Trade Bill

Lord Lea of Crondall Excerpts

Committee: 2nd sitting (Hansard): House of Lords
Wednesday 23rd January 2019 Lords Chamber

[Lord Lansley (Con)]

My Lords, I understand the point the noble Lord is making and exploring on this issue, and when we explore that point, it is worth saying that much depends on our future relationship with the European Union, and how we incorporate state aid into that. If we were in the European Economic Area, we would apply EU state aid rules; that is what EEA members now do. If we were in a free trade agreement with the European Union—as Canada and South Korea, for example, are—we would do something different. State aid provisions are built into those agreements, but they are based not on EU state aid rules but on the WTO Agreement on Subsidies and Countervailing Measures. That will all entirely depend on what the future relationship looks like.

The point has correctly been made that we use state aid proportionately less—about half as much, as a proportion of GDP, as the French do, and a quarter as much as the Germans. So state aid rules themselves have not necessarily restrained us from doing things. The noble Lord will be aware of the report on competition and state aids by the committee of which I have the privilege to be a member—the Internal Market Sub-Committee of the European Union Committee. The Government’s approach is, essentially, that we will replicate EU state aid rules in UK law, but we will, of course, be repatriating them so that they are exercised by our authorities rather than by the European Commission. In that context, it will be the Competition and Markets Authority, rather than any other body, which does that in this country—and it will do so independently.

If I remember rightly from the evidence that we received—I stand to be corrected if not—the Government’s intention is for this to be done by the CMA on a UK-wide basis, and not to be disaggregated to individual nations or regions. Clearly, the state aid rules themselves may have geographical parameters, as ERDF and other EU funding has done in the past, but that is a different matter. The rules on the application of state aid would be applied in this country. So we will have something considerably beyond the WTO requirements. For example—this is probably the best example and the most important for businesses—EU state aid rules would require us to have processes of notification and prior approval whereas, where WTO rules are concerned, if the Government engage in subsidy then they do so at the risk of post-hoc challenge and complaint. That is quite a different structure.

I say all that simply because, while this is an interesting issue, I am not sure whether the amendment does the job. However, I put it to the noble Lord that he might suggest that if future trade agreements of this kind, which are generally with third-party countries, were to apply state aid rules in a UK and third-party country agreement which differentiated from the WTO subsidies and countervailing measures provisions, that should be the subject of consultation and approval in this House. I cannot see why we would want to approve an arrangement for a WTO agreement on subsidies, which would simply be applied in the normal course of events. I hope that those few remarks are helpful.

[Lord Lea of Crondall (Lab)]

My Lords, a couple of the points made in the short debate on this amendment have been very wide and not actually to do with the amendment as such. Perhaps I may add a corrective: we discussed the mergers of railway companies, nuclear power companies and so on earlier today. The fact is that we look at one Chinese company against not one European company but sometimes more than one. Regarding the comment about the EEA, I am sure that the EEA will evolve while recognising that we often need one European company. It could be dressed up as something to do with either the nature of policy on mergers, competition and monopolies or with state aid policy. I put down that cautionary note because, when people say that this amendment does not do those jobs, it is clearly not intended to. However, many such wider commercial questions will have to be faced up to in the future.

[Baroness McIntosh of Pickering (Con)]

My Lords, following the comments of the noble Lord, Lord Stevenson, in moving this amendment, I would like to put a specific question to the Minister. In doing so, I declare that I am a member of the all-party parliamentary group on racing and have enjoyed the occasional day at the races as a result.

For 18 years, I represented a number of racehorse owners, trainers and stable lads and lasses in North Yorkshire, where racing is extremely important. My specific question relates not just to Amendment 16 but to Amendment 48, and looks ahead to the tripartite agreement on the movement of horses. I know that my noble friend the Minister is keen to talk in terms of continuity so, in those terms, what is the specific status of the tripartite agreement as of 30 March? Will it be rolled over automatically if there is no deal, or will it become part of a separate free trade agreement?

