Brexit: Options for Trade (EUC Report)

Lord Liddle Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Liddle (Lab)]

My Lords, I rise somewhat hesitantly and, I hope, briefly, to add to a remarkable cross-party consensus of gloom and apprehension about the prospects for a successful outcome of the Government’s wish to conclude an ambitious and comprehensive trade agreement with what we are no longer allowed to call our “partners”. I noticed that the noble Lord, Lord Bridges, yesterday was calling them “counterparts”, which is an interesting shift. Our chances of concluding the agreement successfully are not very good.

It has been a privilege to serve on the committee that produced the report, which provides a very balanced assessment. I have personally learned a lot. I trade on the fact that I know a bit about Europe, but I certainly learned an awful lot in the process of these hearings. It is an excellent report, for which we owe an awful lot to the clerks, officers and witnesses, very ably chaired by the noble Lord, Lord Whitty, on the Internal Market Sub-Committee, to which I am very grateful.

What is true of the report is that its balanced assessment contrasts with the kind of bluster and assertion of the Government’s position, which I find worrying. Where are the Government getting it wrong? The starting point is the self-deluding proposition that we are in a very strong and good position in these negotiations. I do not think that we are. One of the comments to justify this confidence is made in the response to recommendation 18 in our report, where they say that we are starting from a very different position to other countries looking to agree free trade agreements with the EU because, unlike most negotiations, these talks will not be about bringing two divergent systems together—they will be about managing the continued co-operation of the UK and the EU. They say that they are confident that it is in everyone’s interests to arrive at a mutually beneficial deal. That is false optimism. If you think about it, maybe the rules are at present both the same, because we are all members of the EU as it is, but will they automatically in future stay the same and will we commit to keep our rules in line with European rules to have access to those markets?

Elsewhere the Government say in response to our report that equivalence will of course be an important part of any discussion on our future trading relationship, but we are committed to taking control of our own laws as the people of the United Kingdom have demanded that we must. So will the Government seek to maintain equivalence in future or are they going to exercise sovereignty in determining their own rules affecting our trading position? A very obvious example of this is coming up right now, with the key sector of automobiles—very important in terms of our manufactured exports. We are clearly going to have to devise a lot of rules to deal with the coming of autonomous vehicles; that is happening in the next 10 years. Will we follow the Brussels rules to guarantee access for our manufacturers, or will we have a completely independent approach and say, “We have a right to determine our own rules on safety and everything else”—in which case we will create tremendous trade problems for ourselves? I do not think that the Government are giving a clear answer on that at all.

Another problem is that I do not think that the negotiating position that we are in is very strong. We have much more to lose from a breakdown of these talks than do the EU 27. Our trade with the EU is a much bigger proportion of our GDP than it is of the GDP of the EU 27 and the Government do not seem to understand that point. The timetable that the Government have set themselves, without willingness to contemplate a proper transition phase, is truly frightening, because we are not actually talking about two years. As I see it, in practice, we are talking about the period between the end of the negotiations for the new German coalition, which is when we will see a German Government who are able to make political compromises and will probably be in November or December this year, and the autumn of the following year, when the draft agreements would have to start being put to the European Parliament if they are going to be agreed by March 2019. This is a frighteningly short timetable for issues of huge complexity. If the talks break down, the cost to us will be enormous. There are some sectors where we do not even have the WTO to fall back on.

We heard yesterday in the Article 50 debate about Euratom. The nuclear industry is one of the strategic ambitions in our industrial strategy White Paper yet, if we do not reach agreement with the EU, Euratom comes to an end and there can be no transport of nuclear fuels or nuclear materials with other countries because there is no regulatory regime to cover them. The same is true of aviation and broadcasting. There is a terrible cliff edge for a lot of key sectors of the British economy. If it was not so tragic I would laugh. It is a bit like someone who has been a member of the golf club for 44 years and decides, “Oh, no, I am not going to be a member any more, but I still want to play on the course every day. However, I am not prepared to pay a membership fee for this privilege, I want to determine rules of my own as to who works on this course, because I am not having your free movement rule, and I also claim the right to rewrite the rules to suit myself because I insist that I have the national sovereignty to do so”. This is ludicrous. This is not a sensible way of behaving.

If you are going to leave a club but you want to stay in it, you have to make lots of adjustments to make that possible. I hope that this whole experience does not turn out badly, but I fear that it will and I fear for the country.