Brexit: UK-Irish Relations

Lord Davies of Stamford Excerpts

Tuesday 5th September 2017 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I can state my views on this subject fairly rapidly. To me the whole thing is a sad nightmare. What we are doing is destroying and throwing away a great human achievement, in this case an economic institution, that of the single market. We are setting at possible risk—I put it no more highly than that, and in saying these words, I simply summarise my impression of what has been said by 15 or 20 speakers in the debate—a delicately and carefully balanced negotiated deal in the Belfast agreement. We are also depriving ourselves in the case of Ireland by leaving the European Union of hundreds of opportunities in the course of any year for collaboration with Irish officials and politicians, for working together and finding a common ground for solving problems within the context that we are completely equal because we are both equal members of the European Union. If we take those three things together, it would be quite surprising if there were not some nasty consequences. All of this, as far as I can see, is for absolutely nothing at all. I look around 360 degrees and I cannot see a single gain or benefit that we will derive from this destruction, and that is very sad.

Does this paper before us from the Government help or hinder? I cannot say that I find it a very impressive production. I rather dislike its tone and I find the content distinctly weak, jejune and rather muddled. I will mention the tone first. I was quite shocked because I thought that it was distinctly arrogant. There is not the slightest trace in this document, from beginning to end, of any sense of recognition of or sensitivity towards, let alone any form of apology for, the disruption that we are causing our neighbours. I say that because it is true. No one here in the House of Lords is going to disagree with my view, but it does not sound like that in the document at all. We have decided on the Brexit project and this document is saying to the Irish, “Right, this is a new ball game now, and you have got to move. You have to move quickly too, because we are impatient and we cannot wait around. By the way, no action is not an option, so get on with it”. That is how I read this document and that is exactly how it is drafted. It seems to me that the Brexit department needs to take on some people with a background in diplomacy. Perhaps they can make a bid for a few good ambassadors. It might help the department in packaging what is anyway the pretty unpalatable material that it produces.

As for the substance, which I suppose is more important still, it seems that the department officials had not looked at it for more than two afternoons. They start by saying that, given that 80% of the cross-border trade in Ireland is carried out by small traders, that is all right and they can continue to trade as they do now. But what will happen with the remaining 20%? You might say, “If it is all right for 80%, why not take a risk and let the entire 100% carry on with the present regime?”. After all, we are taking risks with immigration into the common travel area. In the future, if you ask a Romanian, a Pole, a Frenchman or a German who is living in this country how long he or she has been here, they will not be able to verify the answer because they will say, “I came through Ireland”. If we are taking some risks in that area, why not take some risks in the area of trade?

But what the Government are suggesting is a quite different proposal for the 20% of businesses that do not qualify for the small traders’ exemption—I think they call it the authorised economic operators scheme. It is clear that there are a lot of potential problems with it, none of which it looks like the Government have identified because, if they had done so, I suppose they would have mentioned them. The idea is that if a country is exporting to the United Kingdom and the resulting exports are going on to the Republic of Ireland or elsewhere in the EU, or the other way around, the exporter will pay at the first frontier he comes to, whether it is the UK or the single market frontier, the duty rate which is the maximum duty as between the EU and the UK. If their product carries a duty of 0% for the UK but 10% in the EU and it is landed initially in Ireland it then pays 10%, but it is going to the UK so it does not need to pay 10% but 0%. Then, when the goods have been shipped into the UK, there is a rebate of the duty that has been paid at the frontier.

That raises all kinds of problems. First, there is the administrative cost of doing that. Secondly, how do you follow through those goods? What kind of document is required? You can hardly wait for an invoice to be met. You do not have bills of lading in contexts of that kind with land borders. You certainly do not get a stamp at the land border because there is not a land border, according to this paper. That is left completely open. It is unclear how that will happen. What is more, if you are a country that has done a deal either with the EU or the UK to have zero-tariff access to what they think is your country and they then find that it is not zero-tariff access any more—that you have to pay a 10% tariff, even though you are not due to pay it, then you get it refunded but you might not get it refunded if various risks arise—then the whole deal you originally signed in your free trade agreement has been retrospectively changed. Quite legitimately, you would complain and demand compensation under the WTO rules and so forth and invalidate that particular kind of agreement. There is an enormous number of problems about this, none of which has been gone into in this paper at all. One reads it without any sense whatever that the people who have written it have really dealt with this matter thoroughly and seriously, which they ought to have done.

The other thing is that it seems the Government do not understand what the single market is that we are destroying. What they have in this paper is a picture in which there is a variety of different regimes and different types of people. It is immensely complicated. The whole market is fragmented. You might be a small trader. You presumably have to go through some bureaucratic process to prove that you are a small trader, or a bigger trader, or a trusted trader. What about the new business? What about the guy who is not registered? How long does it take to get registered? Why should we impose some penalty on new businesses, or just on ordinary individuals who decide they want to ship goods from one side to another? Since you have said that all the other procedures that have been developed will obviate the need for a border, what happens to those who are not part of the special deals? Where do they stop? Where do they get policed? Where do they get checked, or do they not get checked at all? Since the paper says there will not be any physical border, where and how are these people monitored and checked? What they have done is to go through the border without paying any duty. None of this is gone into at all.

It seems to me that, if we are to have useful debates on these papers, it is important for us to be quite frank about what we see as their shortcomings. Maybe that will help the Government to get them right for next time round when they bring them to the attention of the Irish—our potential partners in any special arrangement—or in the negotiations that go on in Brussels. Even though I am sure some people have not enjoyed my remarks, they may nevertheless find them useful in due time.