Future Relationship Between the UK and the EU

Dominic Raab Excerpts

Wednesday 18th July 2018 Commons Chamber

[The Secretary of State for Exiting the European Union (Dominic Raab)]

I beg to move,

That this House has considered the future relationship between the United Kingdom and the European Union.

Let me begin by paying tribute to my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson). I could not make it into the Chamber, but I listened to his personal statement from my office. I pay tribute to the huge service that he did for our country during his tenure as Foreign Secretary, and also to the passion and optimism with which he spoke in relation to Brexit.

Last week the Government published their White Paper “The future relationship between the United Kingdom and the European Union”. It is a principled and pragmatic plan for the relationship that we wish to build for the future.

[Ian Murray (Edinburgh South) (Lab)]

I congratulate the Secretary of State on his promotion to his new role. He mentioned the personal statement made by the former Foreign Secretary in the House today. I wonder if he could tell us which parts of it he disagreed with.

[Dominic Raab]

I was paying tribute, and paying my respects, to the service that my right hon. Friend had done for this country as Foreign Secretary, and admiring the optimism and the passion with which he had spoken, particularly in relation to Brexit. It is not for me to pick at the detail of his statement. I think that all Members, whatever their views on Brexit, recognise the convictions held by other Members on both sides, and in all parties, in relation to this important matter.

As I was saying, the White Paper is a principled and pragmatic plan for the relationship that we wish to build for the future. It delivers on our dual strategic aim of taking back control over our laws, our money and our borders, while preserving and building on the historic ties with our EU friends—such as trade and security—that we all rightly prize.

The White Paper proposes a free trade area for goods to maintain frictionless trade, supported by a common rulebook and a new facilitated customs arrangement, but only for the rules that are necessary to provide frictionless trade at the border. That will help to secure the complex supply chains and just-in-time manufacturing processes that we have developed with the EU over 40 years. It will give businesses certainty and clarity, and will help us to preserve the jobs that thrive on the basis of frictionless trade across the border. Under those arrangements, businesses from Stockholm to Sunderland and from Cardiff to Krakow will be able to rely on smooth procedures to avoid any potential disruption of their livelihoods.

A key component of the free trade area will be our proposal for a facilitated customs arrangement, a business-friendly model that removes the need for new routine customs checks and controls between the UK and the EU while enabling the UK to control its own tariffs to boost trade with the rest of the world. The UK would apply the EU’s tariffs to goods intended for the EU, and its own tariffs and policy to goods intended for consumption in the UK.

[Mike Gapes (Ilford South) (Lab/Co-op)]

I have not yet had a chance to welcome the Secretary of State to his interesting post. What assessment has he made of the EU-Japan trade agreement that has just been announced? Will he take this opportunity to welcome it as a potential boost to trade for our country, and confirm that the Government are not planning to take us out of that arrangement?

[Dominic Raab]

I thank the hon. Gentleman for his kind words. That is a draft agreement, which has not yet entered into force. We will of course be champions of global free trade with precisely those emerging markets of the future, from Asia to Latin America, which is where the jobs and opportunities will come from. Like him, I want to see more of that. In fact, one of the advantages of leaving the EU is that we will be able to have an even more energetic and liberal approach to free trade.

[Sir Edward Leigh (Gainsborough) (Con)]

My right hon. Friend was talking about the facilitated customs arrangement. Before Monday, it was already going to be difficult enough to persuade the EU that it was in its interests for us to collect tariffs on its behalf, but after Monday’s vote the arrangements must be reciprocal. Is there the remotest chance of us persuading the EU to collect tariffs on our behalf on some distant border? It just will not happen. It’s dead in the water, isn’t it?

[Dominic Raab]

My hon. Friend mentions the earlier approach. Under the earlier proposals for a new customs partnership, businesses would only receive tariff rebates after tracking goods through the entire supply chain to the point of final consumption in the UK. In contrast, the FCA—I hope this addresses his point—will be an upfront system. That means that most businesses, the overwhelming majority, would pay the right tariff to begin with. Other businesses could claim a tariff repayment as soon as possible in the supply chain. We will agree with the EU the circumstances in which repayments can be granted. As the White Paper makes clear, we will negotiate a reciprocal tariff revenue formula, taking into account goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.

