Queen’s Speech

Debate between Lord Lilley and Lord Hannay of Chiswick

Wednesday 16th October 2019 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, in following the noble Lord, Lord Lilley, I suggest that he was far too modest when he recanted on his good work in agreeing the ending of the Uruguay Round and setting up both the World Trade Organization and the single market. I congratulate him. His success in that respect is not taken away by a selective quotation of trade figures that gave a very big number for our increase in trade with third countries—a rather small quantum when compared with the smaller figure for the increase in the much larger quantum of our trade with the European Union. I conclude my point by saying, “Well done”.

[Lord Lilley]

May I express my gratitude? Our trade with all countries outside the European Union is greater than our trade with the European Union and has grown faster than our trade with the European Union. That is why the share of our trade with the European Union has fallen from 60% to 45% and, on present trends, is set to fall to 30% by 2030.

[Lord Hannay of Chiswick]

I do not want to continue the battle of figures for too long but, of course, a large part of our trade with countries outside the European Union benefits enormously from the relationships which we, as a member of the European Union, have with those countries.

I was tempted to devote the whole of my contribution to the all-consuming topic of Brexit but I resisted that temptation. What is going on in north-east Syria and with the US’s green light to the Turkish military action there? However often it denies that it gave the green light, I am afraid that President Trump’s conversation with President Erdoğan and his subsequent tweet about the withdrawal of US troops was as green as green lights go. It was taken as such and quite a lot of people have now died as a consequence. It is not only a tragedy and a moral outrage; it also has serious negative consequences for our security and that of our European neighbours and partners. To play fast and loose with the handling of IS detainees and to destroy the one force that stood up for and shed its blood for our shared policies is not only morally reprehensible; it is, in policy terms, unconscionable.

I welcome the Government’s initiative at the UN to bring the matter before the Security Council and to state clearly there that we oppose Turkey’s actions. To its shame, the Security Council was struck by its usual paralysis when dealing with Syria and was unable to take any action. Now that the international opposition to what Turkey is doing has grown, is there not some scope for reverting to the UN Security Council and seeking agreement on action to stop this conflict and to bring about a ceasefire? Now that the US has adopted some—admittedly pretty inadequate—sanctions measures against Turkey, I would like the Minister, in replying to the debate, to let us know whether we too will go down that road, as surely we should. What is the scope of the decision taken by the EU earlier this week that its members would cease arms sales? I had a rather unsatisfactory exchange with the Minister yesterday because the words he used in his Statement were, as I described them, a little on the weaselly side. I hope we will hear that we will stop the sale of arms to Turkey and that the Minister will deal with these urgent questions, which need clear policy statements.

Turning to Brexit, I support and strongly endorse what the noble Earl, Lord Kinnoull, said about our policy of not attending European meetings. If I remember rightly, it was introduced in September—one of the greatest acts of bureaucratic vandalism that I have seen for a long time. Would the Minister be so good as to tell us one benefit that has accrued to this country as a result of that decision, apart from giving a lot of civil servants some more free time? I imagine that he and his colleagues would not consider that a benefit on the whole. Perhaps he could address that point.

In the current state of the negotiations, it would be pretty unwise to probe too deeply into the detail. I will not do so but here are one or two simple questions that I hope the Minister will be able to deal with when he replies to the debate. Do the Government now accept that, even if some sort of deal is struck by Friday this week with the European Council, there will necessarily have to be an extension of the Article 50 period to enable the processes of parliamentary approval on both sides to be completed and for the legislative processes necessary to bring our domestic law into line with any provisions in the deal to take place before we can ratify? Does he seriously believe that that can all happen before 31 October? If he says yes, I shall see whether his fingers are crossed behind his back.

Secondly, do the Government now recognise that any deal will require substantial changes in the deeply flawed proposals that they put on the table a little over a week ago, in particular with respect to the issue of consent by Stormont and the customs arrangements for trade within Ireland and between Northern Ireland and the rest of the UK? It would be nice to be told that the negotiations are no longer in that place.

Thirdly, do the Government also recognise that their wish to junk the commitments to a level playing field that were in the political declaration will have serious consequences for our subsequent relationship with the European Union? By saying that we no longer wish to stay in step with it on regulatory issues and to continue to accept the work of Europe-wide rules-setting bodies, such as those for aviation safety, the environment, labour and other issues, we are raising issues of deep concern that go far beyond the current obsession with issues relating to Northern Ireland. The Government’s suggestion that a move in this direction, away from a level playing field, is designed to enable us to have higher standards has zero credibility. It is quite clear that it is designed to enable us to have lower standards.

