Trade and Customs Policy

Baroness Verma Excerpts

Tuesday 5th December 2017 Lords Chamber

[Baroness Verma (Con)]

My Lords, it is always a pleasure to follow the noble Lord, Lord Kerr. I will try to calm the waters. I thank my noble friend the Minister for introducing the debate to your Lordships’ House. It provides us with a timely opportunity to discuss the hugely important subject of future trade and customs policy.

The real challenge for the Government is in getting all parts of the UK to agree to the terms that the Prime Minister laid out on taking office: no single market and no customs union. Yet the situation of the Irish border demonstrates clearly the complexities of reaching consensus and what appears to me to be the inadequate preparedness of the Government. Yesterday’s news reporting was evidence of the incredible complexity and sensitivity of the discussions.

Members will be aware that the EU Select Committee and its sub-committees have produced a number of related reports over the past year, including Brexit: the Options for Trade, Brexit: Trade in Goods and Brexit: UK-Irish Relations. The reports have taken large amounts of evidence from businesses, academics, trade organisations and Ministers, and they enabled the committees to lay out objectively the opportunities and challenges arising from leaving the EU. However, there were significant warnings that uncertainty and the slow progress being made would undoubtedly start to impact seriously on business investment decisions if the Government failed to ensure that real progress was made with the negotiations.

The results of the referendum are known: some 4% more of the voting British public voted to leave. However, now it is the duty of the Government and the Prime Minister to ensure that we leave with terms that benefit all the people of the UK; that all who live in the UK believe and feel they will not lose out from our exit from the EU; that the UK will maintain a strong relationship with Europe; and that people working here or in Europe will continue to build on the current opportunities we enjoy.

It is hard to understand what a seamless and frictionless border means in the context of the UK-Irish border. I for one certainly struggle with how, in the time remaining, the Government intend to have a bold and ambitious agreement, the freest possible trade and a bespoke arrangement unique to the UK.

The Government must not believe they have the mandate or position to respond with meaningless responses on the important and detailed work that the committees have carried out here and in the other place, hiding behind the so-often used phrase: “We cannot comment on ongoing negotiations”. Our reports lay out clearly and in detail the many issues and challenges that need to be addressed if we are to see our deep and special partnership maintained with our EU partners.

Many of the proposals contained in the Government’s position papers on Brexit are untested and without precedent. It is critical for all of us—from the job and wealth creators to the workforce at large—to believe that real pragmatism and honesty are in place to tackle the mammoth task ahead. It is certainly not in any of our interests for self-serving politicians to get in the way of what is inevitably a massive task of necessary compromises and demands to maintain a strong trading relationship with our biggest trade partner, the EU.

In the Government’s position paper, Preparing for our Future UK Trade Policy, the Government have expressed a desire,

“to ensure continuity in relation to our trade around the world”,

and that we,

“avoid disruption for business and other stakeholders”.

That is a welcome starting point given the scale of the trade that the UK carries out with the EU: the EU accounted for 43.1% of the UK’s exports of goods and services and 53.9% of its imports. Business, the associated supply chains, the associated services and the required skills and people all demand a high level of certainty and consistency.

It is crucial that we understand what a transition period will consist of. We all understand that these are discussions for negotiation, but I will ask my noble friend the Minister specifically about transitional arrangements and the EU’s preferential trade arrangements with third countries. The paper lays out the Government’s commitment to seeking continuity in arrangements for trade with countries,

“covered by EU third country FTAs and other EU preferential arrangements”.

These must be negotiated with the 60-plus countries that are signatories to the EU’s agreements and not with the EU. Will my noble friend confirm that the Government expect to have in place individual transitional deals the day we leave the EU with all countries covered by current EU FTAs, all states party to EU preferential arrangements and the EEA countries and Switzerland, or does she envisage a different scenario? If the latter, could she shed some light on what that would look like?

Will my noble friend say how discussions with Norway and Switzerland are going to ensure that, post Brexit, we avoid a hiatus with two of our largest trading partners outside the EU? Have the UK Government managed to allay the obvious concerns they may have?

The Government have placed huge emphasis on their intention after Brexit to,

“boost our trade relationships with old friends and new allies”.

Will my noble friend tell us how the Government plan to spend the additional £0.1 billion allocated to the Department for International Trade’s resource budget for 2017-18? Are our old friends and new friends expecting significantly different terms on visas and job prospects, given that the Government want tighter immigration levels?