[Mr Jim Cunningham (Coventry South) (Lab)]

What discussions has the Secretary of State had with companies in this country, such as Jaguar Land Rover, regarding their concerns about Brexit? What reassurances has he given them, or is it too early to ask him that question because he is fairly new in the job? I congratulate him on his appointment.

[Dominic Raab]

The hon. Gentleman is being far too kind, but I appreciate it. I have already met business leaders, from the Federation of Small Businesses to the CBI. The devil will of course be in the detail as we negotiate, but we have received a positive and constructive response. I will be meeting more business leaders on Friday, so perhaps next week I can fill him in further. I think it is widely understood that we have a principled but pragmatic and flexible approach that will preserve frictionless trade. The key advantage of the model we have is that it protects the UK-EU supply and value chains, and the businesses he refers to that rely on them. As well as supporting business, the approach would meet our shared commitments to Northern Ireland and Ireland in a way that respects the autonomy of the EU without harming the UK’s constitutional and economic integrity.

[John Redwood (Wokingham) (Con)]

Will my right hon. Friend confirm that a very large number of components and materials come into this country from non-EU sources every day and fuel just-in-time systems alongside things from within the EU, proving that there is not a border issue about running just-in-time without being within the EU ring fence?

[Dominic Raab]

I understand the point my right hon. Friend makes. What we are trying to do, and what I think this model does achieve, is to make sure that any potential disruption to businesses through the supply chains is minimised to the lowest degree. That is the aim, but I do understand the point he makes.

[Owen Smith (Pontypridd) (Lab)]

Will the Secretary of State give way?

[Dominic Raab]

I will make a little progress, but I promise the hon. Gentleman I will come back to him.

Alongside the close arrangements for goods, we will negotiate a wide-ranging but different approach on services, including the digital sector, which is one of the fastest growing sectors for the UK. That will protect businesses from unjustified barriers or discrimination. It will cover mutual recognition of professional qualifications and it will also preserve our regulatory freedom.

On financial services, we will seek a new partnership in that area, reflecting the mutual interests of the UK and the EU. This approach to services is based partly on the absence of any of the risks of border disruption that might affect trade and goods, coupled with the distinct advantage of regaining domestic regulatory control and the ability to forge new trade deals with fewer fetters so that we are well placed to grasp the opportunities of the future.

[Owen Smith]

I welcome the right hon. Gentleman to his new position. I hear what he says about the Government’s desire to retain as frictionless trade as possible, but does he share my concern that the chief executive of Airbus has said only today that he is so concerned about the prospect of friction that Airbus is having to stockpile components in this country lest the Government make a further mess of Brexit and we end up unable to have frictionless, just-in-time trade?

[Dominic Raab]

I think that, in the hon. Gentleman’s own elegant way, that was a backhanded welcome for these proposals to minimise any risks in that regard, and what we should now all do in all parts of this Chamber is not call for second referendums or returning to the customs union, but get behind the Government’s plan and show a united front so we get the very best deal for everyone in this country.

[Owen Smith]

Will you tell the former Foreign Secretary that?

--- Later in debate ---

[Dominic Raab]

I shall indeed, but I appreciate the support.

This is the ambitious and balanced approach reflected in the White Paper. As well as sensibly managing the risks of disruption to trade with our EU friends, it frees the UK to trade with greater vim and vigour with the rest of the world, and particularly to capture the growth markets and opportunities of the future. It will allow us to seize the opportunities for more liberal and energetic free trade arrangements with the export markets of the future from Mexico to Japan, which is important for creating the jobs of the future, and for cutting the costs of goods in this country to ease the cost of living for lower and middle-income families.

As we leave the EU, free movement will end. Our immigration policy will be set not in Brussels but by hon. Members elected by the people of this country in this House. We will design a new immigration system that works in the national interest: a system that enables us to control the numbers of people coming to live in this country and that places stronger security checks at the border. We will end free movement, but that does not mean pulling up a drawbridge or turning away the talent we need, and indeed want, for the UK to be an outward-looking nation attractive to investment and open to business.

