European Union: Negotiations (European Union Committee Report)

Baroness Smith of Newnham Excerpts

Monday 16th March 2020 Lords Chamber

[Baroness Falkner of Margravine (Non-Afl)]

My Lords, I agree with the EU Select Committee’s report and support the Motion in the name of the noble Earl, Lord Kinnoull. I was a member of that Committee until last summer and I know how carefully it strives to be as objective as possible. This report upholds that tradition of neutrality. However, I do not support the amendment to the Motion in the name of the noble Baroness, Lady Hayter, for reasons that I will set out.

The EU Committee’s report notes the change in the Government’s Command Paper of February to the political declaration of October 2019. Again, I agree that there is a change, but I point to the significant fact that explains that change: the event of a general election on 12 December 2019. This was contested on the basis that, if the Conservatives won the election, they would seek a very different settlement from Prime Minister May’s withdrawal agreement in terms of the sovereign autonomy of the United Kingdom. They won that election resoundingly, hence the hardening of the autonomy provisions in the UK’s negotiating position.

The Committee also notes the EU’s new hardening of its own position on provisions to implement a level playing field, almost predicating the deal on this proviso. This change of position has some history. During my time on the committee, we had several meetings with Mr Barnier through the course of the negotiations. The quest for a level playing field was there, but mainly in regard to market access for, for example, financial services. I recall one meeting in, I think, November 2018 when there was a robust exchange between us when I asked him why he thought the UK would wish to leave the EU if it would end up as a rule-taker with no rights but having to abide by EU rules. I remember his answer in the margins of the meeting, which was simply, “Well, it is your choice.”

Regulatory autonomy is particularly relevant at a time of rapid technological and economic change, which will undoubtedly impact the prospects for all advanced economies in the relatively near future, so dynamic alignment with EU rules in areas such as environmental protection and workers’ rights come at a time when most independent states will seek as many levers at their disposal as possible to mitigate the effect of job-displacing technology. In plain English, every country wants to do what it needs to do to protect the jobs and prosperity of its citizens. That is why carve-outs and exemptions exist in all trade agreements.

Regarding state aid, Mr Johnson, in his speech of 3 February 2020, detailed the enforcement taken by the EU against EU member states. He did so to prove that the UK is not front of the pack in diverging from EU rules. The UK, he said, was subject to four actions in 21 years, compared with 29 against France, 45 against Italy and 67 against Germany. The record speaks for itself.

A further change to the EU position not mentioned in the report is the reluctance of the EU to envisage a Canada-style CETA. Again, Mr Barnier’s sideshow, wheeled out frequently during the negotiations, had several levels of relationship on offer, depending on what the UK sought to do in its withdrawal agreement and future relationship. If we wanted untrammelled market access, we had to be in the single market and the customs union. At the other end of the scale was the Canada CETA as an ordinary third country. So it is surprising to see that once the UK has resolved to be a third country, the EU now discovers, three and a half years later, that we have a close geographical proximity and are a large economic power—which are the reasons it gives for why a Canadian-style CETA is inappropriate for us.

The UK position, reflecting the Government’s majority, can be summed up by the observation made by John Maynard Keynes: “When the facts change, I change my mind.” However, instead of a similar realisation that the facts on the ground have changed, the EU seems to move away from the political facts in the UK, its negotiating partner. However, I hope that these are just negotiating positions through which a consensus will emerge.

My objections to the Labour amendment are mainly in its seeking an analogous position to the European Parliament, not in its desire for greater scrutiny, which to a great extent I share. This comparison with the European Parliament has been a long-standing ask from those in the Lords and the Commons, and was promised by the Government in response to a question that I asked Mr David Davis in 2017 during EU Select Committee evidence sessions. I was surprised that he agreed to grant the committee that, and I continue to be surprised that the Lords continues to ask the question as the Government move away from that offer.

The Motion seems to imply that Parliament should be given the same rights as the European Parliament. That in turn implies that the UK Parliament is similar in composition and powers to the EU, whereby it should have the same rights. First, the European Parliament was given the powers under Lisbon as the Commission, post Maastricht, had come under attack for being insufficiently democratic. The status quo ante had been that the Commission negotiated agreements and the European Council agreed them. Post Lisbon, the European Parliament forms a bicameral legislature with the Council of Ministers. This is not analogous to the role of the UK Parliament vis-à-vis the UK Government; I think that should be self-evident. As the EU institutions—

[Baroness Smith of Newnham (LD)]

I am a little confused. I thought that the point of the United Kingdom voting to leave the European Union was to take back control and that Parliament was sovereign and no Parliament could bind its successor. In such circumstances, is it not wholly appropriate for this Parliament to seek to hold the Government to account? Why is there anything peculiar about this?