The EU External Affairs Sub-Committee wrote to the Minister of State last week on the new trade remedies regime that my noble friend mentioned in her opening remarks. We all agree and accept that a robust trade remedies framework will be essential if we are to make a success of our new trade policy. Is my noble friend able to tell us what progress has been made on the new framework? I know she said that the Government are working for the best possible framework, but I am sure she can say what she feels are the key objectives for the new trade remedies regime.

I will touch quickly on how the paper relates to the WTO. There have been voices of concern from a number of quarters. The EU Committee also expressed deep concern last year that negotiation of the UK’s schedules of concessions may prove to be less straightforward than the Government have pinned their hopes on. It is of course critical that the views of other WTO members be considered, especially on tariff quotas and on whether the UK’s and the EU’s actions are seen as “modification” rather than “rectification” of the schedules. How confident is my noble friend that, if necessary in the case of a no-deal scenario, the schedules will be agreed in a timely fashion, and how content is she with the pace of the negotiations? What to her mind is a bare-bones deal?

I shall not comment on the White Paper on the customs Bill but focus on the Government’s overall approach to customs after Brexit. As I said in opening, the situation in which the Government find themselves reflects complexities that can be ironed out and agreed on only with a sensible timeframe. In any attempt to rush what are hugely sensitive issues, achieving room for manoeuvre can prove extremely challenging, the Irish border being exactly a point of illustration.

The EU External Affairs Sub-Committee considered in the autumn the Government’s document, Future Customs Arrangements: A Future Partnership Paper. It was extremely disappointing that neither of the two options outlined in the paper was presented with sufficient detail to allow us to examine properly what the “new customs partnership” option would look like, because, in the Government’s own words, it is an “innovative and untested approach”. Surely we are right to feel somewhat apprehensive. Given that we have less than 16 months before we depart from the EU, it is clear that a whole plethora of questions need to be answered on what a customs framework will look like.

My noble friend will be aware that the committee wrote to my noble friend Lord Callanan on 31 October requesting details of the preparatory work that the Government are undertaking before they start negotiations on customs with the EU. I will remind my noble friend of the areas around which the letter was framed: entry and exit declarations; membership of the common transit convention; mutual recognition of the authorised economic operators scheme; a technology solution for ports, and other customs co-operation, assistance and data sharing. The committee has received acknowledgement of the letter from my noble friend, but we are awaiting a response on those issues. Perhaps the Minister can comment on them and assure the House that we will receive a detailed response from the Government on the issues we have raised.

As a former Minister, I am aware of the immense pressures that Ministers are working under. That said, I was and remain of the view that, as servants to the British people, it is critical that we keep our population informed, enabling honest discussions and decisions to be made in the interests of all in our United Kingdom.

One such honest discussion is on the concern raised in our committee’s report, Brexit: Trade in Goods, about the costly administrative procedures for businesses and the varying levels of delay in the consignment of goods, let alone issues raised by our committee and other committees on rules of origin, passporting rights and membership of EU agencies that give us the passage to operate across the globe. Have the Government undertaken an assessment of the cost implications for businesses that they outlined in the future customs arrangements paper? What support in preparedness for these transitions has the business community asked from the Government, and have the Government calculated the scale of financial and time impacts on supply chains and associated providers? The noble Lord, Lord Whitty, and I met people from a trade association. He has cited one example; I could cite many more.

In our report, Brexit: Trade in Goods, we drew the House’s attention to our concerns about the new customs declaration service, or CDS. We said that we were concerned that the introduction of a new IT system for customs, planned for the year that the UK leaves the EU, may add to the complexity of the trading conditions facing businesses in the face of Brexit. Will my noble friend update the House on the progress of the CDS, both the development and implementing stages? What information programmes will be made available to businesses and how will this work be complemented with our European partners?

The noble Lord, Lord Whitty, referred to our committee’s report, Brexit: the Options for Trade, published in December 2016. If the Minister has not read it, I heartily recommend that she and her colleagues do so, as it lays out a number of very well thought-through and doable recommendations and conclusions. I will end on one; it is on page 71, at paragraph 263. The last sentence states:

“We urge the Government to establish at the outset of negotiations a clear ‘game plan’ for a future transitional agreement, with specific proposals as to what form it should take”.


We must not allow ourselves to sleepwalk into chaos. The job of this House and the other place is to provide for all the possible outcomes we could face. The people of the UK expect us to work hard on their behalf, but they also expect honesty and integrity in the debate. We make a difference; let us not find ourselves short in performing our duty.