In line with the arrangements we will negotiate with our close trading partners around the world, the White Paper makes it clear that we want to support businesses being able to transfer to their UK offices those from the EU with the bespoke expertise or experience required to deliver services here. We also want people to be able to travel without a visa between the UK and the EU for temporary business activity. We want families and youngsters to travel for holidays and tourism, and students to study at university across the continent. We can agree these common-sense reciprocal arrangements while regaining control of our immigration policy. That is the balanced approach that will best serve the UK.

[Robert Neill (Bromley and Chislehurst) (Con)]

I welcome my right hon. Friend to his post. Will he bear it in mind that there must be linkage between the very welcome liberal approach to visa regimes that he mentions and, in relation to professional services, mutual recognition of qualifications so that lawyers and other professional advisers can operate on the current fly-in, fly-out policy that is critical to the City of London and other financial sectors?

[Dominic Raab]

My hon. Friend makes the right point, and he will see extensive text in the White Paper covering precisely that point.

Our vision for a security partnership covers those vital areas and interests that we share in common. Our proposals will maintain operational capabilities that are necessary to protect our citizens, and enable rapid and secure data exchange, practical cross-border operational co-operation, and continued participation in key agencies including Eurojust and Europol, which already have partnerships with many non-EU countries. We will also pursue arrangements for co-ordination in other areas where we have mutual interests: foreign policy, defence, development issues, joint capability development and wider co-operation.

On the return of democratic control over powers and authority to the UK, the White Paper proposals end the jurisdiction of the European Court in the UK. Laws will be decided by elected Members in this House, and UK courts will no longer refer cases to the Luxembourg Court. In a limited number of areas we will choose to adopt common rules to ensure the free flow of goods, but that body of law is relatively stable and where there are any changes Parliament—this House—must approve them. When the UK and the EU need a clear and consistent interpretation of such rules, as between the UK and the EU, we can choose to make a reference to Luxembourg Court for such an interpretation, but the UK will have to agree to that first, and reference for legal interpretation is very different from giving the European Court the authority to apply the law to the facts or to decide which party to any litigation is successful in its claims. When the UK Supreme Court is no longer subordinate to the European Court, it will finally do what it says on the tin.

This is a principled and practical approach. We have shown flexibility as we strive for a good deal for both the United Kingdom and the European Union and as we demonstrate our ambition for a close partnership through the White Paper.

[Karin Smyth (Bristol South) (Lab)]

I am grateful to the Secretary of State for giving way, and I welcome him to his new position. He might be coming on to talk about Northern Ireland, but just in case he has no more to say than his brief comment, may I ask him a question? His predecessor admitted that he had not actually visited the border area, apart from on one brief occasion recently, for more than 20 years, since when times have changed massively. Will the Secretary of State give an indication today of whether he has any more plans, besides his rather vague infrastructure promises, for dealing with the question of the border between the Republic of Ireland and Northern Ireland?

[Dominic Raab]

I understand precisely the hon. Lady’s concern. This is an important and sensitive issue, and I will be engaging on the EU track in relation to it. I will also, at the right time, make sure that I am properly versed and properly briefed on the matter, and indeed that I visit the border area to take a look for myself.

It is worth emphasising two key principles that we share with our EU friends. The first is that article 50 dictates that a withdrawal agreement must come alongside a framework for the future agreement. The second, flowing from that, is that nothing is agreed until everything is agreed. The Government respect and prize both those principles, and we will not sign away our negotiating leverage or spend taxpayers’ money in return for nothing. In December, we agreed that the financial settlement would sit alongside a framework for a deep and mutually beneficial future partnership. We agreed that we would meet our commitments as they fell due, with ever-declining payments over a finite period that will add up to a tiny fraction of what our net contribution would have been as a member. If either side should fail to meet their commitments under this overarching package—we certainly do not expect that to be the case—that would have consequences for the deal as a whole that we are striving to secure.

