European Free Trade Association

Debate between James Cartlidge and Matthew Pennycook

Wednesday 7th February 2018 Westminster Hall

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to wind up for the Opposition and to see you in the Chair, Mr Gapes. I join other hon. Members in congratulating the hon. Member for Wimbledon (Stephen Hammond) on securing this debate and on the considered way in which he framed the issue.

The Labour party has continually made clear that we want to seek a deal with the European Union that secures all the benefits of the single market and the customs union and that involves no diminution of the EU-derived rights—employment rights and equality rights—health and safety standards, and environmental protections and standards that we currently enjoy.

Jobs and the economy must be the Government’s priorities in the next phase of the negotiations, so it is absolutely right that Parliament debates in detail the pros and cons of any and every means of potentially securing a departure from the EU that protects both. I echo what many hon. Members have said in the debate this morning: every option must be kept on the table.

It reflects poorly on the Government that Back Benchers have to bring Ministers to Westminster Hall and have only an hour to speak on issues of this importance. We should be debating the pros and cons of European Free Trade Association arrangements and other arrangements in great detail on the Floor of the main Chamber; that we are not doing so is a missed opportunity.

I very much welcome the attempt by the hon. Member for Wimbledon to convince the Conservative party to ditch the ideological baggage, and to drag with him the Government and the small group on the Government Benches who favour—for ideological reasons—the hardest of departures from the European Union.

There are misconceptions about EFTA, and they need to be challenged. We need to have an honest debate about what the trade-offs and the compromises involved in an EFTA arrangement, or other arrangements, would be. However, all options must be considered and, as other hon. Members have said, nothing should be taken off the table.

In the brief time I have available to me, I will sound a few notes of caution about the trade-offs when it comes to EFTA, or at least examine some of them. I will start with the transition period, because a number of different views have been expressed this morning about whether EFTA would apply in the transition or afterwards and about the variants that it might cover.

I fail to see how EFTA could work in terms of a transitional arrangement, and that is for two reasons. The first is that, as we have argued for some time, the Government must pursue transitional arrangements on the same basic terms as those that apply now, which includes membership of the single market and the customs union, and would involve the jurisdiction of the European Court of Justice. That is supported by businesses and trade unions, and—if people pay any attention to what the European Commission has been saying on the EU27, they will know this—it is also the only option that is available. I cannot see how EFTA, as a transitional vehicle, could be realistically negotiated.

Even more importantly, an EFTA transition would in a sense entail what the Government—and we agree with them on this—have explicitly sought to avoid. Businesses and individuals do not want two points of transition towards the end state. They do not want a situation whereby they would depart the EU and go on to EFTA terms, and then go on from EFTA terms to the final end state of a bespoke deal.

[James Cartlidge]

What the hon. Gentleman talks about as a transition is not really a transition; it is an extension of existing membership, and there is no point in trying to deny that. EFTA can be a transition in this sense—that we go into it, as others have said, as a safe harbour. However, he seems to be ruling out the idea that, once we are in EFTA, there would ever be any further change, when it would clearly be in our national interest to look at how we might, for example, strengthen co-decision making or consider divergence within parts of the single market. The point is getting to a safe position to do that. That is what a transition is—not an extension of our existing membership.

[Matthew Pennycook]

I disagree, because I do not see a transitional arrangement on those terms as an extension of membership; we would lose our voting rights and our representation in the European Parliament. However, that is the only transitional arrangement on offer, and the one that the hon. Gentleman is suggesting is not a serious possibility. Also, as I have said, it would involve two points of disruption for businesses and individuals. For that reason, we favour a transition on the same basic terms as now. However, if we are talking realistically, and we are talking about a post-transitional arrangement, EFTA membership is clearly something that the Government should consider.

I will just probe a bit of the argument that the hon. Member for Wimbledon made in terms of there being a range of viable options open to the UK within EFTA, each of which warrants consideration. It is difficult to see what would be gained by EFTA membership alone. I take the point that obtaining it would secure for us access to the EFTA free trade area and the four EFTA states, as well as participation in trade agreements with the 27 countries in the EU, but in no way would that make up for the loss of trade that would come from losing the 50 preferential trade deals that the EU has with third countries or the many other trade deals that it is negotiating. Moreover, EFTA membership alone would not secure for the UK preferential access to the EU internal market.

In the same way, it is difficult to see how the Swiss model, or a variant of it, would work for the UK. As hon. Members will know, Switzerland has only partial access to the EU’s internal market. We must also consider services, the future of which is integral to our country. I know that the hon. Gentleman has real concerns about them, and we both do, because of our constituencies. Services are covered only to a limited extent by the Swiss model. Crucially, Swiss bilateral agreements do not provide for cross-border access in financial services. So it is difficult to see how the Swiss arrangement would work for the UK, notwithstanding the issues that it has in terms of its sustainability or the length of time that it has taken to negotiate.