On the comments made by the noble Lord, Lord Stevenson, state aid was deemed to be almost a barrier to the form of instrument used in replacing the racehorse levy which, as your Lordships will know, is the means by which most of racing is financed. The levy puts it on a sound financial footing, but it was prayed in aid that it would be deemed state aid. However, as the noble Lord said, that was specifically excluded for a similar levy that has been allowed in France, which is pertinent to the debate on this amendment. What is good for the goose has to be good for the gander, so if the French racing industry was allowed to be supported then we should be allowed to continue to support the British racing industry. This goes to the heart of the tripartite agreement, so what is the status of state aid, as raised by the noble Lord, Lord Stevenson? What is the position of the tripartite agreement going forward from 29 March this year?

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[Lord Lea of Crondall]

I have been listening to this brilliant speech, and I am just wondering whether I can believe my ears. We are talking about an amendment to a Trade Bill in the context that the Government are trying to put through a withdrawal agreement. Given the complexity of the question of “the customs union” and “a customs union”—there is an element of angels on the end of a pin—if we in Parliament are having difficulty in thinking through its various intricacies, how does he think it is going to be easier for the people to do so? Is that what he has just said?

[Lord Purvis of Tweed]

It is. Ultimately, I believe that the choice is going to be that we either stay in the customs union and the single market of the EU or we leave, either with no agreement at all, which I hope is ruled out in short order very quickly, or with some form of government agreement, which did not secure majority support in the other place, where one-third of those voting against it did not believe that it was leaving the EU at all. I think where the people will now be informed in the decision is as I started: many of the issues are now laid bare about the consequences of leaving.

I am very happy to be a co-signatory to this amendment. I am very pleased that we in this Chamber are debating what the consequences of the actions will be. We are also clear that we want to do the least damage to the British economy and to secure for the future all the relationships that we have at the moment without the extra burdens of regulatory addition.

My final point, which the OBR report in October made very clear, is that if we went down the Government’s course and left, then there would be at least five years of adjustment to a worse scenario for GDP, even on the basis of the agreement. I am seeking to avoid that. I hope there will be consensus, at least in the first instance, that a customs union is necessary. There is no doubt of our position on these Benches that the customs union is preferable to all of those. I hope that will ultimately be the future of our country, and I believe that that is up to the people, who ultimately will have to decide this.

Trade Bill

Lord Lea of Crondall Excerpts

Committee: 4th sitting (Hansard): House of Lords
Monday 4th February 2019 Lords Chamber

Moved by

[Lord Lea of Crondall]

66A: After Clause 5, insert the following new Clause—
“UK membership of EFTA and the European Economic Area
It shall be the objective of an appropriate authority to achieve before exit day the implementation of an international agreement to enable the United Kingdom to become a member of the European Free Trade Association and continue as a signatory to the EEA Agreement.”

[Lord Lea of Crondall (Lab)]

My Lords, I will begin by reading the amendment to set out what I am trying to do here:

“It shall be the objective of an appropriate authority to achieve before exit day the implementation of an international agreement to enable the United Kingdom to become a member of the European Free Trade Association and continue as a signatory to the EEA Agreement”.


It will be recalled from last summer that this policy had—has, I guess—the support of this House. I now wish to scrutinise some of the practical issues of attaining it. Given that all the other ideas seem to have fallen by the wayside, one after the other, like dominoes, I think this is the only one standing. It now has even more steam behind it.

Before I come to the main issue, I should like to make a point about Nissan and Sunderland. This is central to why we need to stay in the single market and customs union. Reading between the lines, Nissan is saying almost as much in those terms. There is a slow-burn catastrophe of collapsing foreign direct investment in Britain. I made a speech a year ago saying that the plans—not forecasts but plans—were down 80%. I was talking to the FDI people around a table. This is now exemplified by the huge Nissan setback. By the way, many Members here, in their previous incarnations, have worked very hard to secure that work. On this occasion, no one is blaming the workers or their trade unions. That is a change, is it not? They blame those who play to the gallery. Boris Johnson and his press acolytes spring to mind, with their self-serving and grossly misleading propaganda two years ago and since. They ought to be ashamed of themselves.

