Brexit: Parliamentary Approval of the Outcome of Negotiations with the European Union

Debate between Lord Hannay of Chiswick and Baroness Neville-Rolfe

Monday 28th January 2019 Lords Chamber

[Baroness Neville-Rolfe (Con)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Whitty. We sit together on the EU Committee and often agree, especially on matters of history and technical reality, if perhaps not today on his latest idea.

I spoke on 9 January about the need to improve the withdrawal agreement. On the assumption that such an improvement would be negotiated, I also talked of the opportunities that we can garner post Brexit. Today I return to the former theme and will also say something about how we should conduct ourselves in the unlikely event that, for whatever reason, improvement proves impossible and we need to proceed with no deal.

The other place, as has been said, voted decisively against the present withdrawal agreement; tomorrow’s further votes are likely to include one requiring the Government to re-enter negotiations and take out or severely limit the life of the backstop. I believe that this can and should be done. We have far more power now than we will have once the withdrawal agreement is accepted. This is partly because acceptance requires only a majority vote in the European Union, whereas the future relationship agreement requires unanimity and votes in Parliaments across Europe. Also, as the Attorney-General has confirmed, if the present withdrawal agreement were accepted, there would be no legal way that the UK could ever unilaterally exit the backstop. My noble friend Lord Bridges said in an earlier debate that no Government should ever have agreed to that concept and I am afraid that I have to agree with him. Vassalage is a colourful term but, to my mind, it would accurately reflect our status if we accepted the current agreement as it is.

Furthermore, the backstop is illogical. We are told that it is designed to prevent a hard border between Northern Ireland and the Republic. Yet, as matters stand, it is the main factor preventing the withdrawal agreement being accepted. Recently, the EU has belatedly acknowledged what has been apparent all along; namely, that if there is no withdrawal agreement there will be a hard border in Ireland at the EU’s insistence. The EU is apparently insisting on the backstop to prevent a hard border in Ireland, while the main factor threatening a hard border is the inclusion of the backstop in the withdrawal agreement. It is a mystery to me why the Government have not been more vociferous in pointing this out.

The major advocates of the backstop are the Commission, the French and the Irish.

[Lord Hannay of Chiswick (CB)]

Perhaps the noble Baroness might think again before saying what she said about tariffs: that tariffs being charged on the border between the Republic of Ireland and Northern Ireland in the event of no deal would be because the EU orders it. That is not true: it would be because the World Trade Organization rules require it.

[Baroness Neville-Rolfe]

I will come on to talk about tariffs in the event of no deal. Obviously, I was referring to the point that has been made about the apparent change in the Irish position in recent days, which others have already referred to. My understanding is—

Trade Bill

Debate between Lord Hannay of Chiswick and Baroness Neville-Rolfe

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[Lord Hannay of Chiswick]

That question should perhaps be addressed to the Prime Minster, who might find some difficulty answering it because it would cause such ructions on the Back Benches of her own party. I do not think it is a question for me: I would have no problem putting “customs union” in. That is why I am standing here now, suggesting that this legislation should contain that phrase. If we leave the EU—if—on 29 March or at a later date, then the option of staying in a customs union is a compelling one, and it ought to figure in this legislation.

Why? First, because that option preserves, to the greatest extent possible, the frictionless trade—or something pretty close to it—which was originally the Government’s objective, but has not figured a great deal in government statements because it is not consistent with what the Government are now trying to do. There would be no rules of origin procedures, no VAT checks, no tariff or other problems which would arise. Investors in this country found this enormously attractive when they saw us as a gateway to the rest of Europe. I fear they will not see us as terribly attractive when we cease to be a gateway, with these friction-causing factors.

Secondly, I do not think that a customs union would solve the backstop, because the regulatory issues are extremely important there, but—as other noble Lords have said—it would make a substantial contribution towards resolving that problem even if it does not totally remove it. Thirdly, it would be likely to ensure us access to the EU’s already hugely substantial amount of preferential trade agreements—both free trade agreements and, in the case of Turkey, a customs union—in a way that would probably be much better than anything we could negotiate separately. The EU not only has this huge panoply of free trade agreements and a customs union with Turkey, but is negotiating now with Australia, New Zealand, Brazil, Argentina and Mercosur, and there are reasonably recent agreements with South Korea and Japan. The one with Japan has not yet been brought into force. The one with South Korea has, I think, brought a quadrupling of our exports to that market. We would get all these advantages if we were in a customs union, without having to do anything about it at all.

What is there not to like about joining a customs union? The noble Lord, Lord Patten of Barnes, quite rightly referred to the problems that might arise and the difficulties we would have negotiating new trade agreements with an independent trade policy. Those are very real, as those who have cited the size of these agreements have demonstrated rather clearly. But what do we have to show for all the rhetoric about the brilliant future that lies ahead of us from Dr Fox’s rather considerable travels, taking him this week to Davos, which is not noticeably a place for negotiating trade deals? Still, no doubt it is quite pleasant to be there. This idea that an independent trade policy is an instant answer to all our problems is simply a mirage that will float before our eyes for years ahead as we trudge through these extremely complex negotiations.

Who are the biggest fish in that pool? There is the United States. President Trump has already said that if we go ahead with the Prime Minister’s deal, which of course the House of Commons did not seem terribly inclined to do, he does not think that there would be much to negotiate with us about anyway. Do we really think China will be more interested in negotiating concessions to get access to our market than it would to get access to the much larger European Union market? India has been pointed out. That will put the whole issue of visas and access for people from India to this country on the table in the negotiations. That will drive another great coach and horses through that very odd immigration White Paper, which we will discuss in about half an hour’s time.

I really do not think that the objections to having a customs union stack up very well. The amendment should be given serious consideration and should figure in the Bill when we send it back to the Commons.

[Baroness Neville-Rolfe (Con)]

My Lords, I am not convinced of the merit of this amendment. Actually, I have taken comfort from the words of the noble Lord, Lord Purvis of Tweed, on the detailed arguments. I know from my experience of operating in Turkey—both with retail outlets and as a source of agricultural, clothing and electronic goods for shops in other member states and in the UK—that it is not an entirely happy situation to be in a customs union and not in the European Union or a single market.

Turkey was at the time keen to get into the European Union properly, partly because of the problems that the arrangements caused. It is very frustrating not to have influence over the tariffs and rules at the border of your country. Essentially, you are a rule-taker, as the noble Lord, Lord Purvis of Tweed, acknowledged. I also recall the lorry delays that he mentioned—so not very frictionless. My recollection is that the rules on the common external tariff also restricted Turkey’s ability to renegotiate independent trade agreements with third countries. That is something that the noble Lord, Lord Hannay, acknowledged. If we go down the road proposed in the amendment, we could be caught up in the EU system of protectionism—which, sadly, I expect to increase without the UK at the table.

On a brighter note, I was glad to see this afternoon that Dr Fox, the International Trade Secretary, had agreed in principle to a UK-Israel agreement—so he has been busy in Switzerland. Rather than going down the road of the amendment, I would prefer one last push to negotiate a good deal with the EU. There is more to do, but we should keep trying, especially on the backstop. Some parts of the Government have clearly not given up, as we heard in the EU Committee today from the Secretary of State, Steve Barclay, which is why, of course, I am afraid I missed some of today’s proceedings.