Brexit: UK-EU Relationship

Earl of Caithness Excerpts

Thursday 1st December 2016 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, I was fortunate, when a Minister in the Home Office, to benefit from the clear thought and wise words of the noble Lord, Lord Ricketts, who was my right-hand man for much of my work. Today, your Lordships have benefited from those same clear thoughts and wise words. I was delighted to hear from the noble Lord—he is not my noble friend, but he is my friend—and we welcome him here.

Much has been said about the involvement of Parliament in the whole of this process. This is the 15th debate on the EU since we had the referendum result. It rather reminds me of the Maastricht treaty debates. This country spent three times as long debating Maastricht as any other country in the EU. I hope that we will allow our Ministers to get on with their jobs at their desks and get us the best deal, rather than constantly bringing them to Parliament.

The four freedoms of Europe have been mentioned. Of course it is right that our friends in Europe have been promoting the idea of freedom of movement as being absolutely sacrosanct, but I hope my noble friend will remind them that they did not think that the free movement of capital and services were equally sacrosanct, as my noble friend Lord Howell said. They dragged their feet and prevaricated, however much we tried to push them. It has been a long and painful process to bring the EU forward on that front.

I am an inherent free trader. Some have said that when we leave the EU, we will be the beacon of free trade for the world. I am not so sure about that. Bilateral trade does not equal free trade. I would like it to, but it does not. Let us look at what is happening in the USA. President Obama is a protectionist. He raised tariffs with China. Mr Trump is going to take that further. Some in the press today say that that will be good because we can do a bilateral deal with the USA more quickly. The USA is protectionist and, as the noble Baroness, Lady Royall, said, we will never get a better deal with the EU than the one we have at the moment. That is a sadness for those of us who believe in free trade. We will all be the poorer for future President Trump ripping up the TPP. It affects us as well: without free trade we will be poorer throughout the world.

I echo what the noble Baroness, Lady Valentine, said about the importance of London. It is incumbent on us all to stress to our European friends that London is the financial centre of Europe—not just the EU, but the whole of Europe. Indeed, in some respects—look at the London Metal Exchange—it is the financial centre of the world. It is hugely important that that continues for the trade of metals throughout the world.

I ask my noble friend the same question that I have asked before. Is she confident that we have the right quality of negotiators? We have not negotiated a free trade deal for more than 40 years. What is she doing to bring in expertise from the private sector and, indeed, perhaps to use the experience of the noble Lord, Lord Ricketts? It would be helpful to know.

I would like to question just one point made by the noble Lord, Lord Liddle, in his Motion. He refers to the EU; I am not certain that we can look at the EU as a single entity anymore. I can see quite massive changes in the EU. Let us just take the example of Ireland—we are going to have a different relationship with Ireland than with the rest of the EU.

So my closing words to my noble friend are: let us be innovative and let us be flexible. I hope that the Government will take that approach, because that is what will get us the best deal with all the other countries.

Brexit: Case for a Second Referendum

Earl of Caithness Excerpts

Thursday 7th July 2016 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, I totally respect the right of the noble Baroness to table this debate. That said, it was a topical question when she tabled it but it is no longer topical. We have just spent two long days debating the subject that she has raised, and I do not think it does the House any good if we repeat much of what was said then. The noble Baroness never mentioned the fact that we had had that two-day debate. My noble friend Lady Anelay made the Government’s position totally clear at about 10 pm last night, and it is at col. 2109 of Hansard. There is nothing that she could add to or subtract from that statement; it is perfectly clear.

Say what one will about the campaign—we can howl about the lack of information, protest at the lies told and bemoan the unprincipled behaviour of some politicians—but there will be no second referendum under this Government. I have been active in both recent referendums. They have both been divisive, destructive and distracting. I do not want to go through a third.

When would it be held? Not now; the noble Baroness has said it would be once we had negotiated our position. We might have a position but the negotiations will take many years. In any case, we have only two years from the service of the Article 50 notice to when we could be unilaterally thrown out of the EU on our ear without any further debate.

I have no doubt that the happy alliance of those in this country who feel most isolated and resentful, together with some of those in the Conservative Party, will not last very long. They have totally different objectives; indeed, the noble Baroness has already told us that that is happening. The only way we can have a second bite at this cherry is to have a political party whose main aim in its manifesto commitment is not to break with the EU, and to test that at a general election.

