United Kingdom-European Union Future Economic Partnership

Lord Newby Excerpts

Monday 5th March 2018 Lords Chamber

[Baroness Smith of Basildon (Lab)]

My Lords, I thank the Minister for repeating the Statement. It seems that the Prime Minister is trying to create an optimistic, upbeat tone to quell the fears of those who are concerned about negotiations, so first I welcome the greater degree of candour from the Prime Minister. While others around her told us how easy it was going to be to leave the EU, she has admitted that it is complex, difficult and uncertain. She was clear that we have to face up to some hard facts, that life is going to be different and that our access to each other’s markets will be less than it is now. Her honesty recognised that we will not be allowed to have all the benefits without all the obligations, which is a far cry from Ministers telling us that we would have the exact same benefits. She also admitted that even after we have left the EU we will still be affected by decisions of the ECJ and that to ensure good access to each other’s markets,

“we must accept the need for binding commitments”,

and she accepted the principle of regulatory alignment in some areas. She has also accepted that in these negotiations neither of us can have “exactly what we want”. These statements are welcome in recognising the harsh reality of what has to be achieved with so little time left.

The Prime Minister has regularly stated her red lines—no single market, no customs union and no role for the ECJ—which we have consistently said she was unwise to use as a starting point for negotiations, yet some of those red lines are now looking distinctly pink.

On Northern Ireland, the Prime Minister said more about this in her Friday speech than in her Statement today, but it still seems to me, and others, that there is an inherent contradiction at the heart of the Government’s commitment that there will be no hard border between Northern Ireland and the Republic of Ireland while they remain opposed to any form of customs union. We were relieved to hear the Prime Minister reject the Foreign Secretary’s assertion in his private memo to her that it is not the responsibility of the UK to resolve the Irish border issue. The Prime Minister was absolutely clear on Friday that it is her Government’s responsibility to resolve this issue. She spoke of her personal commitment and said she recognised the anxieties caused by Brexit and the “desire for concrete solutions”. It is not a desire; it is a necessity, and it is fast becoming an urgent one. If the Government really believe that this issue can be resolved without any form of customs union, they need to start telling us how and to do so soon. The Prime Minister remains resolute against a customs union, but she is seeking a customs arrangement or a customs partnership, so we look forward to hearing more details about the “not a customs union” as negotiations continue.

The Prime Minister has also recognised that some of her early red lines have had to fade. We appreciate her acceptance of the necessity to remain in at least some of the EU agencies, even as an associate member. The Prime Minister identified the European Medicines Agency, the European Chemicals Agency and the European Aviation Safety Agency as being critical. We agree with that description. Many of us are bitterly disappointed that given the importance of the European Medicines Agency, the UK is losing it. Have there already been exploratory discussions with the EU on the principle of remaining, in whatever capacity, in these agencies? Are the Government prepared to negotiate similar arrangements for other agencies? Does the Minister accept that this may well mean a continuing role for the ECJ in the UK? Before she answers, it may help if I tell her that at the weekend, when I did a radio debate with Jacob Rees-Mogg, he described this as “perfectly sensible”. The Minister will be aware that we were a member of Euratom before we joined the EU. She will have heard the debate on Euratom last week in your Lordships’ House. We have now had the Prime Minister’s comment that she wants a “close relationship” with Euratom. Can the Minister tell us what that means? The Prime Minister has not gone as far as she has on the agencies, where she wants associate membership, but she talked about a close relationship. This is also a critical agency for the UK.

In the same way that there has been an evidence-based shift on the position regarding the agencies and the role of the ECJ, the Government have to recognise that if they are genuinely serious about the Northern Ireland border, they need to look at it without unrealistic and unnecessary red lines. We are clear that remaining in a customs union is the best way to deliver the frictionless trade the Prime Minister wants. For Northern Ireland, that means no customs duties or checks at the border. It means no checks for transporters, food, animal hygiene and so on. It will resolve the issue.

I welcome the fact that the Prime Minister says that Brexit is not an end in itself, yet in a further contradiction she has repeated that no deal is better than a bad deal. Surely both statements cannot be true.

Finally, on Saturday morning I was very fortunate to enjoy the company of the political editor of the Sun, Tom Newton Dunn, as he hosted “The Week in Westminster” with two MPs, Jacob Rees-Mogg and Sarah Wollaston, and me. Perhaps that is where the Prime Minister’s biggest achievement was evident because with such divergent views, they both supported the content of the speech. Indeed, Jacob Rees-Mogg admitted that it was “very encouraging for the unity of the Conservative Party”. So much of the Brexit journey has been about internal Conservative Party management. As we have heard, that canny blend of “We’re leaving the EU” with some red lines becoming pink smudges or fudges just might buy the Prime Minister some time. She said that all negotiations are about cherry picking on all sides. Michel Barnier has welcomed her acceptance that negotiations require trade-offs. Perhaps the Prime Minister has finally accepted that negotiations must be less about red lines and more about a pragmatic Brexit.