[Stephen Kinnock (Aberavon) (Lab)]

I thank the Secretary of State for giving way and I should also like to take this opportunity to congratulate him on his appointment. On Tuesday, I hosted an event here in Parliament where the BeLeave whistleblower, Shahmir Sanni, told us that every member of the Vote Leave campaign committee knew precisely about the £680,000 that was donated by Vote Leave to BeLeave. The Secretary of State was of course an active member of the campaign committee for Vote Leave, and presumably therefore knew about that £680,000 donation. Given the importance of his role now in the negotiations with Mr Barnier, will he take this opportunity to set out in precise detail what he knew about that donation to BeLeave? This could be an opportunity to enhance and reinforce his authority and credibility in the negotiations.

[Dominic Raab]

I appreciate the hon. Gentleman’s efforts to try to strengthen my leverage in the negotiations to get Brexit delivered, and I take him at his word. I had nothing to do with any of the financial arrangements; I was on the campaign board. Those details are subject to investigation by the appropriate authorities, and I would just gently say to him that trying in this rather backhanded way to undermine the credibility and the verdict of the British people will only rebound on him—

[Stephen Kinnock]

It is the verdict of the Electoral Commission.

[Dominic Raab]

But the verdict of the British people is the one that we in this House must give effect to.

[Several hon. Members rose—]

[Dominic Raab]

I will not give way.

Tomorrow I will be in Brussels to meet my counterpart, Michel Barnier, to discuss the details of the White Paper and to take stock of the negotiations. The UK will extend the arm of friendship in a spirit of optimism and good will, backed by an ambitious and innovative plan that respects the position, interests and concerns of the EU. I certainly hope that that ambition and good will will be reciprocated.

[Sir Hugo Swire (East Devon) (Con)]

I also welcome my right hon. Friend to his place. When he meets Mr Barnier for the first time tomorrow, will he ask him, as evidence of that good will as the pace of the negotiations starts to increase, whether he will look again at the exclusion of Britain from some parts of the Galileo project and also address why the Department for International Development is being excluded from some projects that it co-funds with the EU?

[Dominic Raab]

I will certainly consider all those areas not only in detail, but in terms of the strategic overview and the state of play of the negotiations as a whole. As I said, I hope that the ambition and good will reflected in the White Paper will be reciprocated.

Equally, it is the duty of any responsible Government to prepare for every eventuality, including the unlikely scenario that we reach March 2019 without agreeing a deal. It is essential that plans are in place to mitigate risks and ensure stability whatever the outcome of the negotiations. The Government have been working on nearly 300 no-deal plans for almost two years, and some of them are already in the public domain. Last month, we passed the Nuclear Safeguards Act 2018, which provides the legal basis for developing our own regulatory system in that vital area. We have also been taking other practical action to ensure that the infrastructure is in place. For example, we have recruited 300 extra border staff, and a further drive to create another 1,000 was launched earlier this year.

Many of our no deal preparations have so far been developed internally and through targeted engagement with relevant parties. However, more of the preparations will now become public, and I can tell the House that the Government will release a series of technical notices over August and September to set out what UK businesses and citizens will need to do in the event of a no-deal scenario, thereby making the public more aware of our preparations. That due diligence is designed to provide reassurance. In reality, such planning cannot properly be done without some public-facing engagement.

[Thangam Debbonaire (Bristol West) (Lab)]

I add my congratulations to those of other hon. Members on the right hon. Gentleman’s appointment. He mentioned advance preparations, but I find it incredibly curious that it took two years before we even started them. He says that no responsible Government would wait to make backstop arrangements, but what happened before the referendum? What has happened over the past two years? Why have we waited until there are just weeks to go before making backstop arrangements?

[Dominic Raab]

I listen carefully to the points that the hon. Lady and all hon. Members make, regardless of their views on Brexit, but I just said that the Government have been working on 300 no-deal plans for almost two years. Planning has not just started. However, we are going to start increasing the pace of the preparations—

[Wera Hobhouse (Bath) (LD)]

Will the Secretary of State give way?

[Mr Steve Baker (Wycombe) (Con)]

Will my right hon. Friend give way?

[Dominic Raab]

May I make some progress? As a result of the further measures that we will be taking, more of the preparations will become public facing. It is important that we talk about that in order to reassure the public that it is the responsible thing to do.