Even now, on the options before us, Her Majesty’s Government are still in denial about the vital requirement to enhance and protect our world market share of investment and trade by staying part of the customs union and the single market/common market. That, in turn, is the secret of Europe’s world market share vis-à-vis the USA and China, as well as Japan and other parts of Asia, as a preferred production location. The same applies to many services.

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[Lord Stoddart of Swindon]

As soon as I said that, I knew it was wrong, but in fact Mr Blair continued that way and did not introduce the Social Chapter. What I find strange about the noble Lord, Lord Lea, and others, is that they do not seem to understand that once we are an independent nation we can make the rules that we want, which may be better than the rules that 27 other member states—or 28 with ourselves—make in relation to the rights, privileges and wages of workers in this country.

[Lord Lea of Crondall]

That is the central point. The reason we could not do it at national level, whether in Europe or the wider world, is that our employer would say we will be uncompetitive. However, in a big bloc like the EU where we negotiated at Brussels level under the Social Chapter, they cannot say that—at least for the most part within the family of the European Union. That is the point that the noble Lord, Lord Stoddart, has not answered.

[Lord Stoddart of Swindon]

That, of course, is a matter of opinion. There are others who say that because we are members of the EU we cannot make the laws that we want in this country, which would benefit the whole country including the workforce. People should have more confidence in this country, the way it is governed and those who can govern it.

The noble Lord, Lord Lea, blamed—or seemed to blame—Brexit for Nissan reneging on its agreement to make its new model in this country. However, Nissan itself has said that the world decline in demand for vehicles, particularly diesel vehicles, was the main reason it wished to save money by developing the vehicle in Japan. We ought to be careful that we do not blame Brexit for everything that goes on in the world and this country. I hope that the noble Lord understands that I was not puzzled about what he was saying—I was merely thinking about what he was saying. Of course he will realise that I was actually listening to him, as I always do.

[Lord Finkelstein (Con)]

I thank the noble Lord for his compelling and persuasive speech. For those of us who are determined that we should not leave the European Union without any deal whatever, it is important to think about the points that he has raised. We are at the stage now where someone like me needs some guidance. There is no point haring off after something that it is not going to happen. We had a discussion in this House on these very questions, and when we had plenty of time to implement this solution, Labour Benches decided to vote against it and therefore implied that they were not in favour of it at that point, and probably that they would not be in favour of it at any point. I suspect that is still the case.

Before we get ourselves embroiled in Norway-plus as an alternative, I would certainly find it useful to know whether it is the noble Lord’s view that the Labour Party Front Bench is ever likely to support this proposal—

[Lord Lea of Crondall]

I can help the noble Lord on that. In the six months since the summer, Jeremy Corbyn—whether you think his policy is that of a snail or a crab—has moved to say that we in the Labour Party are in favour of staying in the customs union and a/the single market. That is Front-Bench Labour Party policy.

[Lord Finkelstein]

I think it is access to the single market, and we are both aware of the difference between those two things. Also, it is “a” customs union; I noticed that the noble Lord referred to “the” customs union. That is also something different, so his view is not quite that.

There is a second question: whether if the Labour Party decides it is going to move to this position—either as a snail or a crab; those were the noble Lord’s chosen animals—that it would then support the withdrawal agreement, which would be needed in order to pave the way for this. If it is not going to, that is significantly less attractive to someone like me looking to ensure that we do not leave without a deal. These questions are not put as a challenge—they are a genuine dilemma for those of us who are now looking at what the solutions are, who are not persuaded after the Brady amendment that we are going to get very big changes from the European Union, and who want to be sure that we can all agree on something.

[Lord Lea of Crondall]

If the protocol of the House allows me, I will answer questions as they come in this way. The proposal I made at the end of a negotiation involving the EU as well as EFTA is one way of getting out from under the dilemma that some future for Britain within the common market and the customs union could be found. It would not simply be “the” withdrawal agreement; it would be the withdrawal agreement/going along with EFTA under the EEA umbrella agreement, with an understanding between the 27 and us. That is my proposal.

[Lord Finkelstein]

It is a credible proposal, but only if it has some sort of political support. The questions I put are merely a matter of guidance to me—and I am sure to lots of other people like me—and I am hoping that we will get a little bit of illumination from both Front Benches that will help us along the way.

