EU Exit: Future Relationship White Paper

Lord Kerr of Kinlochard Excerpts

Thursday 12th July 2018 Lords Chamber

[Lord Callanan]

I totally agree with my noble friend, who speaks great sense as always on these matters. Of course, free trade is in the mutual best interest of both parties; we cannot say that too often.

[Lord Kerr of Kinlochard (CB)]

My Lords, I am grateful to the Minister for making sure that we, unlike our friends in another place, were able to read the White Paper. I have got as far as page 16 and it is there that I would like to ask for some elucidation. It is very good that we have at last put some cards on the table. That is a couple of years too late but better late than never. The White Paper is clearly a very substantial body of work, which will take a lot of reading by us and, I would have thought, a great deal of negotiating in Brussels.

I want to start on an element which the Minister highlighted. The FCA or facilitated customs arrangement, referred to on page 12 of the Statement and pages 16 to 18 of the White Paper, says:

“As if in a combined … territory with the EU, the UK would apply the EU’s tariffs and trade policy for goods intended for the EU. The UK would also apply its own tariffs and trade policy … However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK”.


I have two questions. First, what happens at Dover to goods from, say, Asia which entered the EU via, say, Rotterdam? Where do the customs dues, tariffs and quota checks take place?

Secondly, as the Minister will be well aware from his long experience in the European Parliament, customs dues are an own resource which go straight into the common EU budget and it is 11 years since OLAF, the antifraud agency, started warning us that our border controls on Chinese textiles and footwear were inadequate. We are now in court for unpaid duty, calculated at more than €3 billion over a 10-year period. As he will be well aware, too, we are also in court over VAT fraud at Felixstowe, where the charge against us is $3.2 billion. Does he really think that once we have shaken off the ECJ, the Commission and OLAF, we will be accepted as trustworthy collectors of the EU’s external tariffs and customs duties at our ports, against the background that it believes that we have consistently under-counted for the last decade, having admitted false invoices and incorrect value declarations? How are we going to persuade the European Union that, as non-members of a customs union, we should collect the duties which go straight into its common budget? Would it not be simpler simply to have a customs union, as this House voted for by a majority of 123?

[Lord Callanan]

To answer the noble Lord’s last point first, for the sake of repetition, we have been clear that we are leaving the customs union. The reason why we are leaving is that we do not want to contract out our trade policy to the European Commission. He might think that is a good thing but I do not and I disagree with him. We want to come to an independent trade policy and this model would allow us to do that. I accept that there will be some challenges in negotiating this matter. However, we have put forward a proposal in good faith and intend to persuade the EU of its virtues and benefits.

On the noble Lord’s question about collecting duties, we intend to agree with the EU a mechanism for the remittance of relative tariff revenue. The UK is proposing a tariff revenue formula, taking account of goods destined for the UK entering via the EU and goods destined for the EU entering via the UK. I am afraid I cannot comment on the court proceedings that are taking place but I understand that we are vigorously resisting the sums that have been claimed.