The likelihood of any deal or agreement at this week’s European Council and what it might contain are, necessarily, a mystery. I fear that they will have to remain so at least until this Saturday’s emergency Session, if indeed that takes place. But what is no longer in doubt is that, in every area of policy, post-Brexit arrangements are either highly problematic—that certainly goes for the content of a UK-US trade agreement—or clearly less advantageous to us than the terms of our EU membership. That is the basis of the case for calling and holding a confirmatory referendum on any deal that may be struck or on leaving without a deal. The result of such a referendum would have to be accepted by all as binding on this occasion as it was not on the last one. It is the one way of cutting through to a real end game, not just bringing up the curtain on years of further negotiation in which the UK will hold very few cards. To those who assert that such a course of action would thwart the will of the people, I say this: well, you let this genie out of the bottle to settle an internal dispute within one party, which it evidently did not do. Why not join us now in putting that genie back into the bottle?

[Lord Lilley]

Although I was not here, I was under the impression that the Act required to hold a referendum was voted through by 498 MPs in that House but not opposed by this House. To attribute it to one party is, therefore, incorrect.

[Lord Hannay of Chiswick]

My Lords, I am afraid that that is very far from the truth. The reason it was not opposed here was because of the Salisbury convention, which says that, if a party wins an overall majority in an election with such an issue in its manifesto, this House will not oppose legislation on that issue. That was the sole reason it was not opposed in this House—none other.

Business of the House

Debate between Lord Lilley and Lord Hannay of Chiswick

Thursday 4th April 2019 Lords Chamber

[Lord Lilley]

Let me therefore do so. The amendment,

“notes that more than one day is required for this House to have sufficient time to scrutinise the European Union (Withdrawal) (No. 5) Bill”.

I submit that several days are required and that it is worth taking those days, even if it means leaving on WTO terms—because they are quite acceptable. First, we would keep £39 billion. That was the opinion of this House. I trust the committee which concluded that and I would be quite happy to submit to international arbitration, because I certainly would not want to not meet any legal obligations that we have. So £39 billion is a positive.

Secondly, we would end uncertainty.

[Lord Hannay of Chiswick]

My Lords—

[Lord Lilley]

I am sorry, I will not give way.

Trade Bill

Debate between Lord Lilley and Lord Hannay of Chiswick

2nd reading (Hansard): House of Lords
Tuesday 11th September 2018 Lords Chamber

[Lord Hannay of Chiswick (CB)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Lansley. It is good news that he is back playing an active role in our debates. I say that all the more so because I agree with a large amount of what he just said, but that is not the only reason. The only point I make on what he said is that I think a link with the CPTPP—the Pacific grouping—is of great importance, but it is much more likely to be achieved by the European Union in a more successful way. That is why I support the idea that we should stay within a customs union and negotiate with that objective.

A great deal of the Bill is highly technical and process-driven. The Minister made an excellent effort to persuade us that that was all that it was about, which is not the case, but those aspects require careful scrutiny, and perhaps amendment in Committee and on Report. I intend to focus my remarks today on the broad political thrust of the Bill, which is the imperative view of the Government that this country must have an independent trade policy outside the EU and its customs union—within which this House voted to remain, I recall, as others have done, by a three-figure majority when the issue was discussed in another context.

The contention of those who supported Brexit in the referendum campaign—it since remains the Government’s view—is that an independent trade policy is absolutely vital and that it will be good news for the United Kingdom. Outside the EU and its customs union, Britain, they say, will emerge on to the sunlit uplands of a free trading world, freed of the shackles of the EU’s trade policy with prosperity assured. Negotiating trade deals around the world would be easy as pie—that is what the Secretary of State for International Trade told us, although his assurances were slightly undermined by the fact that he has never negotiated a trade agreement. If only that picture were true the Government would have a case, but it is not. It is, frankly, false.

