European Union Bill

Debate between Lord Pearson of Rannoch and Lord Empey

Tuesday 3rd May 2011 Lords Chamber

[Lord Pearson of Rannoch]

I do not want to delay the House, but that is why I made the distinction between a customs union and a free trade area.

The worst aspect of our membership of the EU single market is its sheer cost. Like their predecessors, this Government are determined to avoid an official cost-benefit analysis, and so we are left with the eight analyses that have been produced since the turn of the century, four of which are pretty much official, and which put the cost of our single market membership at anything between 4 per cent and 10 per cent of GDP. Indeed, the highest cost estimate came in 2005 from the Treasury itself in a paper entitled Global Europe: Full-Employment Europe under the signature of Mr Gordon Brown when he was Chancellor of the Exchequer. It put the cost of EU regulation at 6 per cent of GDP and of EU protectionism at 7 per cent. In March 2006, the French Conseil d'Analyse Economique, which is attached to their Prime Minister’s office, found that France had gained nothing from the single market or, indeed, the euro. In June 2006, the Swiss Government published their finding that joining the EU and its single market would be nine times more expensive than staying with their current sectoral free trade agreements with Brussels. Later in 2006, the EU Commissioner for Enterprise and Industry, Mr Günter Verheugen, said that EU regulation was costing its members some €600 billion a year, or around 6 per cent of GDP at the time.

One of the troubles with being in the single market is that this EU overregulation, whatever it costs, applies to the whole of our economy, not just to the 9 per cent that trades with clients in the rest of the EU. So the 11 per cent of our GDP that goes in trade with the rest of the world and the 80 per cent that stays in our domestic economy—91 per cent of our GDP—has to carry the burdens of Brussels’s overregulation. There are, of course, those who fear that were we to leave the EU and its single market our trade would somehow suffer and that, to quote the propaganda, 3 million jobs would be lost. The truth appears to be the opposite: trade would expand and jobs would be created. It is, of course, true that we have 3 million jobs exporting goods and services to clients in the EU, but they have 4.5 million jobs exporting goods and services to us. We are, in fact, the EU’s largest client. Would the French stop selling us their wine or the Germans their cars just because we had left the single market and were no longer bossed around by Brussels? Of course not. There are also the points that the World Trade Organisation would prevent any form of retaliation were we to leave and that the EU’s average external tariff is now below 1 per cent. Our trade is going up faster with the rest of the world than with the EU, both inwards and outwards. Our exports to the EU single market are declining. The single market is sclerotic and overregulated and its demographic trend is against it. It is the “Titanic”.

It is also hard to think of any other customs unions along the lines of the EU. There was the Soviet Union, and there may be something similar in the Caribbean, but nowhere else. Mercosur in South America does not count because its members are free to agree their trading relationships with non-members. Can the Government advise us of any other customs unions like the EU? If not, does that not suggest that it may not be such a great idea?

As to Amendment 23F, I do not think we need the EU getting more involved in financial regulation. Commissioner Barnier has openly said that he does not favour what he calls the Anglo-Saxon model, and we have yet to feel the damage done to the City of London and its ability to pay tax by the new EU supervisory bodies. When the movers of the amendment say that they do not want it to interfere with the UK’s general approach to financial regulation, I ask whether they have Monsieur Barnier’s agreement? The deed is done. Overall financial supervision has passed to Brussels. No provisions in this Bill will prevent that.

As to Amendment 23H, I fear that those of us who come from the Eurorealistic perspective would rather that the unelected Commission did not continue to negotiate on our behalf in a new global trade round. As the world’s fifth-largest economy, we would rather do it for ourselves.

Finally, is it not really grotesque that an organisation that has so dismally failed to look after the vast sums entrusted to it by the taxpayers of Europe should have its powers strengthened, or made more effective, as the amendments have it? More will certainly mean even worse, and I oppose the amendments.

[Lord Empey]

My Lords, I think we are straying back to a Second Reading debate, because we seem to have moved somewhat from the amendments. I shall return to what the noble Lord, Lord Triesman, said about emergencies and new technical developments that could arise and that are reasons that he is using to justify his amendment.

Of course emergencies will always arise—they are part of life’s rich panoply—and there will always be new developments, but even if they did require changes to treaties and so on, we know that that will take a considerable time. Emergencies can be dealt with by multilateral agreements, bilateral agreements or in a range of other ways, and we deal with them that way all the time. I have worked with an international treaty: the Belfast agreement. We had specific arrangements with the Irish Republic. They were codified. I suspect that people on the streets of Britain talk of little else but codification from what I have been listening to this afternoon.

The debate is so complicated that it causes the eyes to glaze over. We had specific areas of co-operation set out in an international treaty and discovered that an emergency arose. It was the prospect that we would not have enough gas on both sides of the Irish border. What did we do? Because we did not have it codified and it was not part of a treaty, the two Ministers—I was one of them—reached a bilateral agreement that we had ratified through our existing processes. We were able to do the job and get the pipeline built in a fraction of the time that it would have taken had we taken it through a formal process. I believe Governments will always be able to find a way to work together in an emergency and that when things are part of an elaborate process, that does not guarantee speed.

The amendments talk about the effectiveness of the single market, effectiveness in mitigating climate change and effective financial regulations. Effectiveness, like beauty, is in the eye of the beholder. If you talk about all these issues, you are talking about pretty well everything in modern life and policy. Not an awful lot is left if you include all these issues.

A fundamental underlying mistake is being made here; nations that require referendums as part of their existing constitutions are not rendered useless negotiators in Brussels. A number of our fellow members of the European Union have referendums as an integral part of their constitutions. Do we mean that the Danes or the Irish are unable to negotiate? Of course not. They are able to do it, and they sit down with fellow Ministers who might not have that requirement. Does that mean that the Danes, the Irish and others are hogtied and unable to negotiate? Over the years, they have sometimes done a jolly good deal. The recent referendum in the Irish Republic on the Lisbon treaty was initially rejected. They went back to the table and got a better deal, and then it was passed. I do not believe that that indicates in any sense that, just because a referendum might be required, a Minister, or a Government, is paralysed. In fact, the evidence is to the contrary. Of course, if it gets far too detailed and concerns trivial matters, I would agree, but I do not think that we are facing that.

In any event, this Bill is about the future. It is not about the past. I believe that there is sufficient wriggle room in the existing treaties and that you would be a pretty bad Government or a pretty weak Minister if you could not find something on which to hang a hook to move a particular measure forward. I am not confident that this Bill will be a showstopper for the European Union. Of course it will not. The European Union will continue. We have many treaty obligations in it, which I believe will be honoured, but this Bill is about preventing expansion and trying to restore public confidence. It is precisely because people do not believe politicians any more that this sort of Bill is necessary.