Brexit: Appointment of Joint Committee

Lord Hannay of Chiswick Excerpts

Wednesday 3rd July 2019 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, it is surely rather astonishing that, three years after the 2016 referendum, two years after we began to negotiate our exit, and having twice flirted with withdrawing without a deal, we should need to call for an inquiry into the costs and implications of the course of action that is on the Order Paper—and which I whole- heartedly support. I note that several of those who said that they cannot support it are only doing so because they think that it does not go far enough quickly enough. So there is not much opposition to it. That is right, because one is bound to ask whether the Prime Minister knew, before she asserted with such confidence—and continually repeated—that no deal was better than a bad deal, what the costs and implications were.

Perhaps she did know by last November, when she turned her policy through 180 degrees and started to negotiate on the basis that any deal was better than no deal. Anyway, now we are where we are, and it is right that Parliament and the wider public should be told, through this inquiry, what the costs and implications might be. After all, both aspiring Prime Ministers are prepared to contemplate leaving without a deal, so it is surely time to shine a light on what the consequences will be.

I will focus today on the trade pacts, which is a field in which I have some experience, having been involved in the GATT Article 24 negotiations when we joined the European Communities in 1973. What should we expect? Our trade with the EU is 44% of our exports. There are no surprises there, because last December the Commission stated, as part of the preparations for a no-deal exit that they were undertaking with the 27 member states, that if the withdrawal agreement was not ratified, all relevant EU legislation on imported and exported goods would apply as of the withdrawal date, as would the rules on indirect taxation—value added tax. So there is not much comfort for anyone in this country who exports cars and will face a 10% tariff, for the Shropshire sheep farmer whom Jeremy Hunt apparently met on his peregrinations and who will face a 40% levy, or for exporters of fish and shellfish —the list goes on.

That will apply straightaway on the day we leave. How about the service industries, which make up 80% of our economy, as my noble friend Lady Bull pointed out—legal, insurance, finance, creative industries and so on—which have made so much of their position within the single market? Those benefits that they derived from the single market will simply disappear overnight; they will not be there. Is there any magic wheeze to escape from this trap, as the noble Lord, Lord Lilley, continually suggests to us that there is by waving some magic wand which he seems to have identified in Article 24 of the GATT? There is no chance of that whatever, because in order even to get to first base on that you need the agreement of the European Union—and the European Union will not agree to that, because it involves driving a coach and horses through the most favoured nation provisions of the GATT, which, funnily enough, this country as well as the European Union is desperately trying to save from the depredations of President Trump. The EU will not do it, in particular because, if it went down that road and it did not work, it would lay itself open to massive retaliation by the United States. So do not expect it.

Then there are all those third countries with which we currently enjoy free trade thanks to the trade agreements which the EU has: with Japan, South Korea, Mexico, Turkey and now the countries of Mercosur, among them two of the three largest countries in Latin America. There are also the 50 associate countries in Africa, the Caribbean and the Pacific; we have free trade with them, too. All that will be lost. There is plenty of work there for Dr Fox just to get us back to where we were before we started. So there will be a hefty price to pay in just this one sector to which I have referred—trade policy—and there are plenty of others that noble Lords have gone through in this valuable debate.

We need to know in detail what the costs for our exporters are likely to be. We are told by Dominic Raab, who is no longer in the race to be Prime Minister but who believed, I suppose, that he was worthy of the post, that the first rule of negotiation is to be prepared to walk away. I am not sure where he got that from, because I looked at his CV and there was not a lot of negotiation in it. Perhaps he had been reading Donald Trump’s book, The Art of the Deal—in which case, heaven help him and heaven help us. I would happily debate with him his assertion that you have to be prepared to walk away, because I have been through rather a lot of negotiations into which this country went in good faith with a determination to get a deal and did not suggest that it was prepared to walk away.