[Baroness Falkner of Margravine]

I fear that the noble Baroness is a little enthusiastic in jumping in before I have concluded setting out my rationale for why I think that this is not analogous. I will not go into “taking back control” because we are a bicameral Parliament and the European Parliament is not, so it is a different entity entirely.

As the EU institutions practise in an area of trade policy that is not analogous, there is a distinction between straightforward trade agreements and mixed agreements, with differing procedures as the CETA debacle apropos Wallonia demonstrates. I remind noble Lords that CETA remains a provisional agreement; as yet it has not been ratified by all member states. So I would argue that how the Commission works through blockages is still a work in progress. My prediction is that the EU will find it increasingly difficult to pass the kind of comprehensive deals with either the US or other large countries that it seeks if such divergent and multiple checks on its autonomy prevail.

I turn to the noble Baroness’s question about the UK Parliament and the attempt to replicate the European Parliament’s powers here. One singular distinction is that we are bicameral and the European Parliament is a single Parliament, as I have just reminded her. Moreover, we have an elected Chamber, the Commons, which is similar to the European Parliament, and a further appointed Chamber, the Lords. Were we in the Lords to seek to put up objections to a trade deal that had been agreed by the Commons potentially where the detail may not have formed part of that Government’s manifesto, where would we be if the Commons cleared it but the Lords did not? Moreover, if one takes the EU analogy for mixed agreements and replicates it at national level, is one not saying that the devolved nations should also have a veto on the deal?

I am all for involving the devolved powers in the details of free trade agreements as in the end they have to implement them. The current mechanism for consultation should be improved. Would that be against changing our settlement for reserved matters? If that is the case, I will need to look again.

It seems to me that this ongoing quest for analogous powers to those of the European Parliament on the part of some sides of this House is misguided.

--- Later in debate ---

[Baroness Smith of Newnham]

My Lords, like the noble Lord, Lord Liddle, I need to apologise for having been temporarily absent during this debate. I was in my place for all the opening speeches, but I was absent because I am being double-hatted today. In normal circumstances, my noble friend Lord Wallace of Saltaire would have been winding for the Liberal Democrats and I was going to play a bit part. Unfortunately, for various reasons associated with the coronavirus, he is not able to be in his place and, as I also do defence things, I was in Grand Committee, but the fact that I was in Grand Committee will shortly be relevant to my remarks.

As so often, the report of your Lordships’ European Union Committee is timely and insightful. As other noble Lords have said, we are most grateful to the noble Earl, Lord Kinnoull, for bringing it to the House. Unlike the noble Baroness, Lady Noakes, these Benches believe that many of the issues raised in the report and in the Government’s negotiating strategy are of national interest. It therefore seems wholly relevant that the report should come to the Chamber and that the Government’s Command Paper has also been brought.

Like many other noble Lords, we on these Benches have considerable concerns about the timing of not the Command Paper but the Government’s attempts to negotiate and ensure that the future relationship is agreed by 31 December 2020. It is clear that the Government won a mandate on 12 December with the clarion cry “Get Brexit done”, but on 31 January that first stage of the withdrawal agreement was reached. The UK has left the European Union. The future relationship does not have to be agreed by 31 December.

Several noble Lords, starting with my noble friend—she is a friend—Lady Falkner of Margravine, talked about John Maynard Keynes’s remark that when the facts changed, he changed his mind; what do you do? The facts that have changed since 12 December and since the Command Paper was published are precisely that Covid-19 may potentially have a catastrophic effect on this country and the EU 27. The international context has changed fundamentally. As the noble Baroness, Lady Bennett, pointed out, the country expects us to be focused on dealing with that crisis. It is not only the country that thinks that. When I asked the Minister, the noble Baroness, Lady Goldie, in Grand Committee about the future of the integrated security and defence review, she pointed out that the country wanted and expected the Government to focus on the crisis, and that is what they are doing. If the Government are rightly focused on the Covid-19 crisis, do they have the bandwidth to engage in the appropriate negotiations to ensure that by the end of June we have reached a situation where we have a future trade deal?

I will not rehearse the Brexit debate. I do not wish to do that, or to test the patience of the House by rehearsing the views for or against being in or out of European Union. We have very clearly left. But it is surely in the national interest to get the best deal that we can. It is well known that the Prime Minister is of the view that if you cannot get the deal you want, you should walk away. He made that absolutely clear writing in the Daily Telegraph before Prime Minister David Cameron tried to renegotiate the UK’s terms of membership.

