Brexit: Preparations and Negotiations

Baroness Noakes Excerpts

Monday 23rd July 2018 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I have framed three questions on the Government’s White Paper and here is a spoiler alert: none has a positive answer. Monsieur Barnier has already asked the first question, which is whether the White Paper provides the foundation for an agreement with the EU. He has not, in terms, declared the White Paper a non-starter, but he has given a laundry list of reasons for dismissing its proposals on goods: fraud risks, burdens on EU businesses, impracticality and even illegality. The Commission hates anything that might allow the UK to gain a competitive advantage and has used that excuse to damn the White Paper’s proposals to keep services separate from goods. In financial services, as we have heard already this afternoon, where the EU has much to lose if cross-border transactions do not work well, Monsieur Barnier has already rejected our generous proposals.

It seems that nothing will satisfy the Commission, apart from our subjugation to the EU on its terms and without any prospect that we could prosper once we have left. Of course, no UK Government should even contemplate agreeing on that basis. There may well be some discussion during the summer on the White Paper for form’s sake, but real negotiations cannot work if one side is intransigent—and I am not talking about our Government here. On current form, I can see no way in which the White Paper can form the basis of an agreement with the EU.

My second question is whether the White Paper delivers what people voted for in the referendum, in which 17.4 million people voted for one very big idea—to take back control from the EU. They were not concerned with the details of single markets, exactly how to control immigration or what a customs union meant. They expected, and were entitled to expect, that the Government would implement the big idea and sort out the details in practice. Let me be clear: the White Paper does not take back control. We will be tied in to what is euphemistically described as “a common rulebook”. The truth, as we have already heard, is that the common rulebook is, and always will be, the EU’s rulebook. We shall be expected to keep pace with it in future but will have no say whatever in those rules, and the ECJ will continue to be the arbiter. The White Paper says that Parliament can decide whether to apply the rules, but in truth Parliament will be emasculated: if we do not stay signed up to the rulebook, there will be “consequences”. The noble Lord, Lord Hannay, has already reminded us that Switzerland has experience of not agreeing to continue with the rules imposed by the EU.

My third question is whether the UK will prosper if we leave on the White Paper terms. There is no reason to think that we will. We will be tied in to the EU’s rulebook on goods and will be under constant pressure if we do anything that smacks of obtaining a competitive advantage in our trade with the EU. Our route to economic prosperity does not lie in the EU but in the high-growth economies outside the EU. Goods account for only 20% of our economy and less than half of our exported goods go to the EU, but signing up to the EU’s rulebook on goods will be a constant drag on our scope for free trade agreements with the rest of the world. The White Paper’s promise of freedom to negotiate trade agreements with other countries is illusory.

Free trade agreements are always anchored in trade in goods and, in particular, agricultural products. We need to be flexible here in order to gain opportunities for our all-important services sector in free trade agreements. If we cannot be flexible—which may well mean ignoring the EU’s rulebook—the prospect of free trade deals will evaporate. The ball and chain of the EU rulebook will drag us down.

I continue to believe that a negotiated deal would be the best outcome for everyone, but I am not afraid of a future that sees us trading on WTO terms. Much of world trade is already on WTO terms. It is a sound basis, especially from which to start, and especially if we are also prepared to lower or eliminate tariffs to demonstrate our commitment to free trade. We do not have to believe that Project Fear mark 2 economic forecasts are any more accurate than those we were given before the referendum in Project Fear mark 1.

Of course, if we exit on WTO terms things will not be the same as they are now. That is why the part of the Chequers outcome which deals with intensifying preparations for exit in all scenarios, although not in the White Paper itself, is probably the most important thing to come out of the Cabinet’s agreement. Change happens. We should embrace change and prepare in earnest for the UK operating outside the EU on terms which offer us the maximum chances of our future economic success. I am afraid to say that we should forget this White Paper.