Trade and Investment

Earl of Caithness Excerpts

Monday 15th June 2015 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, it is a great pleasure to welcome my noble friend Lord Maude of Horsham and congratulate him on that fine maiden speech. It is also a pleasure to have another member of the former Paymaster-Generals club in this House. We are a small band, but I am glad that we are all here.

In the past five years, the coalition did well, but this Government need to do better and have the opportunity to do so. I welcomed the overseas business network initiative launched by the Prime Minister late in 2012. Will my noble friend tell the House what progress there has been towards doubling UK annual exports and increasing the number of UK exporters, and if and when the Government are going to implement some or all of the Cole commission report, which is an important step in the subject we are discussing?

Our Government can do only a little to support trade and investment by themselves. The rest is setting the scene. The noble Lord, Lord Davies, mentioned infrastructure. When the Government have set the scene, it is up to businesses themselves and, importantly, other countries in the rest of the world and their attitudes.

My noble friend covered trade with the rest of the world fairly extensively. I want to focus on trade with the EU, which accounts for about half our trade. We are part of a market of some 500 million consumers. Peace and stability is fundamental to trade, and there is no doubt that the EU has helped to keep Europe pretty well free of war for nearly 60 years, in marked contrast to the previous 60. The peace that we take for granted is not something that our parents or grandparents or earlier generations could. As for stability, I, too, would say how concerned I am about the referendum last year in Scotland and the upcoming referendum on the EU. That is destabilising—it is bad for trade and for investment.

Having said that, I think that we are incredibly lucky, but not everything is rosy in the garden. In the negotiations that the Prime Minister is carrying out with other countries, it seems that the red line for them is the free movement of people. That was one of the objectives of the treaty of Rome and the EU treaty. Another objective was to create an internal market where competition is free and undistorted. If we want to play the game of red lines, that should be a red line for us. Of course, we will not in our lifetime see an internal market in Europe like the US, with its smaller population and lack of language problems compared with the EU. However, we have been badly let down by protectionism by other member states and by a weak Commission. Add that to the limited growth worldwide, and these are strong headwinds for any Government to overcome.

Although the internal market has increased trade with the EU by about 15% per annum over 10 years, there is still a transposition deficit of single market legislation at national level by member states. What is the current percentage of legislation not implemented, and what action is being taken against those recalcitrant states? As an example, I give the second Single Market Act. By the end of 2013, the Council was supposed to have adopted legislation on all items, but I understand that today five of those 12 key items have not been implemented.

There are four key markets in the EU that can be improved to help trade, investment and growth. I would class them as services, capital, digital and energy. The single market is one of the EU’s best achievements; it goes beyond a free trade agreement and reduces those pernicious non-tariff barriers, such as different regulatory regimes. It has been remarkably resilient through the financial crisis, but it is far from complete. We need to close the productivity gap with the US, which continues to grow faster than us, thanks mostly to the development and take-up of information and communication technology. Some member states, such as Slovakia and Slovenia, have cut a number of barriers, but the likes of France, Germany, Italy and Austria retain highly protected service industries. Yet services make up the great majority of economic activity in most developed countries. The original services directive provoked hostility, so does my noble friend agree that a more cautious step-by-step approach, although irritatingly slow, is likely to produce better results in the long term? What is the Government’s view on increasing mutual recognition in tourism, business services, construction and retail? In particular, what progress is being made on those fronts?

I turn to the capital markets union, where progress is starting, thanks to my noble friend Lord Hill, as EU Commissioner. I hope that we will debate in the near future the report of the EU Economic and Financial Affairs Sub-Committee on the proposed CMU. I will reserve my remarks for that debate and turn to the digital market, another area in which the Commission is overanxious and muddled. New technology increases income when it raises productivity, something that the EU is pretty bad at. It is not about creating a rival to those big American beasts. It is also not about creating jobs per se. The combined workforce of Facebook, Google, Amazon and Apple, excluding the supply chain, is considerably less than that of German companies already operating in the UK.

The EU must embrace this opportunity to provide growth, and one way to do that is the direct responsibility of government: changing the tax rules. Does the Minister agree that it would be hugely beneficial if corporate tax and VAT were to be payable in proportion to companies’ revenues in that country? How much longer can we allow Luxembourg and Ireland to be free riders on consumer demand in other member states? Bringing down barriers within Europe could contribute in excess of €400 billion to Europe’s GDP.

