Brexit: Trade in Non-financial Services (EUC Report)

Lord Purvis of Tweed Excerpts

Monday 18th December 2017 Lords Chamber

[Lord Purvis of Tweed (LD)]

My Lords, it seems as if we are mid-point in a two-year transition period before the Government respond to this committee’s report. We still await clarity in many respects and there has been unanimity across the House this evening asking for clarification. We have very high expectations of the poor Minister, who has to respond to this debate and provide all the answers. I will do my little bit simply to add to that burden in my few moments.

The fact that the Cabinet, 18 months on from the referendum, is only now discussing the UK’s desires for its future relationship with the EU perhaps explains why the committee of the noble Lord, Lord Whitty, has struggled to get a clear government response—the Government do not have one. They have not had one since the referendum and we do not know when they will have one. The thread throughout the report still holds true and many of the points, issues and questions all raised very clearly in this report all still hold water, even as, as the noble Lord, Lord Whitty, said, the water has been moving quickly over the last year. Like the noble Lord, Lord Liddle, I take the point of the noble Baroness, Lady Noakes. When I read the report for the second time—I read it when it was first published but I had to refresh, because it has been so long since then—it did not strike me that the evidence provided to the committee was that of traditional vested interests wanting the status quo. The noble Lord, Lord Liddle, referred to that. For example, the very clear request from the Broadband Stakeholders Group that Ofcom remain part of the body of European regulators for electronic communications was not a vested interest asking for the status quo; it was asking for UK influence in a decision-making body affecting one of the most critical sectors of the UK economy to continue. That was a very reasonable request, which the whole industry would be behind and which I hope the Government will act upon.

My noble friend Lord German gave clear and tangible examples of how these issues are affecting the music industry and the performing arts. When I was listening to his speech with regard to the uncertainty of the future, I thought of the old electronic rock band, Orchestral Manoeuvres in the Dark. But it is not an amusing situation when, as he pointed out, we have already lost the youth orchestra—we have already lost influence in a key element. This is the reality which is seeping in now.

The Government have made their choice—and it is their choice—that the UK leaves the single market for services, a sector which, as we have heard, affects the economy perhaps more than any other single sector. Therefore, it is right that we scrutinise this. As the noble Lord, Lord Green, said, the UK is more dependent on services, especially non-financial, than perhaps any other country in the world. We export more in absolute terms than any other economy other than the US. We do so, as my noble friend Lady Randerson said, with and as a member of the largest single bloc—the integrated market of the EU—but the Government have chosen that we leave it in its entirety. As the report says, this was not necessarily going to be the position of the Government at the outset of the committee’s inquiry in 2016 but the Government have made it their position. Therefore, it is incumbent on the Government to give a clear explanation of what that position will lead to. I think it is fair to ask.

I have been in this House for four years. As I read the Official Report of the debate on 5 December, with the noble Baroness, Lady Fairhead, in her new role, I noted that she is the fifth Minister covering international trade in my four years here. She brings great experience to her role, of course, and in the circumstances that experience will be necessary, but I am sure that experience tells her, as it does many others, that those hard Brexiteers who continue to suggest that there will be better opportunities for trade in services with the EU after we come out, as a third country, and then ask to rejoin many of the parts of that, are deluding themselves and deceiving the public, and that deception carries on. This report is a calm and clear explanation of the complexities and the realities. Nothing from the Government in the past year has suggested that those realities are being addressed and the complexities tackled.

The EU does not have harmonised trade policy in relation to trade in services with third countries outside the single market, meaning that UK businesses will most likely face differing non-tariff barriers between member states, which will lead to additional cost and inhibit growth. The noble Lord, Lord Wei, says that we have an opportunity but the White Paper did not give any clarity on what the opportunities are, nor how the new approach from the Government will allow us to take advantage of them. Being out is doubly problematic for the UK because in many elements of trade in services, particularly digital services, the UK leads the EU. This is the very platform that we are leading, which those such as the noble Lord, Lord Wei, and others are saying that we would wish to replicate in the future to give us opportunities. The Government’s position leaves the economy in an absurd situation, where we are choosing to leave the integrated market, which we lead and which is so important to the most important single element of our economy, and then we will seek to negotiate a relationship back with that market but will have no say in how it is managed. As the report says, at its very best this will be worse than what we have now.

If the Leader of the House’s appeal to us this afternoon to wave our Order Papers in acclamation of the fact that the Prime Minister has got us to stage 2 in the talks with the EU—but only because she has acquiesced to everything it asked for in stage 1—is anything to go by, the Government will seek credit for us securing any agreement at all. However, as the report suggests, our economy is dependent upon much more than simply political assertion.

Quite frankly the global situation for trade, as the noble Lord, Lord Liddle, said, is not necessarily conducive to us going into a new comprehensive agreement. If you had wanted to read the communiqué of the last ministerial committee of the WTO in Buenos Aires last week, you would struggle because there was none. No agreement was reached. I was in Buenos Aires last week to meet with Commonwealth Trade Ministers in my capacity as co-chairing, along with the Trade Minister from Nigeria, the Trade out of Poverty All- Party Group inquiry on trade and poverty in the Commonwealth. It was a depressing time to be in Buenos Aires because there was no major agreement or communiqué. There was no agreement on e-commerce, which had been tabled, and the US and China are both taking a country-first nationalist approach. There is no sign that it will be any more conducive when the UK tries to be at the WTO’s MC12, by which time we will be out of the powerful EU bloc and have no voice in its future—nor will we have an FTA with the EU signed.

Where does this leave us, ultimately? It leaves us with the reality that, whether it is the Africa continental free trade agreement, the Mercosur development or the emerging Pacific alliance, the focus now is all on securing EU agreements. That means we will have a second-order relationship. The noble Lord, Lord Green, referred to last week’s Japanese agreement. We will be in the regrettable situation where, at the time that that Japanese agreement with the EU is ratified, we will have left it but will still have to comply with the terms and conditions of that agreement—and be constrained in making any further agreement.

I entirely endorse the point of the noble Lord, Lord Green, that the new Trade Minister for Africa has no remit for trade and development, which is a retrograde step. I hope there is time to change that. If the solution from the Government, through the Department for International Trade and the new trade commissioners, is to provide no more clarity then we will still have to ask our questions. The noble Baroness, Lady Noakes, says that we need not be afraid to venture into the dark but, humbly, we simply ask for light and to have clarity. I hope that the Minister will be able to provide that in his summing up.