Brexit: Options for Trade (EUC Report)

Lord Jay of Ewelme Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Jay of Ewelme (CB)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Gadhia, with all his experience of the City and his extremely wise words. As a public sector Cross-Bencher, I feel rather uncomfortable being sandwiched between the noble Lords, Lord Gadhia and Lord Green—but I will do my best.

I very much welcome the report and offer my congratulations to the noble Lord, Lord Whitty, the noble Baroness, Lady Verma, and their committees for producing it. It is good to have the discussion now about the future relationship between the UK and the EU because, rather like the noble Lord, Lord Horam, I have some suspicion that when Article 50 is triggered, the attention will switch, at least for a while, towards the rather more exciting prospect of the short-term withdrawal negotiations and, in particular, will focus on the much-heralded figure of €60 billion that may or may not come forward from the Commission. None the less, I hope that those negotiations will progress and that attention will turn again, both in public and during the negotiations, to the longer-term relationship between the UK and the EU.

Like others who have spoken this evening, it seems clear to me—and it is quite clear from what the Government have said—that remaining in the single market is not an option that will be open to us. The Government’s commitment to having at least some control over the levels of migration from the EU and their concern to avoid ECJ jurisdiction will rule that out. I regret that but it is a fact. I had hoped that they would keep open the option of staying in the customs union. That would have guaranteed tariff-free movement of goods, if not of services, and also would have eased the difficulty of managing the border between Northern Ireland and the Republic of Ireland. Although I am very glad that the latter issue is mentioned in the Government’s response to the report, I still feel that it is not given anything like enough attention. I hope that it will get more attention in future. However, the Government have not kept the customs union option open—or at least they seem not to have done so.

I am not quite sure what the Government are now hoping to achieve in their trading relationships with the EU and the rest of the world. In her speech on 17 January the Prime Minister said:

“We want to get out into the wider world, to trade and do business all around the globe”.


That is an aspiration but I do not think it is a policy. It was slightly more fleshed out in the recent White Paper, but I hope that in her response to the debate the Minister will say a little more about the Government’s intentions as regards their relationship both with the EU and the rest of the world.

I will make three points in what time remains. First, if the Government do not succeed in reaching agreement on their negotiating objectives, they risk getting pushed back, as others have said, on to WTO terms. I have heard it argued that this would be no bad thing, and that it would provide business with certainty. Perhaps—but that is not the kind of certainty that business, and in particular the jobs that depend on business, needs. So I hope that the Minister can also tell us more about whether resort to WTO terms really is envisaged as a desirable or even plausible fallback if—as I hope is not the case—the negotiations do not succeed.

My second point concerns dispute resolution. The Government clearly do not like the ECJ and in particular its direct effect on UK law. But dislike of the ECJ does not mean that you can do away with dispute resolution. The key point is that virtually any international agreement, and certainly any trade agreement—again, as has been said in this debate—has to have some form of dispute resolution. The WTO has its own dispute resolution mechanism. The EU and the US, the US and China and the EU and China have resorted to it when necessary in the past. So will the UK, if and when it has trade agreements that lead to disagreement—as, inevitably, will happen.

I deliberately used the past tense when I said that the US had recourse to WTO dispute resolutions in the past, because I have seen, as I am sure have other noble Lords, reports in today’s press that the US may be thinking of not accepting WTO dispute resolutions in the future. That is a profoundly worrying development that would make our position outside the EU, if there were no effective dispute resolution within the WTO, even lonelier than I fear it will be when we leave the EU.

My final point is perhaps the most important. There sometimes seems to be an assumption behind the Government’s rhetoric that with one bound we will be free from the constraints of the EU and the single market—which, incidentally, as others have said, takes more than 40% of our exports—and shall be able to trade easily through new bilateral trade agreements with China, the US, India, Australia, Brazil and others. But those are all tough potential partners, with a clear sense of what is in their interests. They and other countries will negotiate what they want out of negotiations and not what we want. Such negotiations will be tough, protracted, complex and at times ugly—and it is no use pretending otherwise.

I do not favour another referendum on the EU. I would have wished the result of the last one to have been different, but I accept it. But I echo what the noble Baroness, Lady Armstrong, and others have said in this debate: that the road ahead, particularly for trade, will be hard and long and gritty.