[Mr Baker]

I congratulate my right hon. Friend on taking up his new post. As he knows, I am well familiar with the work that has been done. He may have heard my question at PMQs earlier, but may I put to him what I put to the Prime Minister? When technical notices or any communications related to no deal are released, will he please ensure that they are shaped to ensure that they support the credibility and feasibility of our plans, not only to give comfort and reassurance to business, but to strengthen our negotiating position?

[Dominic Raab]

This is an opportune moment to pay tribute to my hon. Friend for all his work in the Department, particularly on no-deal planning. He makes an excellent point that will be at the forefront of my mind as we continue to step up our preparations.

[Owen Smith]

Will the Secretary of State give way before he moves on?

--- Later in debate ---

[Dominic Raab]

I will not. Other people want to speak and I have already given way to the right hon. Gentleman.

We will strive in the spirit of optimism to strike the very best deal with our European friends but, whatever the outcome of our negotiations, we stand ready to make a success of Brexit.

--- Later in debate ---

[Dominic Raab]

indicated dissent.

[Keir Starmer]

It is no good the Secretary of State shaking his head, because that is what it says in paragraph 16 of the White Paper. It is complicated. It is no wonder that businesses have said that they are sceptical about it and it is no wonder that the EU has said that it does not think it can operate such a system. It is no doubt for that reason that paragraph 17a says, after a description of the arrangement:

“However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

There is no reading of that other than, “This is so complicated and bureaucratic that we know the EU will not be prepared to do it and we are not going to ask it to.” There is no other reading of that sentence.

Enter Monday’s European Research Group new clause 36, which says:

“Subject to subsection (2), it shall be unlawful for HMRC to account for any duty of customs or VAT or excise duty collected by HMRC to the Government of a country or territory outside the United Kingdom”,

unless

“arrangements have been entered into by Her Majesty’s Government and that government under which that government will account to HMRC for those duties and taxes collected in that country on a reciprocal basis.”

In other words, it will be unlawful for us to collect and account for taxes at our borders unless other countries and territories—the EU27—collect tariffs and account for them for us. It will be unlawful. The White Paper says that we are not going to ask the EU to do it, but new clause 36 says it will be unlawful if the EU does not.

[Dominic Raab]

indicated dissent.

[Keir Starmer]

I invite the Secretary of State to intervene if he wants to quibble with that analysis. By that amendment, the Government have cut across their White Paper and inevitably made it more difficult for the Secretary of State to negotiate with the EU when he goes there tomorrow, because the EU has said, “This is not attractive to us and we don’t want to do this.” The White Paper says that we will not ask the EU to— presumably, as part of that discussion, that makes sense as the logical next move—but Monday’s new clause, which was a wrecking amendment, has now made it unlawful for a sensible way to be found through.

[Keir Starmer]

I shall make further progress, then give way.

This is not just a forensic challenge to the White Paper; it is fundamental. Absent a workable customs arrangement, the Government have no answer to the question of how they would protect the manufacturing sector. Absent a workable customs arrangement—

[Dominic Raab]

The right hon. and learned Gentleman’s analysis is not that forensic, because—inadvertently rather than deliberately, I suspect—he omits the key words from the White Paper:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue. On the basis that this is likely to be the most robust approach, the UK proposes a tariff revenue formula”.

That, of course, will be agreed as well; that is what the negotiations are for. It is set out plainly and squarely in the White Paper, and I think he knows that.

[Keir Starmer]

I anticipated that challenge, and I anticipated that sentence. Let us read the sentence:

“The UK and the EU should agree a mechanism for the remittance of relevant tariff revenue.”

Will it be reciprocal or not? If it is not reciprocal, it will be unlawful; that is the difficulty. If it is intended to be reciprocal, what is the point of the sentence reassuring the EU that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK”?

Whatever the arrangement is, we know one thing about it: it will not involve the EU applying UK tariffs and trade policy at its border. Otherwise, what is the point of that qualification?

[Dominic Raab]

I am afraid that the right hon. and learned Gentleman is making a false distinction. The key line in the paragraph is that

“the UK proposes a tariff revenue formula, taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK.”

