European Union (Withdrawal) Bill

Lord Lamont of Lerwick Excerpts

Report: 1st sitting: House of Lords
Wednesday 18th April 2018 Lords Chamber

[Lord Wigley (PC)]

My Lords, I support Amendment 1, moved so persuasively by the noble Lord, Lord Kerr, and Amendment 4. I want to speak briefly to Amendments 2 and 5 in my name, which are coupled with them and essentially seek the same goal.

Noble Lords may remember that in Committee I moved the very first amendment on the issue of maintaining a customs union with the EU after our membership ceases. We had an excellent debate at that stage so I will not repeat the detailed arguments, save to remind the House of one central point: having tariff-free trade in goods with the European Union and the 56 countries with which the European Union has an agreement is fundamentally important—not only to Wales but throughout the UK—to our manufacturers and farmers. It also opens the door to resolving the Irish border question, as has been said.

I accept—reluctantly—that we are leaving the European Union. That is not the issue in this debate. The question is how we leave without weakening or severing our vital trade links. By passing either of these amendments, we give MPs an opportunity to return to this central issue. Without such an amendment, they will be unable to do so. They need such a facility because so much has changed in the time that has elapsed since they passed this Bill last year. We must enable them to fine-tune the Bill to meet the requirements of exporters, manufacturers and farmers. MPs will have the last word, and rightly so, but by passing either amendment we give them the opportunity to endorse a better Bill that is fit for purpose and more acceptable to those whom it affects. I urge colleagues on all sides to unite in passing such an amendment and I urge the Government to accept the outcome.

[Lord Lamont of Lerwick (Con)]

My Lords, both the noble Lord, Lord Kerr, and my noble friend Lord Patten made extremely powerful speeches. Both of them referred to trade with the EU representing 50% of our exports. I think that the figure is actually a little lower than that, nearer 45%; I make that point not to argue over the absolute figure but the direction of travel.

One of the points that was not made in either speech is how the pattern of our trade has been changing and a much higher proportion of our trade was with the EU 10 or 15 years ago. This is because Asian markets and other countries—I agree that they are all small markets at the moment—have cumulatively been growing as a share of our trade. The question in considering the amendment is, which is better for the future trend of our trade: remaining in the customs union or the Government’s alternative—which the noble Lord, Lord Kerr, did not really put forward—of a free trade agreement with the EU? We are talking not just about the customs union, but the customs union while being outside the EU—that is, being in the customs union but not an EU member—which is a very different matter, for reasons that I will come on to.

We have to be clear in our minds about the difference between a customs union and a free trade area. A customs union has free trade between its members but an external tariff and rules against non-members. A free trade area has reduced or zero tariffs between its members but allows individual members to have differing external tariffs and non-tariff controls on imports from non-members. The noble Lord, Lord Patten, referred to the question of rules of origin—that is, goods that come from outside the free trade area but which have to qualify to go into other countries by having a certain percentage of the content being made locally. The EU is a customs union but has free trade relations with European states outside the EU, such as Norway, Iceland and Lichtenstein. This means that, despite being inside the single market, they have control over external tariffs and the administrative costs are greatly reduced by modern customs procedures, such as electronic pre-clearance and trusted trader arrangements.

In his speech on the customs union, the noble Lord, Lord Kerr, concentrated just on what happens at the border. I would argue that a customs union is not just about tariffs; it has implications for the single market. It is related to the whole issue of the rules and definitions that make up the single market. This is made very clear on the European Commission’s website, which defines the customs union like this:

“The Customs Union is a foundation of the European Union and an essential element in the functioning of the single market. The single market can only function properly when there is a common application of common rules at its external borders … These common rules … go beyond the Customs Union as such—with its common tariff—and extend to all aspects of trade policy, such as preferential trade, health and environmental controls”,


agriculture and fisheries,

“the protection of our economic interests by non-tariff instruments and external relations policy measures”.