European Union (Notification of Withdrawal) Bill

Lord Liddle Excerpts

Committee: 1st sitting (Hansard): House of Lords
Monday 27th February 2017 Lords Chamber

[Lord Keen of Elie]

Yes, of course. The noble Lord to whom the noble Lord refers is not in the House today.

It is my intention to make some progress with this matter. The Prime Minister clearly set out her vision for the future of the UK post-exit in her speech on 17 January, including our future trading relationship with the EU. She was clear that we do not seek membership of the single market. Instead, we seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement. We want the UK to have the freest possible trade in goods and services with the EU’s member states but also to be able to negotiate our own trade agreements. As the noble Lord, Lord Hamilton of Epsom, observed, we seek our own, bespoke deal.

The United Kingdom has always been a leading voice for free trade, not only in the European Union but globally, and we have been consistently clear that we want the maximum possible freedom to trade for businesses in both Britain and Europe. But we also want to take back control of our laws and control immigration to Britain from Europe.

Being a member of the EEA would mean complying with the EU’s rules and regulations that implement the four freedoms—in respect of capital, goods, services and people—without having a vote on what those rules and regulations are. It would mean accepting a role for the European Court of Justice that would see it still having direct legal authority in our country. It would mean not having control over immigration. EU leaders in the other 27 states have been clear as to their belief in the indivisible nature of the four freedoms, and we respect that. The people of the United Kingdom voted to leave the EU, not to maintain partial membership of its bodies or institutions. When the people of the United Kingdom voted to leave the European Union institutions, they did not intend that we should leave by the front door and rush back to attempt entry by the back door.

As set out in the White Paper, we recognise that we will require alternative forms of dispute resolution once we leave the EU and are no longer subject to the European Court of Justice. But again, these mechanisms are common both to agreements between the EU and third countries and in international agreements to which the United Kingdom is also party, of which there are many examples. Once we leave the EU, the EEA agreement will no longer be relevant for the United Kingdom. It will have no practical effect. It will be an empty vessel. That is because the agreement is defined as covering all EU members and those three EFTA states—Iceland, Liechtenstein and Norway—which have chosen to join the EEA. As we are leaving the EU, we will automatically be outside this definition, as found in Article 126 of the EEA agreement. So there is no choice open to us to leave the EU and remain a member of the EEA, which would require a separate negotiation with the EU and the three EFTA states that I have just mentioned. For example, Switzerland, which is also a member of EFTA, has separate bilateral agreements with the EU even though it is not in the EEA. EFTA membership is not, of course, the same as EEA membership.

Although it will have no practical effect after the EU exit, we are considering what steps might need to be taken formally to terminate the EEA agreement as a matter of law, as we will remain a signatory to the agreement. This could be done through Article 127 of the EEA agreement on giving 12 months’ notice, or by some other means, but no decision has yet been taken on that. We have laid out in the White Paper, however, the relationship we are seeking: a new strategic partnership which includes a new customs agreement and an ambitious and comprehensive free trade agreement. We are seeking the greatest possible access to the single market as part of this.

The noble Lord, Lord Lea of Crondall, referred to the fact that we would not be at the table. That is absolutely right, and that is not what 52% of our population voted for when they voted leave. It is one thing to have power without responsibility; it is another to have responsibility without power, and that is what we would have in these circumstances. It was suggested that freedom of movement could be open to a variety of interpretations. That is not the view in Europe. It is open to only one interpretation—one which we have been under for a number of years.

The noble Baroness, Lady Quin, referred to the report of the House of Lords committee. I can reassure her that we take the terms of that report very seriously, and we will be taking forward our consideration of it in due course. The noble Lord, Lord Davies of Stamford, referred to the suggestion that somehow we could keep our options open so far as the EEA is concerned, but that is not the case. EEA membership is not an option that is simply open to us if we leave the EU. As I said, it becomes an empty vessel. We have to face up to the indivisibility of the four freedoms, as insisted upon. It is not a case of going to Europe and saying, “We would like to negotiate out of one of the four freedoms”. We are told repeatedly that they are indivisible, and we have to take that into account.

At the end of the day, we cannot embrace membership of the EEA any more than membership of the EU without freedom of movement in Europe. In these circumstances, I invite the noble Lord to withdraw this amendment on the understanding that we cannot retain membership of the EEA for the reasons I have sought to set out.

[Lord Liddle (Lab)]

Before the noble Lord sits down, there is one issue on this question which is very important to the national interest. When the noble Lord, Lord Bridges, came to the Select Committee to answer questions about the Government’s negotiating strategy, I asked him whether—as part of a transitional arrangement—they had ruled out membership of the single market or the EEA, and he said they had not. Can the Minister clarify the Government’s current position?

Whatever the Front Bench opposite thinks, most observers think it will be impossible to negotiate a comprehensive trade agreement within the practical 15 months of negotiation that will be available after the German elections. This implementation phase that the Prime Minister talks about is in fact a transition. Are the Government saying that under no circumstances would we consider being members of the EEA, or the single market? If they are, we are facing the most horrendous cliff edge as an economy.

[Lord Keen of Elie]

My Lords, with respect to the noble Lord, Lord Liddle, I do not accept that we face a cliff edge—there is no cliff and therefore no edge. We fully intend to negotiate a suitable settlement within the period set out in Article 50 and that is the course of action on which we are setting out at this time.

