Brexit: Transition Period

Lord Callanan Excerpts

Monday 16th April 2018 Lords Chamber

[The Minister of State, Department for Exiting the European Union (Lord Callanan) (Con)]

My Lords, we have agreed a time-limited implementation period where businesses in the UK and the EU will continue to access each other’s markets on current terms and will ensure that they have to make only one set of changes. That is what business has been asking for, and that is exactly what it is getting. We are working at pace to ensure that all the necessary arrangements are in place for 31 December 2020.

[Baroness McIntosh of Pickering (Con)]

My Lords, my question actually related to the end of the transition period, which has been brought forward by three months. Will my noble friend commit the Government to keeping under constant review the state of preparedness of government departments and agencies, such as the Food Standards Agency and others, to ensure that all regulations will be in place? Assuming that the Government do not wish to be part of a customs arrangement with the EU, what will happen on the vexed question of rules of origin for industries such as the food industry, the car industry and other manufacturing industries that rely so much on imported goods?

[Lord Callanan]

I thank my noble friend for her question, but of course we want to be part of a customs arrangement with the EU. That is one of the matters that we will need to discuss with it. I can agree with her that the department keeps all the necessary arrangements under constant review, and we will do so throughout the implementation period to make sure that everything is in place for the end of that period on 31 December 2020.

[Lord Wallace of Saltaire (LD)]

My Lords, every time I have heard or read a briefing from business over the past 18 months, it has talked about the need for certainty so that business can invest for the long term. By the long term, business means five years, not two. It seems to many of us that the Government are in danger of allowing a transition period to be used to put off telling business what the future arrangements will be for another 20 months. Can the Government assure us that by this October they will be able to give business detailed assurances about the sorts of future arrangements we are likely to have for trade and investment with the EU at the end of the transition period?

[Lord Callanan]

We have said that we want to get the withdrawal agreement bottomed out and agreed by October and that we also want to agree future partnerships in as much detail as possible to provide that certainty. I accept the noble Lord’s point that this is a time of uncertainty. We are working at pace to try to provide that certainty.

[Lord Watts (Lab)]

My Lords, can the Minister explain why any country in the world would want to do a better trade deal with a country with a population of 50 million when it would have a chance of getting a better deal with the rest of Europe, which has a population of 500 million?

--- Later in debate ---

[Lord Callanan]

The problem with the EU negotiating trade deals is that it does it on behalf of 28 countries, shortly to become 27, which all have different priorities and different things that they want to agree within that deal, and of course that makes them difficult to agree for the bloc as a whole. As a country that believes in free trade, we will be able to do it in a swifter and more efficient manner.

[Lord Teverson (LD)]

My Lords—

[Lord Mountevans (CB)]

Would the Minister see merit in the implementation period having two elements—first, a bridging period to cover the time between exit and when the agreement is ratified and becomes unconditional, and, secondly, an adaptation period, starting on the expiry of the bridging period? This would enable businesses to be clearer and to adapt to whatever is finally agreed.

[Lord Callanan]

We set out in the agreement that we reached with the EU how we see the implementation period working, which is pretty much to maintain the existing arrangements in place to provide certainty for businesses.

[Baroness Hayter of Kentish Town (Lab)]

My Lords, I would like to talk about the transition period. We now understand that we are coming out of all the agencies in March, so we will be out of the European Medicines Agency in March. What is the attitude of the pharmaceutical industry to that decision?

[Lord Callanan]

The noble Baroness makes a good point. We are continuing the discussions with the EU to see what the precise formulation of our involvement in the various agencies will be. We are clear that we want to remain involved and participate in the work of those agencies, which are so essential for many businesses in the UK, but we are currently discussing how precisely that will work during the implementation period.

[Lord Teverson]

My Lords, the Government were looking for a two-year transition period, which they themselves said was a short period of time.

[Baroness Altmann (Con)]

My Lords, could my noble friend reassure us that the Government are listening to British business concerns about how long it will take to make new agreements on the rules of origin if we do not remain in a customs union with the EU, particularly as that will affect the food and automobile industries?

[Lord Callanan]

We have undertaken extensive consultations with industry and businesses. We are doing it all the time. I do it myself. We have undertaken more than 500 recorded DExEU organised engagements with businesses and civil society to find out what the concerns of businesses are. We are of course taking the feedback that we have received from them to the negotiations with the EU.

[Lord Teverson]

My Lords, I shall have my third attempt, and I thank the House for letting me. The Government were looking for a two-year transition deal, which they themselves understood was short. The EU said “21 months, that’s it”, and we just said yes. Why was that? Was that not selling out Britain and British industry?

[Lord Callanan]

No, I do not think it was. The Prime Minister made it clear that she was looking at an implementation period of around two years, which of course even the Liberal Democrats will know is 24 months. We eventually agreed that 21 months would be the period. We did not think that three months was a huge difference. These things are of course always subject to negotiations. We had to reach agreement, and we did. It is important that the implementation period is time-limited, and 31 December 2020 is a good time to end it because that is the end of the current multiannual financial framework.