European Free Trade Association

Chuka Umunna Excerpts

Wednesday 7th February 2018 Westminster Hall

[Stephen Hammond]

As ever, my right hon. and learned Friend makes the point rather better than I can. It is absolutely clear that that is implicit and, based on the evidence we heard in the Treasury Committee, explicit in what the Government signed or agreed to at the end of phase 1 of the negotiations in December.

EFTA provides a great deal of flexibility, as we have explored in a number of interventions. It keeps open the option of joining the EEA agreement, which I think would be the right thing to do. However, it must be right that, as we leave the EU, we keep our options open. I say to the Minister in all sincerity that there is a lack of clarity over exactly what type of deal the Government want. We talked about CETA and beyond, and as I said a moment ago, CETA is the most advanced trade agreement that the EU has yet signed with a third country. I understand that the Government want to go beyond that, but the clock is ticking, and in trying to spend a huge amount of time carving out a middle ground between CETA and the EEA, the chances are that we may end up with nothing at all, or with something well below the Government’s ambitions.

It seems to me that an EFTA-style EEA relationship—the Norway option—could be achieved rapidly and will go much further than CETA goes at the moment. That is a route we could pursue for the UK’s best interest, and it must not be allowed to be dismissed without proper analysis and consideration.

[Chuka Umunna (Streatham) (Lab)]

I congratulate the hon. Gentleman on securing this important debate. First, with regard to CETA, one reason why that kind of relationship would not be appropriate for the UK is that CETA substantially covers goods, whereas 80% of our economy is services. Secondly, as he may come on to, one of the objections raised to our being part of EFTA, and using that as a way of accessing and being part of the EEA, is that we would be a rule receiver as opposed to a rule maker. Does he agree that it is wrong to say that EEA and EFTA members have no influence on the rules that apply? Does he also agree that if we want to access the single market, we will have to comply with its rules, and that we are more likely to be able to frame those rules if we are part of the EEA, through EFTA, than if we are sitting outside and simply accessing the single market through a free trade agreement?

[Stephen Hammond]

I of course agree with the hon. Gentleman. I am about to make exactly those points, because it is important that they are made loud and clear. As he will know and will have observed, I have spent a lot of time in the Chamber over the last two years making the case for services, which is one of our biggest tax generators. The public services that we all enjoy will not be able to be funded in the same way if we do not protect those services. As he will have wanted to point out, the EFTA arrangement covers services in many cases, whereas CETA, for instance, does not. That is a clear issue that the Government will have to confront.

The EFTA-EEA framework is motivated purely by the economy and not the pursuit of a political objective such as ever closer union. It is crucial that people remember that. The EEA would give the UK the same access to the single market as it has now for most goods and services. It is an off-the-shelf, already tested model that would provide businesses and our citizens with the most certainty that we can give them as we leave the EU. Yes, we would be subject to EEA regulation, but as my right hon. Friend the Member for Meriden (Dame Caroline Spelman) pointed out, it does not cover the controversial common agricultural and common fisheries policies or justice and home affairs. From the outset—to allay the concerns of some of my hon. Friends—we would have control of those policy areas.

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[Stephen Hammond]

They would.

[Chuka Umunna]

They would.

[Matthew Pennycook]

Well, they might be. I think there is a range of opinion out there about it; I have spoken to a number of different people with different views. The hon. Member for Wimbledon said that he had spoken to the ambassador and the professor himself. I note the comments of the Norwegian Prime Minister in August last year, when she said that the UK joining EFTA, even for a temporary period, would be a “challenging and costly” undertaking. Again, those concerns are not insurmountable, but we need to grapple with how realistic this option is and, in particular, with whether EFTA’s institutions—especially its court—could cope with the volume of cases that would land in them if the UK was to join EFTA.

All of that speaks to a wider point, which is that the four EFTA economies are very different from the UK economy. The size of the EFTA countries and the nature of their economies make UK membership of EFTA a challenging prospect.

All of that needs to be debated, and it cannot be debated in an hour and a half in Westminster Hall. The EFTA option should not be taken off the table, but there are real reasons why the Labour party believes that a bespoke deal following a transitional arrangement on basic terms should be what we are aiming for, and therefore EEA/EFTA would not be our first preference. However, as I say, the key point is that that option should not be taken off the table. In the end, it is up to Parliament to decide, which is why it is so important that we have a meaningful vote—

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[Mr Walker]

No, I need to make a little progress because I have got quite a lot to try to cover.

Membership of EFTA alone does not automatically guarantee UK access to the EU single market, and EFTA states have the different trading relationships I have described. In this debate, most people have spoken about the EEA and EFTA. The EEA, which is sometimes referred to as the Norway model, would mean the UK having to adopt automatically and in their entirety new EU rules over which we would have little influence and no vote. As the Prime Minister has said, such a loss of democratic control could not work for the British people. It would also involve continuing to pay substantially into the EU budget.

[Chuka Umunna]

Does the Minister not accept that if we are to do the free trade agreement that he and his colleagues in government keep talking about, we are going to have to comply with European standards anyway? We have much more chance of having some influence—albeit, I accept, not a vote—if we do so through EFTA and EEA membership. The hon. Member for Wimbledon (Stephen Hammond) has been clear he is arguing for that.

[Mr Walker]

The Government are ambitious about the extent of the trade agreement we can do with the EU. The EU has a number of trade agreements with other countries where there is mutual recognition and regulatory alignment, but not the absolute harmonisation of rules. I do not accept the premise of the hon. Gentleman’s argument.

I will not be able to cover all the comments, so I want to focus a little more on international trade. Members have asked why we do not plan to rejoin EFTA as a way of continuing our trading relationships with its members and trading with the wider world through the adoption of its existing free trade agreements. As I have already stated, EFTA has a network of 27 free trade agreements as compared with the EU’s 40 FTAs. While many of those agreements significantly overlap, EFTA agreements still focus on traditional areas of market access and therefore tend to be less comprehensive and more goods-focused than those of the EU. It is also notable that some EFTA FTAs specifically exclude trade remedies that the UK may seek to have as part of our independent trade policy. The UK is in many ways different from those countries.