The noble Baroness, Lady Deech, questioned whether this amendment was within the scope of the Bill. That is a question for others, but clearly it is not related to the purpose of the Bill. The Bill is concerned with process and, if we lose sight of that, we are liable to become rudderless in very difficult waters.

[Lord Liddle]

Will the Minister give me an answer to the question? It is a reasonable question on such a vital matter of national importance: is this ruled out in a transitional arrangement or not?

[Lord Keen of Elie]

With respect, the noble Lord’s question proceeds on a supposition that I do not accept.

--- Later in debate ---

[Lord Bridges of Headley]

I think that I would like to say a few words, despite what the noble Lord, Lord Mandelson, says. I sense there is some division. Let me start by trying to mend some bridges—pardon the pun. All of us in this House wish our country to prosper. We all want to see more investment and more jobs. The very simple question raised by these amendments is this: in light of the vote to leave the EU, how can we best do that? I know that the noble Lords, Lord Hain and Lord Monks, and other noble Lords whose names are on these amendments, have long-held views that the best route to achieve that aim is, at least in part, for the United Kingdom to remain within the EU and within the single market. I respect their views and the steadfastness with which they hold them. I will try my best to be eloquent, but I am sure that what I am about to say will not deflect them and a number of other noble Lords, such as the noble Lord, Lord Mandelson, from supporting this amendment. But I will briefly set out why the Government oppose the amendment. The first and most obvious reason is that it has nothing to do with the Bill. The Bill has one purpose only: to enable the Government to start the process of negotiation. It is not a means to dictate the terms of the negotiation.

The second reason concerns the democratic arguments. Very briefly, as I said earlier, the Government promised to hold a referendum and to honour its result. Yes, I know that the Conservative Government said that they would protect our role in the single market in the manifesto. But as my noble friend Lord Blencathra pointed out, the manifesto also promised to respect the result of the referendum—a promise which this Parliament endorsed by passing the European Union Referendum Act.

As the noble Baroness, Lady Hayter, said, the debate we have heard tonight has been a rerun of the referendum campaign. As I said earlier, during that campaign, every household was sent a leaflet which spelled out the consequences of leaving as regards our membership of the single market. A number of people on both sides of the argument pointed out that we could not vote to leave and then try to remain in the single market. Criticising the leave campaign, one of those arguing to remain said:

“Some of those advocating British withdrawal suggest that we can have our cake and eat it by staying within the European single market to retain the great bulk of our trade which is with EU countries”.—[Official Report, 2/3/16; col. 855.]


Those are the words of the noble Lord, Lord Hain, and he was quite right. The four freedoms are seen by many across Europe as indivisible, and we should respect those views.

Much more than that, as other noble Lords have said, remaining a member of the single market would mean complying with the EU’s rules and regulations that implement the four freedoms, without having a vote on what those rules and regulations are. It would almost certainly mean accepting a role for the Court of Justice of the European Union. It would mean still not having control over immigration—relying on enforcement powers rather than creating an immigration system, which this Government intend to build, which allows us to control numbers and encourages the brightest and best to come to this country.

As to the customs union, were we to remain a full member, we would remain bound by a common external tariff, which would greatly limit our ability to strike our own trade deals and our freedom to determine the level of UK tariffs. Were we to remain within the common commercial policy, we would not be able to pursue freely our bold, ambitious trade agenda with the rest of the world. We would instead, as now, be ceding responsibility for this to the European Union. So to remain a member of the single market and to remain a full member of the customs union would, to all intents and purposes, mean not leaving the EU at all.

As to the EEA, I agree with the noble Baroness, Lady Hayter, that it suffers from a democratic deficit. Once we leave the EU, as my noble and learned friend said earlier, the EEA agreement will no longer be relevant for the UK. It will have no practical effect. But we expect a phased process of implementation to cover our withdrawal from the EU in which both Britain and the EU institutions and member states prepare for the new arrangements between us. This is intended to give businesses enough time to plan and prepare for the new arrangements. The interim arrangements that we rely on will be a matter for negotiation.

[Lord Liddle]

Does that mean that the Government are not ruling out EEA membership for the transition?

[Lord Bridges of Headley]

I have nothing further to add, other than to say that it is a matter for the negotiations. It is a matter for the negotiations and I am not going to go further. I checked the transcript of the Select Committee hearing that the noble Lord so rightly brought me up on earlier and that is what I said. It is exactly consistent with what I have said.

I turn to our approach to trade with the EU once we have left. My noble friend Lord Howell pointed out the intricacies of this. It is absolutely true—a basic point—that across the world countries which are not members of the single market trade with Europe. The single market is not a tablet of stone. As the noble Lord, Lord Mandelson, so rightly said, in services, which drive so much of our wealth creation, the single market is incomplete; likewise, on digital services. With that in mind, the Government have a clear aim: to seek an agreement for the freest and most frictionless trade possible in goods and services between the UK and the EU. We start these negotiations from a unique position. The EU exports to the UK £290 billion of goods and services each year, and on day 1 we will have exactly the same regulations and standards as our negotiating partners. The focus will be not about removing existing barriers or questioning certain protections but about ensuring new barriers do not arise, and the scale of trade means that it should be in our interests, and Europe’s interests, to come to an agreement.