First, take the EU’s trade policy. It is, of course, not perfect and it has some protectionist features which need to be changed. That is what the EU was attempting to do in the Doha multilateral trade negotiations and in the TTIP negotiations with the US; the EU was not responsible for the failure of either. When the EU was founded, it did have a pretty protectionist trade policy but, over the decades, that policy has been progressively liberalised, not least by the leadership of a whole succession of British Trade Policy Commissioners: Lord Soames, for whom I worked, Lord Brittan, the noble Lord, Lord Mandelson, and the noble Baroness, Lady Ashton. Britain, as a member state, was at the forefront of that liberalisation campaign with great success. Now, the results of that campaign, in the form of the European Union’s trade policy, are being denigrated, belittled and cast off. Nor is the EU and its trade policy in any way the only important point. After all, we export only about one-third of the amount that Germany does to China. That is not because we are shackled by the EU but because we are not quite as competitive as the Germans. That will not be solved by leaving the EU or by negotiating separate trade agreements.

There is then the still-growing network of bilateral trade deals that are an integral part of the EU’s trade policy and its customs union: most recently the agreement with Japan, but also those with South Korea—where our exports have hugely increased since that agreement came into effect—Turkey, Chile, Colombia, Mexico, the 50 or so African, Caribbean and Pacific associates, and the countries of eastern Europe, the Mediterranean and the Caucasus. There are negotiations now under way with Mercosur, which hopefully will lead to a successful conclusion, and with Australia and New Zealand. Are we going to do better than those deals that are being handed to us on a plate? Will we do more for developing countries than the EU’s “Anything but Arms” policy? I rather doubt it.

How about those sunlit uplands? Well, the sun is not shining up there any more, as President Trump rampages through the international trade commitments that the United States has, mistakenly believing that trade wars are easy to win and that trade between nations needs to be bilaterally balanced. This is the very antithesis of this Government’s trade policy, yet the US seems to be the jewel in the crown when it comes to our negotiating independently. Some hope.

Then there is China, which has negotiated free trade deals such as the one it did with Switzerland, which gave China tariff free access to the Swiss market straightaway and told the Swiss that, with a bit of luck, in 20 years’ time they might get something like that.

[Lord Lilley]

The noble Lord said in 20 years’ time. Actually, the Swiss deal with China reduces tariffs by two percentage points a year. The high tariffs are 18%, so in nine years they will all be gone. They are already half way through. Where are we, in our membership of the European Union, in the process of getting free trade with China?

[Lord Hannay of Chiswick]

That remains to be seen, of course. If we were in a customs union, I have no doubt that the issue of freeing up trade between the European Union and China would become a very important point—and, since the Chinese are now being sucked into a trade war with the United States, they might take a rather different view of a free trade agreement with the European Union than they have in the past. I do not know. All I can say is that they are more likely to do so if what they are offered is access to a 500 million single market, with the UK in a customs union with it, rather than what they have at the moment.

Then what will we say to India and Brazil, for example, which undoubtedly will raise with us issues about the visa burden on their students, businessmen and researchers? It is obviously desirable that we should have agreements with Australia and New Zealand, but what will that mean for our producers of sheepmeat and beef, who are already at risk of being struck by the loss of their continental European markets if all does not go well with our negotiations with the EU. What will we say to that?

One day, I hope, when President Trump’s memorial library is being constructed—there will not be many books in it, I imagine—the world will resume the search for multilateral and plurilateral trade agreements to remove tariffs and non-tariff barriers to trade. What role will we play in such negotiations as an independent actor with our own trade policy? I can give noble Lords a clue: a very modest one, is the honest answer. I was a very junior member of the negotiating team in the Kennedy round, which was the last occasion on which the UK operated independently before it joined the European Communities. We were in a much stronger position then than we are now. Our share of world trade was much greater and we had a stronger economy on the whole compared with other people. However, even then, in the 1960s, the deals were cut between the US, Japan and the European Community. In future, it will be between the US, China, the European Union, Japan and India. Of course, we will be there on the margins, our eye glued to the keyhole, saying, “Me, too”, when they reach an agreement, but our role will be that of a watcher and not, as we are at the moment, an actor. So the case for an independent trade policy does not stack up. It is a chimera and a mirage, doomed to disappoint.

Of course, if we were to remain in the customs union, we would need to raise some quite important issues with the EU to ensure that we had a proper consultative role in shaping its trade policy and that any trade deals negotiated by the EU applied fully to all members of the customs union, including the UK, and did not require separate negotiation. But how can we find out whether these possibilities are even faintly viable if we are not ready to ask for them to be put on the table and to discuss what the reaction of the other side would be? Since this would greatly help the problems of Northern Ireland, I suspect that it would be pretty positive.

The other day, I heard a representative of one of the think tanks that supports Brexit and an independent trade policy, the IEA, say, quite clearly, that an independent trade policy is “the only prize” remaining from Brexit. But is it a prize? I very much doubt it.