because the EU has recognised the significance of the industry through its turnover of around £3.5 billion per year. That is not insignificant, although it is not on the same scale as agriculture.

The EU has been willing to carve out special provisions for this group of manufacturers, which often cannot meet performance and environmental standards in the way that mass automobile manufacturers can and should. It has managed to open up global markets for those cars by incorporating those niche provisions in its trade agreements: 65% of these cars are exported. The largest market is the United States, where environmental and performance standards are never really an issue; it starts from a very low base. The manufacturers get permission to sell these cars in the EU, which is the next-biggest market, followed by South Korea and Japan. It is only because of the EU’s size that it has been able to create those niche opportunities for this industry. I am interested to know whether the UK believes that it can continue, in its rollover arrangements, to provide that ongoing protection to what one might describe as a somewhat resented industry, even though it is rather successful.

The other achievement of the EU because of its power, breadth and size is its vigorous and strict standards for mass-market cars, despite its significant exception to deal with this essentially British industry. The EU will have no interest in continuing that arrangement post Brexit; as I said, some cars are made in Italy, but no Government anywhere else in the EU will be concerned about this issue. The industry is already very concerned that, following no deal, it may find the EU quick to eliminate the carve-out. That is possible and it is a serious question, but another question concerns whether the carve-out can be preserved in these rollovers and continued in future arrangements when the UK will be negotiating from a much weaker position.

Can the Minister help us work our way through this? I suspect that this industry is not the only niche one. As the Minister will know, the EU has been very good about providing opportunities for highly specialist and select industries that are specific to one of its member countries. I suspect that my experience with the automotive sector is repeated elsewhere. The EU uses its large heft to protect the relatively small. Can the Minister give us some clarity, since these deals are being negotiated as we speak?

[Baroness Hooper (Con)]

My Lords, I fully accept the Government’s assurances in relation to this group of amendments that there is absolutely no intention to lower standards and that the existing protections for consumers will be preserved. However, as has been shown in the discussions so far, there is a cause for concern. While the British Government intend to roll over the agreements without making any change, there is some uncertainty about whether the other parties with which we will be negotiating have the same point of view. The issues have been discussed sufficiently for me not to repeat what has been said, but I suggest that there are a couple of safeguards which have not been mentioned.

The global demand for British goods is based on our high standards. People buy British goods not because they are cheap but because of their high quality. Therefore, to disregard food standards would undermine any possibilities in that area. I understand that the EU withdrawal Act ensures that all existing EU environmental law will continue to operate in UK law. That again provides businesses and stakeholders with certainty.