That is the most explicit statement of reciprocity. What more could he expect?

[Keir Starmer]

I invite the Secretary of State to intervene just one more time. What is the point of the sentence that follows the one that he has just read out?

[Dominic Raab]

It is the exception to those arrangements, which is that we are not requiring the EU to levy the tariffs.

[Keir Starmer]

This must be my failure to comprehend. There is an arrangement whereby tariffs are applied at the border and accounted for. The UK is not proposing that the EU applies the UK tariffs and trade policy at its border for goods intended for the UK, so how is it going to account for them?

[Keir Starmer]

I am grateful for that intervention, because it demonstrates why this is so important. Unless there is a customs arrangement that works for manufacturing, there is not an arrangement that works for manufacturing. The Government last night voted down an amendment to say, “If we cannot make something else work, we will have a customs union.” So if this does not work, there is nothing for manufacturing. Equally, if this does not work, there is nothing for Northern Ireland.

[Dominic Raab]

indicated dissent.

[Keir Starmer]

The Secretary of State shakes his head, but if this does not work, what is the plan? If he wants to intervene, that is fine. If this plan does not work—if this facilitated customs arrangement is not acceptable—the default, according to the Government, is not a customs union. What is the plan?

--- Later in debate ---

[Dominic Raab]

This model will work. I gently say this to the right hon. and learned Gentleman: if he cared about it that much, why did the Labour party go into the last election committed to having an independent trade policy, which can only mean leaving the customs union?

[Keir Starmer]

I really do not like the Secretary of State saying, “if he cared about it that much”. The suggestion that we are not both engaging in a difficult analysis of the White Paper with the interests of our country at heart is not fair. I care about this greatly, because without the right arrangement, I genuinely believe that manufacturing in this country will be at risk. Having worked in Northern Ireland for five years, I genuinely believe that, without a working arrangement, the solemn commitment to no hard border in Northern Ireland may not be kept. It is really serious, and point scoring about whether one is serious about it or not does not help; doing so demeans the Secretary of State in his role. It is not the way to conduct such debates.

It is not just the manufacturing sector; the White Paper’s proposals on services reveal a huge black hole. Likewise, the proposals on rights and protections are simply inadequate. On social rights, employment rights and environmental rights, there is a non-regression approach: we will not necessarily keep up and we will not necessarily improve, but things will not necessarily get worse.

There is no clarity on the role of the European Court of Justice. [Interruption.] The Secretary of State says, “It ends”, but it clearly does not end. The European Court has two different primary jurisdictions: first, dispute settlement; and, secondly, reference. That is the jurisdiction that it has had, as he very well knows, with his experience. The second of those is being preserved for everything in the common rulebook. That is why it has caused such difficulty within his own party. The jurisdiction of the Court would exist on reference procedure for that wide range of issues, and he well knows it. It will operate, I should imagine, in precisely the same way that it operates now. That is, there will be a reference to the Court, the Court will decide the question before it, it will give a ruling and an interpretation, and that interpretation will be binding, because if it is not, there is no point in that reference procedure, as he knows.

[Dominic Raab]

indicated dissent.

[Keir Starmer]

Well, if the Secretary of State is going to suggest that the reference to the Court is for a ruling that is not binding, I will be very interested to hear about it, because there is not much point in referring something to a court for a ruling and then saying, “Well, it’s very nice but we’re not going to apply it.” The whole thing only works if the ruling of the European Court can be binding.

The proposal for the labour mobility framework says things about business trips and tourism, but is completely silent on the terms under which EU citizens will be able to live and work in the UK and UK citizens in the EU.

The grim reality is this: it has taken two years to get to this point, yet, on analysis, there is nothing there—or, more accurately, there is nothing that the warring Conservative party can agree on. The Prime Minister’s plan is exposed as unworkable and unacceptable to her own party, but she cannot move forward, as Monday night showed, and she cannot move backwards, as last night showed. That is not taking back control; it is no control—stalemate. But the country cannot keep paying the price for these divisions in the Conservative party. We need a Brexit plan that can unite the country and protect jobs and the economy, and I am sorry to say that this White Paper is not it.