Brexit: Preparations and Negotiations

Lord Farmer Excerpts

Monday 23rd July 2018 Lords Chamber

[Lord Farmer (Con)]

My Lords, I thank the noble Lord, Lord Bew, for his very interesting clarification of the Irish issue.

I think we can all agree that Brexit has been divisive. However, after much internal debate we have produced our trading position, which has gone a long way to meet the EU’s demands and which has brought people on opposing sides together in what I might describe as mutual disappointment. As a trader, I have to say that this tends to be the hallmark of a deal that is beneficial to both parties. That said, we have in our negotiations continually made concessions and moved a long way from where we started. Instead of Lancaster House or Mansion House, we now have Bleak House. Now we must say, “This is our set of terms. Take it or leave it, and, as the Prime Minister has hinted, with nothing else negotiated away. If you leave it, we will withdraw it from the table”.

This is le crunch. We cannot allow the EU to revert to past practice and whittle away at the Chequers position. As a trader I have been in many negotiations that have seemed terribly important for my company, but one always needs to evaluate the worst-case scenario, that the negotiations come to nothing—in this case not no deal but World Trade Organization terms, where there is in reality little to fear and much to feel adventurous about. We should not rubbish such terms—they are foundational to all international trade. The WTO is a rules-based body that enables the EU to trade; it is of course a member. Can the Minister confirm that novation would allow us to continue to trade with countries that currently have a deal with the EU?

I sense an almost morbid fear of the tariffs to which we might be subject under WTO. I have two points to make on that. First, tariffs under WTO terms tend to be small, not punitive, and the “tariff advantage” of membership of the EU in the context of WTO had declined to about 1% on average by 2011. We would not be paying very much more, although one market where the EU hits importers is that of motor cars, with the imposition of a much higher 9.8% tariff. The EU needs carefully to consider the consequences if we were to reciprocate, and that leads on to my second point.

According to the ONS, we have a £94.6 billion trade deficit with the EU and specifically a £10.5 billion deficit on motor cars, so our Government could collect a healthy level of revenue on tariffs, and EU states must be aware of that. Moreover, last week my noble friend Lady Fairhead announced consultations on free trade agreements with the United States, Australia and New Zealand—some of our closest strategic allies—as well as with members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which includes some of the world’s fastest-growing economies.

Negotiations conducted by the EU to date have been filtered through a political and ideological lens. The priority has been to humiliate and intimidate us, and to make it so incredibly punitive to leave the EU that no country acting in its citizens’ best interest would act on any nascent pressure to do it. It was the EU’s inflexibility and the unappetising morsel that was all David Cameron could get out of it that made the referendum inevitable. The time will come when the EU’s countries and industries will be negotiating instead from a position of self-interest. German car manufacturers will not abandon their biggest export market—the UK.

By cutting ourselves loose from an oppressive and dictatorial relationship with a superstate that has sought to retain us by fear, we will regain our sovereignty and fall back on ourselves and on the ingenuity, acumen and audacity that have enabled us as a trading nation to thrive in the past without the clunking fist of excessive regulation. On that subject, it should be noted that EU diktat did not prevent the disgraceful and deceitful German “dieselgate”.

We here are all lawmakers and we should be aware that creeping European federalism will eventually hollow out our jobs—and this Parliament—of all meaningful power. Many, through a Stockholm-syndrome-like process of insinuation, have already been made willing captives of a fundamentally undemocratic system. The important issue of the democratic deficit of the EU was discussed extensively before the referendum, so all I will say on that front is that I have never met anyone, except the very occasional politics junkie, who knows the name of our Commissioner in Europe, what his portfolio is, what the European Council of Ministers does and how much power the European Parliament has, et cetera. To quote one person after the referendum campaign, I like to be able to look into the eyes of the people who make my laws. The European Union’s Kafkaesque operation makes that virtually impossible.

Guidance has been published by the EU for member states on preparing for the fallout from a so-called no-deal scenario. However, those responsible for any damage due to their ideologically inspired stonewalling —Juncker, Barnier, Selmayr et al—are completely untouchable. The rest of the EU should be deeply concerned that appointed Commissioners and negotiators, unaccountable to any electorate, cannot be voted out for failing to get a deal. It is democratically elected Governments, including our own, who will ultimately take the hit at the ballot box for the disruption they say will be caused.

To reiterate, with regard to our trading position, I did not expect or welcome the Chequers plan, but I do not want to fight the last war. Some 17.4 million people said they wanted to leave the European Union and this barely achieves that, but what matters now is that, in taking the plan to Monsieur Barnier, our negotiators need to be keenly aware of the democratic pressure that the referendum result represents. Will the Minister confirm that our side will look into Monsieur Barnier’s eyes and say, “This is our backstop position, not our starting point. This is where we have come in response to your continuous demands. If you don’t accept this, we will take it, and the divorce payment, off the table. You need to understand that”?