Comprehensive Economic Partnership (EUC Report)

Lord Kerr of Kinlochard Excerpts

Thursday 26th November 2020 Grand Committee

[Lord Kerr of Kinlochard (CB) [V]]

What a privilege it is to follow the noble Lord, Lord Darroch, and be the first to congratulate him on an excellent maiden speech. We come from the same Diplomatic Service stable, where, in Washington, Brussels and Whitehall, he served five Prime Ministers with verve and distinction. He was famous in our service for hard work, good judgment, a certain joie de vivre and conspicuous loyalty to his team. I was rather luckier than him in some ways, because the Presidents I watched in Washington were rational and predictable, and all the Prime Ministers I worked for saw loyalty as a two-way street. We have just had an insight to and foretaste of the huge contribution that the noble Lord, Lord Darroch, will, with his wisdom and experience, make in the House. Despite his being a Chelsea fan, I welcome him very warmly.

As a member of the committee, I begin by congratulating the noble and learned Lord, Lord Goldsmith, on his judicious and magisterial chairmanship. I also congratulate the noble Lord, Lord Grimstone, and thank him for his courteous and co-operative relationship with the committee. I particularly congratulate our clerk, Dominique Gracia, who mustered our thoughts graciously, skilfully and fiercely

I am one who welcomes the agreement and think that its principal merit is continuity; it prevents a cliff edge on 31 December. There are small pluses—on digital, on data and on regulatory co-operation, though nothing on investor protection and no separate chapter on digital—and there are minuses. There are minuses on TRQs, as the noble Lord Darroch, has said, and on geographical indicators. I would not make a big deal of these minuses—indeed, I would not mention them at all—but for the fact that the department chose to present them as pluses by comparing the deal not with the status quo of the EU deal that we have enjoyed up to now but with the straw-man of what WTO terms would have been.

I join the noble Lords, Lord Foster, Lord Hain and Lord Darroch, in warning of the dangers of overselling. It is actually unfair to our negotiators, who have produced a perfectly respectable rollover deal, that there should be Twitterstorms and criticisms over claims that are, at best, exaggerated. I think it would be wise, if we are comparing the benefits that we will secure from the agreement, to compare them with the status quo.

These points have been well made and I do not want to labour them. I would like to make a different and more general point. For 40 years, the dominant factor in our economic relationship with Japan has been its inward investment in this country, first in electronics, then in the automobile sector and then more widely. The benefits to us have been enormous, not just in employment but in learning from Japanese production techniques of automation and now digitisation. The Japanese came here because they saw us as a springboard into Europe. I was one of those who, despite strong Italian and French opposition, persuaded Jacques Delors’s Commission that Nissan’s investment in Sunderland would produce European cars, not Japanese cars, and they would be just as European as Fiats or Peugeots. If we had failed, the Japanese would not have come here. What worries me now that Sunderland is outside the single market—which Jacques Delors, Leon Brittan and Margaret Thatcher built—is that the Japanese may be forced to take a different view. Whether Nissan and Toyota now pull back—or, worse, follow Honda and pull out—depends not on the agreement that we are discussing today but on the agreement we strike with the European Union and what it says about rules of origin and what the return of customs formalities and frontier checks means for just-in-time supply chains. We must cross our fingers and hope for a no-tariff deal and minimal frontier friction. If we do not get those, the relationship with Japan will wither.

For all the fine talk of Asian opportunities and the CPTPP, the rule of thumb for trading in goods is that trade halves as distance doubles. That is why the Japanese have chosen to make things here, and if we lose them the European market, we will lose them, full stop. They will make things in continental Europe instead. I hope that the Prime Minister understands that.