Trade Bill

Debate between Lord Davies of Stamford and Lord Lilley

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

[Lord Davies of Stamford (Lab)]

My Lords, the fact that, if the Government have their way, in two months’ time we shall be dragged out of the single market is a tragedy of great proportions which will affect everyone in this country with not the slightest doubt. That is particularly sad and ironic because of the great efforts that were put into the creation of the single market, particularly by this country. There is no question that the major movers were not Lord Cockfield and Margaret Thatcher. What is more, the single market has been an inspiration around the world. As others seek to imitate the achievement and derive the great benefits that we have had, the British Government can think of nothing better than to take us out of the original single market.

This raises many practical problems, as we have seen. We have heard three extraordinarily well-briefed, considered and well-informed speeches on this subject by the noble Lord, Lord Lansley, and by the noble Baronesses, Lady McIntosh and Lady Kramer. The noble Lord spoke particularly about the difficulties which will arise in connection with the definition or redefinition of rules of origin; and the noble Baronesses spoke extremely well about the threats and complexities we shall face because of the rules of the WTO and the possibility that we will suffer considerable perverse costs as a result of leaving the single market. These have never been properly considered in this country by the Government and, therefore, private individuals, trade associations and businesses up and the down the country have also not had enough time or opportunity to consider and reach a conclusion as to what the concrete impact will be in all probability on their own businesses.

That is the point of my intervention. It is not reasonable to ask tens of thousands of businesses which may well be affected by the changes that the Government are trying to enforce on the country in this regard to pick through all the volumes of Hansard in the House of Commons and the House of Lords where these matters have been debated, even supposing—which was not the case on the last occasion we debated this matter—that the Government give informative answers to the questions that have been raised.

My question to the Minister today is: does she propose, or has she already perhaps set in motion, an effort to inform businesses directly about these matters; to set out for the benefit of British business in different sectors the potential threats—or indeed the opportunities, if there are any—from the policies that the Government are pursuing in this area; and to answer definitively the questions that have been raised today about rules of origin, the impact of the WTO non-discrimination rule and principle, which has been set out so well, and any other WTO rules which may have an impact on the trading conditions for British companies which are trading with either the European single market after the end of March this year or with countries which currently have trade agreements with the Union?

In that latter context—my final remark today—can we please have some absolute clarity about what is happening to those countries which currently have free trade agreements with the European Union and where we have the ambition to roll over those free trade agreements? How many countries have accepted in principle to roll over the agreement as it currently exists without any substantive change? How many countries have expressed the willingness in principle to roll over an agreement but are asking for substantive changes?

Most people, I suspect, will ask for a particular concession of interest to them. They will take the opportunity to get something if they can. At the very least, this will result in many months of discussion and negotiation. In some cases, it may require us to make concessions that will be expensive for British industry or business. We need to know exactly where we stand here. I hope the Government themselves know the answers to these questions—I sometimes get the feeling that they do not. If the Minister thinks that that is unfair she has the opportunity this afternoon to make the position absolutely clear to the House and the whole country.

[Lord Lilley (Con)]

My Lords, I congratulate the Minister on introducing this debate and focusing on rules of origin, which is the main complexity that will arise with trading goods. I suggest that this should not be exaggerated. It is the big difference between free trade areas and customs unions but I note that the Swiss, who have a free trade agreement with the EU—not a customs union—do not seem to be too upset about that. They do not seem to be calling for a customs union. They seem to be coping with all the problems that noble Lords have told this House are insurmountable; the Norwegians likewise.

The Canadians have a free trade agreement with America but are not calling for a customs union. Even our Canadian Governor of the Bank of England, when he returns to Canada and joins in the political process there, is not going to call for Canada to have a customs union with the United States to overcome all these supposedly insurmountable difficulties. They are not insurmountable and they are going to get somewhat simpler.

The EU is bringing in the REX system for self-declaration of rules of origin—you will have to do the calculations but you will not have to buy a certificate; you will just declare the origin of the goods. Of course, you will have to get it right; as with any self-declaration, you will be open to investigation and checks if there is any reason to suppose you are cheating, but it will simplify the process greatly.

Can the Minister confirm that we will be able to join the pan-Euro-Med convention on rules of origin if we have a free trade agreement with any member of that convention—for example, Israel? I believe that when you belong to it you can begin to assess diagonally, as they say, the components of your goods when you export among them. If that is open to us, it will ease things as far as we are concerned for a large group of countries.

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[Lord Lilley]

Perhaps the World Customs Organization knows nothing about customs, but we have to reach the judgments that we can, and certainly under the REX system the fees that the noble Baroness referred to will not have to be paid, as I understand it. However, again, I ask the Minister to confirm that.

Finally, the noble Lord, Lord Davies, waxed eloquent about the single market. I take that as personal praise, as I had to introduce the whole single market legislation back in the early 1990s and spoke eloquently about how it was going to boost our trade. How sad we, and he, must be that in the ensuing 25 years our exports to fellow members of the single market have risen by just 18%. It did not have quite the big and wonderful impact that I hoped it would have and which he in retrospect believes occurred. Our trade with the rest of the world rose by 72%, so let us get these things into perspective.

[Lord Davies of Stamford]

The noble Lord is, once again, moving into the dangerous business of making elementary errors in the interpretation of statistics. Quite clearly, where we had a relationship with mature markets, as we did when we joined the single market, we were not going to have the same rate of growth in trade as we had with countries that were still very poor and were maybe just beginning to embark on international trade. A mature economy is not going to have the same rate of growth in trade as a newly emerging economy. It is an absolute falsehood to try to compare the two and draw the conclusions that he has drawn.

[Lord Lilley]

It is always a pleasure to be patronised by the noble Lord, Lord Davies. As someone who passed only parts 1, 2 and 3 of the Institute of Statisticians exams, I suppose that I must give way to him if he passed part 4. I fully know the difference. If he looks, for example, at a group of countries which are at a similar level of development to ours and which trade with the EU single market, he will see that their exports rose significantly more than ours did over that 25-year period. I do not know quite why that is but it is clear that trading within the single market has not had such a big impact on our exports to the rest of the EU as I certainly expected it to have at the time and as he believes in retrospect it has had.

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[Lord Davies of Stamford]

I am sorry to interrupt the noble Lord again, but I will just correct him on this matter. If he looks at the figures, he will see that France and Germany have increased their trade at a much faster rate than we have while being in the single market. The reason is that, sadly—we know that it is a big handicap for us all—productivity in this country has risen much less fast than that of Germany, France and other members of the EU.

[Lord Lilley]

It is quite true that other countries within the single market have increased their exports to each other more than we have—but that is not purely because of differences in productivity. Indeed, our GDP over most of that period has grown rather more rapidly than that of many other members of the single market. I do not know what the factors are but I would not just assume that it is all due to the wonders of the single market that somehow have not yet reached us.