[Lord Hamilton of Epsom]

Does the noble Baroness agree that if you threaten to walk away, you strengthen your negotiating position?

[Baroness Smith of Newnham]

My Lords, as has happened so often this evening when there has been an intervention, I will say: “Ah, if the noble Lord will only wait just a moment, I might get to that point.” What I wanted to say was that when Boris Johnson was writing in the Telegraph he was always clear in his advice to David Cameron and Theresa May that they had to be able to walk away from the table. That is clearly something that as Prime Minister we expect him to do. If we get to late June and he does not feel the deal is appropriate, we expect him to be willing to walk away, and that is certainly a negotiating strategy. But there is a huge difference between the Government negotiating with the 27 as equal sovereigns, as the Command Paper suggests, in our current situation and in normal times, when the focus of negotiations can be week in, week out. We have already seen the second phase of negotiations postponed because of the current crisis that affects not just this country but the EU 27. We are not going to be focused for the next three and a half months on negotiating the future relationship; nobody would expect us do that. In that context, can the Minister confirm either that it would be appropriate to extend the deadline or give the House some indication that the Government are acting in good faith in negotiations?

As my noble friend Lady Ludford pointed out earlier, there is a question of trust. It is not always clear that Her Majesty’s Government are trusted in Europe on the question of our relationship. Issues in the Command Paper, as we have heard in so many speeches this evening, have raised questions about the Government moving from the political declaration. Could the Minister reassure the House that the negotiations will take place in an appropriate timeframe—that 31 December does not have to be do or die? After all, the Prime Minister won his election on 12 December; he has a five-year term of office, unless and until the Fixed-term Parliaments Act is repealed.

There is every opportunity for the Government to do the right thing, act in the national interest and postpone the deadline for withdrawal—not least because we do not simply have to negotiate and ratify the withdrawal agreement in your Lordships’ House and the other place, but the other 27 member states have to ratify. The noble Lord, Lord Kerr of Kinlochard, suggested that perhaps it would be a very simple agreement; if we go low, it will be simple. In that case, the 27 might not have to ratify through their national capitals. But, if we have a mixed agreement, which is what we might have expected, it will have to be ratified through all the national parliaments of the 27, including Flanders and Wallonia, and the Canadians can tell you what that might mean in practice.

We are faced with a very tight timetable, and the potential for serious divergence from the political declaration and from the future of the European Union on a whole range of areas. We have had questions about financial services. I want to raise another set of areas of participation in Union programmes, and at this point declare an interest: in my day job, I am reader in European politics at Cambridge University, where I have project funding from Horizon 2020, and I am linked to the Erasmus+ programme. So I would like to know a little bit about the Government’s thoughts on future integration in those areas, particularly because on Erasmus+ the Command Paper says that the Government might look at some possible time-limited arrangement,

“provided the terms are in the UK’s interests.”


Can the Minister explain what that might mean? Similarly, and more importantly for the research community at large, under what conditions might the Government wish to participate further in Horizon Europe?

On security questions, we have heard from the noble Earl, Lord Kinnoull, and the noble Lord, Lord Liddle, particularly the concerns about security and foreign policy. The former Prime Minister, the MP for Maidenhead, seemed to be rather keen on the idea of close security and foreign policy co-operation with the EU 27. That seems to have disappeared from the Command Paper. Will the Minister reassure us that the Government still believe and understand that our security interests and those of the EU 27 remain as one? If anything demonstrates that, it is surely the Covid-19 crisis, which affects all of us and in which we are benefiting from the links to the European Union for ventilators and so on.

On these Benches, we strongly support the amendment from the noble Baroness, Lady Hayter. Some of us listened with some incredulity to the noble Baroness, Lady Noakes, who, I believe, said, “Parliamentary scrutiny is neither necessary nor desirable.” She may wish to correct me if I have misheard. I thought that that was what your Lordships were here for. Regarding the future relationship with the European Union, we believe that parliamentary scrutiny is both necessary and desirable. We may not be involved in the day-to-day negotiations, but we should certainly be kept abreast of what is going on to the extent that it is possible in the context of whatever limited arrangements Parliament might face in the context of the current crisis.

We are in a situation in which time is of the essence. We have seen months of negotiations with the European Union sometimes leading to the outcomes that we want and sometimes not. We are currently faced with a three-and-a-half-month window of opportunity for the future relationship unless the Government are willing to demonstrate some flexibility. In the context of the dire straits that the Prime Minister has just been telling us that we are facing and the fact that so many Members of your Lordships’ House will self-isolate and not be here, it is surely appropriate for the Government to look again at their timing and talk to the EU 27 about changing the timetable for our future relationship.