Trade and Customs Policy

Lord Monks Excerpts

Tuesday 5th December 2017 Lords Chamber

[Lord Monks (Lab)]

My Lords, I, too, welcome the noble Baroness, Lady Fairhead, to the Dispatch Box this evening and thank her for her presentation of the government documents on trade and customs. I have to say that even her skilful presentation could not disguise the huge amount of wishful thinking that exists in the Government’s position on these two subjects. I also welcome the lament expressed by the noble Lord, Lord Empey, for too much of UK manufacturing. Whether we are inside or outside the EU in the future, it certainly needs a lot more attention than it gets in British public life at the moment. Like my noble friend Lord Whitty, I will leave my comments on Ireland at least until I have seen the evening news, because when you are in this Chamber you do not know quite what is going on outside.

To return briefly to wishful thinking, the feeling that having independent trade deals with countries around the world will more than compensate for the costs associated with leaving the EU seems to me wildly misplaced. The harsh reality is that by casting ourselves adrift, not only from the EU but from the European Economic Area, we put ourselves in an environment where we will be trying to negotiate deals not just with the EU and its 27 member states, with all their different interests to be taken into account, but with the 60 other counties that currently have trade deals with the EU. I make that 87 countries to negotiate with just to get the same geographical coverage as we have now. I am talking not about the quality of those agreements but just about some sort of arrangement with them.

I agree with those who say, as several noble Lords have in this debate, that we have to level with the British people and be very honest about how things lie. Membership of the EU has been unencumbered by tariffs or rules of origin checks. My noble friend Lady Quin reminded us that the single market was Mrs Thatcher’s baby. It was her vision. She wanted the common market. When, at their first meeting in Downing Street, Jacques Delors asked, “What do you want?”, she said, “I want a big market”. That option is still there for the Government, but at the moment it is being rejected. It ensures common product regulations and standards, basic worker rights on health and safety, information, consultation and equality, good consumer and environmental standards and, importantly, the right to deliver services across the continent. That is what we have. That is what we enjoy at the moment, and that is what we have to try to replace in some way if and when phase 2 ever gets off the ground. What a task we are setting ourselves. We should tell the people how hard it is going to be.

I agree with noble Lords who said they wished we were trying to lead Europe rather than leave it, not least because trade is inversely proportionate to the geographical distance between the countries concerned, as the noble Lord, Lord Kerr, explained. We also need to bear in mind that many of the countries earmarked by the Government as friendly targets for future trade deals are right on the other side of the world—as far away as you can get in some cases. At the moment, Australia accounts for 1.7% of our exports, India the same and New Zealand 0.2%. Even those countries, with their close historic and cultural ties with this country, will be very tough on trade talks, as they were a few weeks ago on agriculture in the case of Australia and New Zealand. Can the Minister tell us whether the Anglosphere countries, such as Canada, Australia, New Zealand and the United States, are prepared to open their markets to British beef exports soon? When will they lift the bans that were imposed as a result of the BSE crisis? The EU did it years ago, in 2006. The European Court of Justice made it do it. One or two countries, such as France, did not want to, but the ECJ made them. That is also something that will be lost as we go down the current route that the Government are setting. It is part of the wishful thinking that there will be friendly countries out there anxious for deals generous to us. The true picture is more like an episode of the BBC’s “Blue Planet”: a frightening ocean full of all kinds of predators seeking to burst out from the depths to circle and pick up some of the choicest parts. Some of our choicest parts, such as pharmaceuticals and financial services, are already being eyed up greedily by other countries to pick them off if they possibly can.

The EU apparently favours a replica of the EU-Canada proposed deal—the CETA agreement—for the UK, and I can see why. If I were in its position, I would do the same thing. CETA covers most manufacturing, an area where, as has been said, we have a big trade deficit with the EU. It does not cover much in the way of services, such as audio-visual and, crucially, financial services, where the UK has a big balance of payments surplus, so a CETA deal would not be a good deal for the UK. Wishful thinking is not an intelligent basis for these trade talks. I have yet to learn what the Government are really seeking in their comprehensive free trade deal in phase 2 of the negotiations, if and when they get going.

In the absence of a hard-headed, clear approach, the Government must think again and look again at the option that several noble Lords have mentioned. Do we have to exit the single market and the customs union? Can we not stay in the European Economic Area? Can we negotiate a Norway-plus deal rather than a Canada-plus deal? It is far from the ideal option and would not be anything like as good as what we have at the moment. It risks the charge of being a colonial arrangement, as the noble Lord, Lord Kerr, said. There is no doubt about that. We would be a rule-taker rather than a rule-maker, although I am sure we would still find ways of having a significant influence on crucial decisions if we were in that position as this is a much bigger country than Norway in the constellation of European states. If we are to stick to the result of the referendum, however, it is the only option that minimises the damage of Brexit, as others have said, and solves the Irish border issue. It is the only way I can see to keep at least some cake and possibly be able to eat it.

It is a better bet than Canada-plus. If the Government will not take this kind of changed approach as the difficulties mount up, as they inevitably will, the moment is surely arriving when Parliament itself—this House and the other place—will have to consider what to do. The situation is very serious, and the sooner the country is aware of the limited nature of our options the better.