The EU’s aim must be to put more emphasis on growth at the heart of its long-term plan. To achieve that, it needs to open up its markets more fully so that the more productive firms in one country can move into another and take market share. Mutual recognition is a key ingredient of that policy. In that way, the 28 countries that currently form the aged and increasingly geriatric aunt of the world, the EU, will rejuvenate themselves, and trade, investment and growth will flow naturally from that.

EU and Russia (EUC Report)

Earl of Caithness Excerpts

Tuesday 24th March 2015 Lords Chamber

[The Earl of Caithness (Con)]

My Lords, I thank my noble friend Lord Tugendhat and his committee for the excellent work that they have done in producing the report. I congratulate my noble friend Lord Oxford and Asquith on his excellent maiden speech. I say that because the noble Lord, Lord Kerr, who is sadly not now in his place, welcomed him as a fellow member of the Diplomatic Service. I welcome him as another example of the goodness of the hereditary system and the by-election system in bringing people into this House who can make a contribution who might not otherwise be taking part in national politics.

There are a number of examples of larger countries breaking rules with impunity. We have seen it in the EU itself, with France and Germany making agreements and then breaking them. Some people point the figure at China. Now we have Russia breaking an international agreement. Whatever one thinks of Mr Putin and his actions, I believe that we might have reason to be grateful to him. I say that because he has made us wake up. He has certainly shaken up the former Soviet Union states—some of which are now in the EU, some of which are not—which were perhaps a bit starry eyed about what the West could offer and how much benefit there could be from the West. It has certainly shaken up the West. By the West, I mean the EU and the US. It is one of the sadnesses that this report is inevitably more EU based than internationally based, because the EU policy towards Russia will have to take account of what the US is doing.

I ask my noble friend on the Front Bench what she expects the EU’s reaction to be to the US supplying arms to Kiev. Will there be a united response, or will an American action divide the EU rather than a Russian action?

The report rightly highlights some of the failures of the West and shows as a result what a tricky negotiating partner the EU can be at times. It is striking at paragraph 235 how shocked Mr Putin was that for once the EU was unified and had a strong sense of purpose. The noble Lord, Lord Owen, mentioned the understandings that the US had with Russia, which seem to be broken with fairly good impunity on its side.

My noble friend Lord Jopling said that he hoped that NATO would have full European support, but that is a big if. Can there be full European support? This takes me back to the point that we might be grateful to Mr Putin, because we now have a better chance than there has been to date of having a long-lasting European response to the Russian problem.

When I talked to people in the Czech Republic, particularly the older generation, I was struck by what a generation gap there seems to be. These people were born under the Soviet regime—the noble Lord, Lord Soley, mentioned what a transformation they have had—and they are finding it extremely difficult to adjust to western European standards, which the young seem to pick up fairly quickly. There was certainly a hankering to go back to a more structured, family-orientated way of life that existed in the Soviet Union, much though they disliked the oppression at the time. Mr Putin’s actions have made that older generation think that they were perhaps being slightly misty-eyed about what had happened in the past and that the reality, whatever difficulties that generation gap produces, is a better alternative.

I was also struck by the fact that the Lithuanians who gave evidence to us in Sub-Committee A did not want to talk about the single currency but about defence, because they saw the euro as part of defence. The remark that particularly struck me was that the Russians could attack them much more easily if they had their own currency, but now that they were part of Europe they saw its currency as part of their defence policy and were much more resilient to any difficulties that Russia might cause.

I want to ask my noble friend about what I read at the end of last week that really thrilled me: that we were going back to one of Mrs Thatcher’s old policies—giving help to the former Soviet states for good governance. This was a hugely important part of the Foreign Office brief then. If we are to give £20 million a year to the former Soviet countries for good governance and improving their way of life, I hope that my noble friend will be able to tell us more about it.

We must be under no illusion as to what the Government in Russia are up to. I stress again, as some noble Lords have done, that we need to separate out this Government from Russia itself. We are not criticising Russia, because there have been different Governments. We heard before this debate started that Russia is now exploring selling ships to the Argentinians, who are going to call those ships the Malvinas-class destroyers. That is another way of getting at the unity of the EU and separating parts of the West from itself. I hope that as a result of all the damage, horrors and evils that have happened over the last couple of years, we will emerge with a stronger, more united EU and a more sensible regard for some of the sensitivities of Russia and treat it as a more equal partner than in previous years.