EU: Future Relationship

Lord Hain Excerpts

Wednesday 23rd September 2020 Grand Committee

[Lord Hain (Lab) [V]]

My Lords, just three months away from the end of the Brexit transition period, there is still no clear idea of a “landing zone” for the negotiations on the UK’s future relationship with the EU, with the UK Government’s latest threat to break international law destroying our negotiating trust and threatening a massively damaging hard or no-deal Brexit, compounding the economic recession resulting from Covid-19.

In March this year, your Lordships’ excellent EU Committee report contrasted the latest negotiating position of the EU as a “development” of the political declaration, which the British Government had solemnly agreed, with London’s new approach of turning its back on that. Within a couple of months, it had become clear that the EU was leaning towards an inclusive approach to the negotiations, with extensive consultations achieving consensus among member states, a willingness to engage in open and interest-based discussion aimed at problem-solving, and high levels of transparency. The UK approach, on the other hand, focused upon defending predetermined red lines, and decisions taken behind closed doors.

Now the Prime Minister has lurched into reneging on the treaty commitments for joint decision-making, in an agreement not yet a year old. This may be pure brinkmanship—upping the ante, either to prepare to blame the EU for no deal or to retreat into a “thin deal” under the guise of triumphal Boris Johnson tub-thumping, as happened last October. The EU, although shocked at this tactic—which calls into question whether any treaty signed by the UK is worth the paper it is written on any more—and despite declaring its intention to mount a legal challenge, is still negotiating, to its credit under the present German presidency. It appears that its real objective is to get a deal, although not at any price.

One of the main bones of contention is state aid, where the UK Government were warned by civil servants in January that provisions in the Northern Ireland protocol could potentially “reach back” into the rest of the UK. It is very strange, therefore, that according to the Financial Times on 14 September, the recent trade agreement with Japan commits the UK to tougher restrictions on state aid than the ones the Government are currently offering to the EU.

If a solution to the state aid issue can be found—the Institute for Government has recently proposed a possible solution—there is every likelihood that compromises on other outstanding issues, such as fisheries, can follow. However, we still have no clarity on what the Government’s aims are, apart from bombastic “sovereignty” slogans, which they continue, tragically, to confuse with UK power. No. 10 apparently wishes to see its discretion to subsidise “pet” projects unfettered by any agreement. Sir Ivan Rogers, the former UK ambassador to the EU, told the Irish Times on 16 September that he thought the Boris Johnson-Dominic Cummings view on state aid would prevail, with no deal the outcome. Perhaps we should hope that the Prime Minister, who was given six months to save his premiership in the Daily Telegraph last week, will decide there is a political premium from even a “thin deal” which, as the Centre for European Reform think tank argues, would at least provide a platform on which to build a more substantial EU-UK relationship going forward. Meanwhile, UK businesses are reduced to reading the tea leaves in trying to decipher what will be the trading environment for them after Christmas with the market which constitutes nearly half of the UK’s trade.

Britons make almost 60 million trips in a normal year into mainland Europe. Next year, will they still enjoy the protection of the European health insurance card, will pet passports still be valid, and will the current extension of UK mobile phone deals to EU countries, which means no roaming charges, still apply? Otherwise, UK citizens will need to take out costly health insurance, travelling with pets will be extremely onerous—with a new four-month process, including having cat or dog blood samples tested at an EU laboratory—and costly mobile phone charges will return. UK travellers will need at least six months’ validity on their passports, and drivers will need one or more of three different types of international driving permit.

The UK imports 50% of its food, with 30% coming from the EU, and the Food and Drink Federation anticipates tariffs of 23% on £35 billion-worth of imports of food. There will be higher prices, lower quality, and less choice.

A large percentage of medical supplies come from the EU, and the Government wrote to suppliers in August advising them to stockpile, as “significant disruption” to trade was likely for six months. Pharmaceutical firms have told the Government that disruption caused by Covid-19 has meant stockpiles have been “used up” and it may not be possible to replenish them in time.

Manufacturing is threatened with tariffs and disruption to Europe-wide supply-chains, with the more than half a million cars exported to the EU last year facing in future a duty of 10%. Road haulage will face a limit on the number of permits, and two-thirds of UK firms will not be able to operate in the EU at all. In finance, many firms either have or are planning to relocate to mainland Europe. Restrictions on EU migrants will make it more difficult for UK businesses to plug their gaps with European workers, and the UK will be unable to return migrants crossing the channel without negotiating new bilateral agreements. It will become illegal for EU servers to send personal data to the UK. Law and intelligence agencies will lose access to pan-European criminal databases, and shared arrest warrants would be limited. In addition to the ending of trade agreements with the EU 27, the UK will lose the benefit of deals that the EU has with up to another 70 countries, except where these have already been renegotiated.

The list of potentially catastrophic consequences of a no-deal Brexit is endless. In Hemingway’s 1926 novel The Sun Also Rises, a character is asked how he went bankrupt. The answer is: “Gradually, and then suddenly.”