--- Later in debate ---

To deal with the other points, the noble Lord talked about convening a meeting of the EEA Council and asked whether it would be possible. The UK will be leaving the EU. We will have control of our borders. That is not what he was asking about, but the terms and conditions for rejoining the EEA agreement as an EFTA member would need to be agreed with the contracting parties—the EU, the remaining EU 27 and the three EEA EFTA states, Norway, Iceland and Liechtenstein—through the EEA Council. It is not the Government’s policy to join the EEA because it is not the right arrangement for the UK’s economy and size. I hope the noble Lord will feel that we have responded to his serious proposal with some serious reasons why the Government are not able to accept his amendment, and I hope he will withdraw it.

[Lord Lea of Crondall]

I thank the Minister for that very courteous reply. I do indeed believe that he has taken the points very seriously, as I would have expected of him. Neither of us is Wittgenstein. I say that because I fear that Wittgenstein would not have been very happy with some of the logic that has been heard in the last 20 minutes, which tends to be along the lines of, “We can’t do X because that is governed by Y”, as though that were the end of the argument, when in fact I dealt with that proviso in what I was putting forward. It is very difficult across the Chamber, if not impossible, to untangle the tortuous web we weave, but that is what I have been endeavouring to do. I would add that the EEA Council would undoubtedly be able to open a discussion with us: who is going to tell it that it cannot do that? Whether, technically, at that moment, Britain is a third party is a separate question, I would have thought. The agenda is, first, what can we do to avoid tripping over each other in sequential negotiations with the EEA and EFTA? That is a serious problem, given the asymmetry between the technical questions affecting the single market and the customs union.

British pragmatism and common sense—not that there is much of that around these days—is the territory that I am trying to get into. I very much hope that, in the spirit of what a number of people have said, there is food for thought in what I have been saying and, in the two or three weeks before we come back on Report, who knows? A day is a long time in politics at the moment. I beg leave to withdraw the amendment.

Amendment 66A withdrawn.

Trade Bill

Lord Lea of Crondall Excerpts

Report: 1st sitting: House of Lords
Wednesday 6th March 2019 Lords Chamber

Moved by

[Lord Lea of Crondall]

11: After Clause 5, insert the following new Clause—
“UK membership of the European Free Trade Association and the European Economic Area
It shall be the objective of an appropriate authority to achieve before exit day the implementation of an international agreement to enable the United Kingdom to become a member of the European Free Trade Association and continue as a signatory to the EEA Agreement.”

[Lord Lea of Crondall (Lab)]

My Lords, last summer the House supported a proposition along the lines of retaining our membership of the EEA. Given that all other ideas seem to be falling by the wayside one after the other like dominoes, it now has even more steam behind it. I expect this will be demonstrated in the other place quite soon, with the proposition supported by cross-party groups in the Commons and in this House.

Before I come to the main issue, I want to make a point about all the bad news from the car industry, with BMW and Toyota adding to it. This is another demonstration of the need to stay in the customs union, which will be debated later.

We are talking in this Bill against a background of leaving the EU—not about whether it is a good idea, which it certainly is not—and moving from Pillar 1 of the twin-pillar European Economic Area, which is the European Union, to Pillar 2, which is EFTA. Given where we are now, I think that it is the only way we can still be part of a family of agreed rules and justiciable arrangements, with the emphasis shifting on the latter point from the European Court of Justice to the EFTA Court.

I wish to get out of the way a rather unnecessary obstacle. I refer to the publication by this Government on 20 December of the EEA EFTA separation agreement with the UK. Although this is a treaty provision whereby we will leave the EEA on 29 March, will the departure requirement in Article 71 of the draft agreement be automatically frozen in the hypothetical situation of our reaching agreement with the EU to extend the Article 50 period, which is becoming more likely, so that it does not happen on 29 March? If we crash out, would we not have the right to apply to rejoin EFTA? Would not Parliament have the right to vote on such a treaty change if it were no longer logically derivative of the wider constitutional Act? Many lawyers think that there should be such a vote.

