Further Discussions with the European Union under Article 50 of the Treaty on European Union

Lord Kerr of Kinlochard Excerpts

Wednesday 27th February 2019 Lords Chamber

[Lord Kerr of Kinlochard (CB)]

Following the noble Lord, I am reminded of how much he has done down the years to encourage our engagement in Asia and Asian investment in this country. I feel very sorry for him, because this must be a sad time for him. If you take just Anglo-Japanese relations, his work down the years was remarkable. We know what the Japanese banks here are doing. We know what Hitachi and now Honda are doing. We know what Toshiba is doing. We know about Sony and Panasonic. When will we hear from the third of the great car companies, Toyota? Actually, we did hear from it. It exports 80% of its UK production to the European Union. Its executive vice-president, Didier Leroy, said that:

“The UK government should … understand that we cannot stay in this kind of fog when we don’t know what will be the output of the negotiation”,


and that any kind of EU import tax would create a huge,

“negative impact in terms of competitiveness”,

for its UK plant. That quote—

“we cannot stay in this kind of fog”—

was from October 2017. It is still in this kind of fog. We have not told it anything, so it is not surprising that it has given up and is backing off. It has given up expecting clarity from us.

[Lord Lilley]

I am sure the noble Lord will want to congratulate Toyota on opening in this country a year later—in October last year—a line producing the best-selling car in the world, opened by the Secretary of State. That shows a rather different picture to that he was portraying.

--- Later in debate ---

[Lord Kerr of Kinlochard]

I wait to see what will be the fate of its massive investments in Deeside and in Derbyshire, both of which are very important. I am concerned; I know the company is concerned. The noble Lord, Lord Howell, has worked very hard to secure investment in this country and must be very sad.

The noble Lord, Lord Newby, started with a Churchillian quotation, which put me on my mettle. I was determined to match him. I can just beat him on vintage; mine is a 1936 quotation. Churchill described Chamberlain as,

“decided only to be undecided, resolved to be irresolute, adamant for drift”.—[Official Report, Commons, 12/11/1936; col. 1107.]

As we kick the can down the road, somehow it came to mind. It is actually quite unfair to Mrs May; it was probably unfair to Chamberlain too. What is more striking about Mrs May is her messianic, Mosaic mission, and her determination not to listen to anybody else. I am impressed by her belief that she knows all the answers, and does not have to pay attention to any of us.

[Lord Winston (Lab)]

I think the noble Lord will find that Moses listened. That was one of the issues.

[Lord Kerr of Kinlochard]

But what he brought down was graven on a tablet of stone, and what Mr Nick Timothy drafted for the Prime Minister in September 2016 was not, in my view, to be taken as graven on a tablet of stone. We know now that the Cabinet was not consulted about it. We knew at the time that the country and this Parliament were not consulted, but these four red lines have determined where we are now.

The European Union has said all along—it said it in the cover note of its first mandate—that if our red lines were to change, then it was happy to look again at its mandate and change it. However, we do not seem to listen to those across the House of Commons who propose something that would break one of the red lines. When Labour talks of customs union, and this House votes for customs union, it is dismissed because it breaches one of the four red lines.

By the logic of the Prophet Timothy, Switzerland, Turkey and Norway are not sovereign states independent of the EU, because in at least one respect each breaches at least one of the four red lines laid down by Mrs May in the party conference speech in September 2016. Yet the Swiss think that they are independent. They do not think they are in the EU, and are commonly regarded as not being in the EU. I do not know why the definition of Brexit that was laid down without consultation in September 2016 has to be accepted as the only definition, and why it is a denial of Brexit, flying in the face of democracy, to argue that there might be a better Brexit than the one defined by Mr Timothy and the Prime Minister in September 2016. That is why I am offended by the “my deal or no deal” choice.

As everyone has been saying and as the document published yesterday proves, no deal is an economic catastrophe for the country, but it cannot be right that the only alternative is the lineal descendant of the tablet brought down by Moses to the party conference in September 2016. There are at least two more options available. One is to try for a better Brexit, which I do not believe the Prime Minister is going to do with the short extension she says that she might be ready to foresee. She is not looking at anything other than the sort of declaration that could be fitted into the political declaration, or might be free-standing, in some way adding emollient words about the backstop. However, the backstop is not the only defect in this dreadful, humiliating package—this humiliating treaty and vacuous declaration.

If we were prepared to contemplate the Swiss approach to free movement of persons, the Turkish approach to a customs union or the Norwegian approach to the single market, or if we were prepared to envisage an EEA-type arrangement, we do not know what new prospects might open up—we have never tried, because No. 10 does not listen. It has never been tested. We have never discovered what the EU means when it says that, if we were to change our red lines, it would change its negotiating position. That makes the “my deal or no deal” position irresponsible.

Others have explained why no deal is extremely bad for our trade. There would be no preferential arrangement with the EU or with any of the countries with which it has preferential deals, which amounts to more than two-thirds of our trade. The non-EU countries I am talking about include some very big ones, such as Japan, South Korea and Turkey. We are told that we have rolled over six agreements, but these are with minnows—not Japan, not South Korea and not Turkey.

Quite apart from the question of our domestic tariff, which the noble Baroness, Lady Hayter, spoke about, we have to accept that our export market would be seriously damaged by no deal. Whether it happens in April, May or June, no deal is no better then than it would be on 29 March.

[Lord Howell of Guildford]

I apologise for interrupting the noble Lord—he said some very nice things about me and I have a lot of very nice things to say about him. However, he has presented me with a puzzle. He keeps talking about this business of “my deal or no deal”. In fact, the Government have now recognised that it is not “my deal or no deal”, but “my deal or postponement”—admittedly, in the words of the Prime Minister, a “short” postponement. We all know perfectly well that an overwhelming majority in the other place supports a delay in Article 50. If the Prime Minister fails on 12 March—I do not think she will—there will be a postponement. The concept of “my deal or no deal” is last week’s story. It is simply out of date, so why is the noble Lord worried about it?

[Lord Kerr of Kinlochard]

I am worried about it because I do not believe that the Prime Minister intends to use the short delay she says she is prepared to settle for—although she has not said that she would vote for it—to explore the possibilities of a better Brexit. As far as she is concerned, the only deal is that which she brought back in November, possibly titivated slightly in the declaration to try to deal with the objections of some to the backstop. I believe that is all she intends to do. The right thing to do is to have a long enough extension to go back and consult the people. This has turned out so differently from what we were told, and it is absolutely right that we would go back and consult the people.

The point I was trying to make was about trade. I would like to end on a warm and friendly note towards the noble Lord, Lord Callanan, who is in such sparkling form today—I shall try to sparkle back in what is, for me, an unusually friendly way. I congratulate him on his honesty in the last debate, when he put to rest the Legatum Institute theory that the answer to the problem of WTO terms and no preferential trade deals was Article 24. It was extremely straightforward and honest of him to say of Article 24:

“This provision refers to interim agreements. In order to use it, we would need to agree with the EU the shape of the future economic partnership, together with a plan and schedule for getting there. This would then need to be presented to all 164 WTO members and they would be able to scrutinise it, suggest changes and, ultimately, veto it”.—[Official Report, 13/2/19; col. 1935.]


That, I believe, is absolutely correct. I think it was generous and honest of a Minister to put it on record. Article 24 is absolutely no way out in the situation we would be in with no deal. It depends on a deal being struck. It depends on a process going on. It is possible that eight years into future negotiations this is what we might be able to do, although we would, as the Minister rightly said, be dependent on the agreement of 164 parties in GATT. Therefore, even that cannot be assumed.