Brexit: Trade in Goods (EUC Report)

Baroness Quin Excerpts

Tuesday 18th July 2017 Lords Chamber

[Baroness Quin (Lab)]

My Lords, I add my congratulations to the noble Baroness, Lady Verma, and the committee on this report. I join the noble Earl, Lord Sandwich, in having good memories of having served on the committee fairly recently.

As the noble Baroness pointed out, the report was published some time ago. In some ways it is frustrating that it has not been debated before now, but it is very timely, given its subject and given that we are at the beginning of formal negotiations with the EU. This report, together with the other reports on Brexit from this House, shows compellingly how much we benefit from being a member of the European single market and how vital that trading relationship between the UK and the EU is going to continue to be for the future. This is a reality which both remainers and leavers have to come to terms with.

The report highlights the difficulties and challenges that Brexit poses and the possible consequences of Brexit on jobs, living standards and the influence Britain can have in the European and international contexts. This report makes many important points and asks important questions to which, so far, no very clear replies have been forthcoming. The report refers to industries, such as the automotive and aerospace industries, which are part of an integrated European Union supply chain and lists the ways in which UK industries that are part of that supply chain may face increased costs and economic disruption from Brexit.

The report also clearly and correctly states that the manufacturing and primary commodities sectors are important employers in particular regions of the UK. I note that a number of speakers in the debate today are, like me, from the north-east of England, a region which has had a good export record in recent years but whose trade is more heavily dependent on the European market than that of most other parts of the UK. The Newcastle Journal carried out polling during the election campaign. When asked about specific Conservative Government policies only 16.6% of people polled said they backed Conservative plans to leave the EU single market, despite the region having voted overall for Brexit.

There is also concern arising out of the current, very welcome, moves to finalise a free trade agreement between the European Union and Japan, but if the UK leaves the European Union with only WTO rules to fall back on we could end up with a region such as the north-east, which has the tremendously important and successful Nissan car industry, having to face obstacles that cars coming direct from Japan would not have to face. This is causing concern and will continue to do so unless somehow it is resolved in the negotiations that are taking place.

I listened with interest to the comments made by the noble Lord, Lord Howell, about services and the importance of the English language. It is a very important point, but it is verging on the tragic that we are leaving the EU at a time when English is clearly so widely used across the whole European Union. That is an asset that we are turning our back on in the process that we seem to be embarking on at present.

I want to make one point very strongly to the Minister. I know it is a point that was very important to her predecessor, to whom I pay tribute for the open way in which he dealt with Members of this House, which I am sure she will replicate. We need an assurance on how much consultation there will be and on who will be consulted throughout this process. Obviously the devolved Administrations have to be very closely involved from the outset, but all localities and areas of the UK and virtually all industries and local authorities will be affected by Brexit, and I hope that the Government will give us some idea at the end of this debate about the systematic consultation that will take place. People very much need that reassurance at present.

I note that when talking about Britain’s future trade post Brexit, the Government, including the noble Baroness, refer to the fact that the strongest-growing markets at the moment are outside the EU. Mention is made of the Far East in particular. When that argument is made, though, it often creates the false impression that there is a choice between being in the EU and its single market or being outside and trading with markets elsewhere. I am sure the Minister will concede that a country does not need to be outside the EU or the single market to trade with emerging and growing markets across the world, as can be clearly seen from the fact that Germany, from within the EU, exports about four times as much to China as we do. That proves the point, and indeed France too exports more to China than us at present.

As we know, trade takes place in an extremely competitive environment. Even if UK industry faces only modest tariffs or extra customs costs, it may find that that is enough to lose business on a large scale, so we have to be very careful about the arrangements we make in our negotiations with the EU. Also, we are talking not just about the competitiveness of trade. The report makes it very clear that, within the EU, UK industry benefits from collaboration and from funding in lots of joint endeavours with other European countries. The report rightly asks whether that essential co-operation will continue post Brexit.

For all the reasons that I have given, I believe the Government will have to envisage some kind of arrangement for the UK along the lines of the European Economic Area or EFTA. I note with interest the differing views from the noble Lord, Lord Livingston, on the one hand and my noble friend Lord Hain on the other. I must say I incline to my noble friend’s view that we need to maintain those key benefits of being in the single market and the customs union.

I believe the Government have no mandate for breaking the links with the single market and the customs union. The election result did not endorse their approach, nor did it, as the Prime Minister wanted, strengthen the Government’s hand with regard to Parliament, including your Lordships’ House. In the election, Labour, the Liberal Democrats, the SNP, Plaid Cymru and other parties all stressed the importance of the single market to the UK.

The referendum result itself did not include a specific commitment to leaving the single market; again, I agree with my noble friend Lord Hain on that. In any case, if the country is to come together after a narrow victory in the referendum for leave—52% compared to 48%—it has to be recognised that that close margin means that those who did not want to leave the EU should have some of their concerns addressed, in terms of achieving a continuing close relationship with our EU partners. Indeed, the referendum result in different parts of the UK—remain won handsomely in Scotland and Northern Ireland, not to mention in Gibraltar, where there was an overwhelming remain result—means that to keep our union together, compromise, not confrontation, over maintaining our links with Europe should be the order of the day. I hope the Government will take the report to heart, along with all the other excellent reports that have been provided by this House.