Jeremy Corbyn paid tribute in the Commons recently to the cross-party Norway-plus group, echoing its view that we need full access not only to the single market but to a customs union. This policy is supported by the TUC under the distinguished leadership of Frances O’Grady. As I have said previously, I prefer to say “the” customs union, because I am agnostic about whether there is a cigarette paper of difference in this context between the definite and the indefinite article. The EU customs union and the single market between them—they are intertwined—cover a wide range of electronic data, driving licences and product standards, as well as labour standards. Given what has been said in the newspapers today, membership of them would be the only way to guarantee that workers’ rights in this country kept pace with further improvements in the EU. As we have seen from today’s reports, the Prime Minister restricts her commitment to consultation, which past experience suggests gives a veto to the CBI, even though I suspect that it, like the TUC, will remain part of the employers’ negotiating team in Brussels. In other words, it could have its cake and two bites at the cherry, given its reluctance to be part of this arrangement.

--- Later in debate ---

[Lord Bates]

My Lords, I am conscious of the time, but I also want to ensure that noble Lords have an opportunity to reflect on the serious issues raised by the noble Lord, Lord Lea. We may deal with them briefly this evening but we did not deal briefly with them when they came up in Committee. There was quite some debate on them on 4 February, and for those noble Lords who are interested, they can read it in glorious technicolour between columns 1360 and 1370 in the Official Report of those proceedings. Perhaps if the noble Lord, Lord Lea, will permit me to summarise what the key arguments were at that point, I will try to answer two of the points that he raised.

EFTA membership would not be acceptable because it would mean accepting the free movement of people between its four existing members. To gain access to the 29 existing free trade agreements negotiated by EFTA, the UK would have to negotiate its way into each and every one of them with the relevant third countries. There is no guarantee that that would be successful: EFTA’s trade agreements were not negotiated with the size and type of Britain’s economy in mind. Were the UK to join EFTA, it would constitute 71% of the enlarged area.

If we rejoined the European Economic Area to stay in the single market, we would not have control over our borders. It would mean having to accept all four freedoms of the single market, including free movement of people across the 30 EEA states. On laws, it would mean having to implement new EU legislation covering the majority of the sectors of our economy. In contrast, we are making an up-front sovereign choice to commit to ongoing harmonisation with EU rules on goods, covering only those necessary to provide frictionless trade in the context of our agreement.

The noble Lord, Lord Lea, said that if we crash out, we need to keep the right to rejoin EFTA. If we leave the European Union without a deal, we fall out of the EEA and EFTA. We would be able to apply to rejoin, but this is contrary to government policy for the reasons that I have explained. He asked what the impact on the EEA Agreement would be if we extended Article 50. If we were to extend Article 50, the UK would, of course, stay within the EEA under the EU pillar until we left the EU. With regard to citizens’ rights agreements made with the EEA and EFTA states, these would enter into force only when we leave the EU or at the end of an implementation period.

I hope that, with that brief summary, the noble Lord—whose contributions I always enjoy and listen to attentively—will not feel that I have not responded to him, but in the context of the wider consideration of this issue in the debate, the Government’s position remains as it was in Committee. I therefore ask him to consider withdrawing his amendment at this stage.

[Lord Lea of Crondall]

My Lords, I thank the Minister for that reply. In fact, he did not answer all the questions on 4 February. I could draw attention to some of them, but I will not. This could have been an opportunity today. Free movement of persons is, of course, an issue of which we have experience within the European Union. We would be cutting off our nose to spite our face on areas of the economy, such as the whole entertainment, theatre and ballet industry, as the noble Baroness, Lady Bull, referred to on one occasion. There are many, many others, so these sweeping statements about control of our borders are really over the top and not a sensible way to address this issue.

I am not going to say more at this stage. Suffice it to say that the initiative is now with the House of Commons. I have some confidence that in the next few days and weeks this will become, as my noble friend Lord Monks said, a strong policy in the Commons. I rest on the fact that it is still the policy of the House of Lords, as has been said by my noble friends. On that basis on this occasion, I will not seek to test the opinion of the House.

Amendment 11 withdrawn.