Trade and Customs Policy

Baroness Quin Excerpts

Tuesday 5th December 2017 Lords Chamber

[Baroness Quin (Lab)]

My Lords, it is a pleasure to follow the speech of the noble Baroness, Lady Verma, who reminded us, as did my noble friend Lord Whitty, of the valuable work done by the European Union committees in this House.

Despite the publication of the two documents before us today, on trade and on customs policy after Brexit, there remain huge unanswered questions. First, I want to look at the aim of frictionless trade with the European Union—this is very much the topic of the moment, given the events of yesterday in Brussels. How can frictionless trade be achieved when we are outside the single market and the customs union? The irony of the two papers is that we seem to want to get as close to the EU as possible while at the same time moving away from it. There is almost a secret admission in the papers that what we have now is very much in our economic interest.

There is the whole question of regulatory divergence. It has often been put to us that, outside the EU, we will be free to make our own rules, but if we want frictionless trade, it cannot be in our interest to have regulatory divergence from the European Union. Regulatory divergence may give us more theoretical freedom to do our own thing, but it will not lead to frictionless trade and we cannot have both.

The papers also make a great deal of consultation with industry, and I welcome the fact that the Government have launched widespread consultation the length and breadth of the UK with devolved authorities and with industries both large-scale and small. However, if the outcome of the consultation is a strong message from the majority of business that is against the Government’s policy of leaving the single market and customs union, will they think again as a result?

I have read briefing papers recently from a huge variety of our major industries, both in the manufacturing sector and the services sector, and they all seem extremely worried about our future outside the single market and the customs union. Furthermore, I have been struck by the number of industrial sectors which, rather than resenting European regulation, feel on the whole that they have had a huge role in creating and shaping that regulation. They worry that there will be a massive loss of influence for them once they no longer have a seat at the table. They feel that they have been setting the agenda in Europe, in many ways. That is a very different picture from that painted by many during the referendum campaign.

Understandably, the papers in front of us talk a lot about the prospects for trading with the rest of the world outside the European Union. Of course we want to conquer new markets and do better in existing markets outside the European Union but these things are not an alternative to European Union trade; they are complementary and additional to it. Certainly, over recent years, Germany has exported on average about five times as much to China as we have done—it can do that while being firmly part of the European Union. The irony is that, as was reported last week in a number of newspapers, our exports to the European Union have improved in recent months but our trade deficit with the rest of the world has worsened.

Much is made of our ability to negotiate free trade deals post Brexit, and that is certainly mentioned in the papers in front of us. But, again, there are many uncertainties here. Obviously, the United States is mentioned as a very important market. The noble Lord, Lord Kerr, referred to that. Personally, I was very keen, unlike some in my own party, to see a free trade agreement between the United States and the European Union. I saw huge benefits in that, particularly for some of our smaller-scale exporters and specialist exporters in the agricultural sector, for instance, which are handicapped by American rules, which make it very difficult and a huge bureaucratic procedure to export to the United States. But the United States under President Trump now seems less keen to prioritise a deal with us over one with the European Union, and in any case we know that the programme on which he was elected is much more protectionist than the one followed by President Obama. The question is: will we be a priority for third countries or blocs to negotiate with, or will they favour the much larger European Union trading bloc? This is a valid question, which needs to be asked. I noticed an interesting quote in the Evening Standard yesterday, which was covering the new V&A museum in China. It quoted a Chinese spokesman as saying:

“You should be leading the EU, not leaving it”.


Trade deals require dispute resolution mechanisms, which the Minister referred to in her opening speech. In this respect I simply cannot understand the Brexiteers’ paranoia about the European Court of Justice. There are many people in this House who have longer ministerial experience than I do, but when I was Minister for Europe I made a lengthy visit to the European Court of Justice; earlier, as a Member of the European Parliament, I was involved in helping constituents take cases to the European court. In those cases and judgments, there was a ruling in favour of our own citizens. As a result, I have tended to see the European Court of Justice as an ally rather than an enemy, and as an organisation which carries out the responsibilities that the member Governments of the European Union have entrusted to it.

I see two big ironies in the current situation. The Government believe strongly in free enterprise—understandably and rightly—but ironically this present situation is making industry more dependent on politics and on the negotiating competence of government politicians than at any other time I can remember in our history. It is also ironic that many pro-Brexit politicians used to say to us that the European Union would be absolutely fine if it was just a common market, yet it seems to be that common market—that single market that Britain did so much to create—that we are turning our back on. I do not really understand why.

I accept the point made by the noble Lord, Lord Kerr, that tariff rates are not the most important things now, but I also worry that in a harsh trading environment any changes to tariffs or non-tariff barriers—sometimes even marginal changes—or suddenly becoming penalised by the rules of origin, which my noble friend Lord Whitty mentioned, can be the difference between export success and failure. Coming from a part of the country—the north-east of England, which voted largely in favour of Brexit—where we have a good exporting record, I am very worried that we will make the economic situation worse in my part of the country, rather than better, as a result of this overall approach.

The noble Baroness, Lady Verma, urged the Government to be honest with people about these issues. That theme was also mentioned by the noble Lord, Lord Tugendhat, and others in the debate yesterday. The Government really should admit that the current arrangements are better than the alternatives, certainly with regard to the situation in Northern Ireland and the Republic. The best way to resolve the concerns of the Irish Government and those of the DUP and Northern Ireland is to maintain these arrangements, not destroy them. The arrangements also allay the concerns of Scotland and, indeed, of London and other parts of the UK, which have also talked about the possibility of having separate arrangements, but I agree with the Government that it would be a nightmare if within the United Kingdom common market we had all kinds of different trading and customs arrangements. Living very close to the Scottish border, I feel that issue very strongly indeed.

The hard-line Brexiteers often present themselves as patriots and accuse those who do not share their views of talking the country down. But by not facing the problems honestly, the Government and their hard-line supporters are letting the country down and endangering our future as a United Kingdom. Surely that is something that none of us wants to see happen.