European Free Trade Association

Dominic Grieve Excerpts

Wednesday 7th February 2018 Westminster Hall

[Stephen Hammond]

First of all, nothing in EFTA implies a customs union; there is no customs union with EFTA. That myth is being perpetrated. My hon. Friend is absolutely right that Switzerland is not in a customs union, and nor are any of the other EFTA members. I accept that we are likely to leave the customs union, but as he will know, it is the Government’s stated policy, in the Prime Minister’s Lancaster House and Florence speeches, that the possibility of a customs union is left open. Nothing has changed in terms of Government policy, so I am entirely in line with Government policy on that.

[Mr Dominic Grieve (Beaconsfield) (Con)]

On that point, it is also clear that the first-stage agreement that we reached in December, concerning the border between Northern Ireland and the Republic, must imply the maintenance of a form of customs union. What form that might take is clearly open to some level of debate, but as my hon. Friend may agree, it is quite explicit that it must follow that there is regulatory alignment to prevent the need for customs checks.

[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.