The noble Baroness knows from our previous discussions that we welcome a pragmatic approach, in the interests of the economy, of jobs, and of maintaining rights and standards. As part of that, I hope she will be able to confirm that she understands that it becomes even more crucial that Parliament has not just a meaningful vote but an ongoing meaningful role.

[Lord Newby (LD)]

My Lords, the Prime Minister has set five overarching tests for a successful Brexit. Three are simply vacuous: respecting the referendum, being enduring and being consistent with the kind of country we want to be. Two are more substantive, but both are being actively undermined by the Government’s own Brexit stance.

The first is protecting people’s jobs and security. Has the Prime Minister given any thought to how that sounds to the 300 Ryanair workers at Glasgow Airport as the company closes its international base there, on the basis of Brexit, to the 288 workers at Landis+Gyr in Stockport as it moves its production to Romania, or to the small businesses which have contacted me explaining how leaving the customs union and single market will impose costs on them that will force them out of business? The Statement contains some welcome shafts of realism, none more so than the statement that our access to EU markets will be less than now. Does the noble Baroness the Leader accept that less access means less trade, which in turn means fewer jobs, lower national income and higher prices?

The second substantive test set by the Prime Minister is that Brexit must strengthen,

“our union of nations and our union of people”.

Leaving aside the impasse in discussions with the devolved institutions about the transposition of EU law, how does the noble Baroness think that sounds in Northern Ireland? The Prime Minister has come up with absolutely nothing new to reassure people that there will be no customs border between the north and the Republic. Of the options on the table, one simply says that SMEs, which represent 80% of trade, can carry on as if the border did not exist. How could that possibly work if standards diverge or if the UK strikes its own trade deals with different tariffs from those applying in the EU? This is the only example I know of where the Government’s policy is indeed bold and imaginative—but it is hardly credible.

As for the technological solution to the border, does the noble Baroness agree with Pascal Lamy that there is no such thing as a virtual border? Does she agree with the report, much touted by Brexiteers, from Lars Karlsson, which explains on page 11 that, on the highest tech option he can see, an app on a mobile phone of a lorry driver “opens the gate automatically” as the lorry approaches the border—that is, a gate, a physical thing, not a virtual border. Has she read his description of the Norway/Sweden border, the most technologically advanced in the world according to him, where at staffed customs posts most goods traffic is cleared “within 3-9 minutes”? There is no soft border there either.

The Prime Minister refers briefly to our being able, in theory, to negotiate new trade agreements after Brexit. When she rang Donald Trump over the weekend to complain about his plan to slap a punitive tariff on UK steel, did she ask him how that fitted into a comprehensive free trade deal? Did she consider that in fighting any US steel tariff, the EU as a whole was likely to have a bit more clout than the UK on its own?

More generally, the speech sets out a range of areas where the Government plan to follow EU rules but pay for the privilege and lose any say in how they are set. Having associate membership of various EU bodies is better than nothing, but in reality we become rule-takers. On the trade in goods, the PM admits that we will have to follow standards “substantially similar”—that is, as near as makes no difference to identical—to those set by the EU.

The rationale for becoming rule-takers instead of rule-makers is that Parliament retains the right to diverge from the EU rules if it chooses. But the speech demonstrates how in practice it will not dare do so because of the damage it would cause to business and the economy. The Prime Minister wants to exchange the reality of influence for the pretence of sovereignty—and what is worse, she clearly accepts that it is a pretence.

The Government are going through extraordinary contortions of both policy and language to try to replicate as far as possible the existing terms of our EU membership. It all begs the question, “Is it worth it?”—and invites the response, “No”.

[Baroness Evans of Bowes Park]

My Lords, I am grateful to the noble Baroness and the noble Lord for their comments. I particularly welcome the noble Baroness’s constructive comments and assure her that we take the scrutiny and involvement of Parliament as we develop our new relationships with the EU extremely seriously and will continue to do so.

The noble Baroness asked about agencies. As the Statement set out, we want to explore with the EU the terms on which the UK could opt to remain part of EU agencies—as she rightly said, the European Medicines Agency, the European Chemicals Agency and the European Aviation Safety Agency. There may well be other agencies, such as those related to our future security partnership, that the UK chooses to remain a part of, and we will continue those discussions. Again, in relation to Euratom, it will be of benefit to both sides for the UK to have a close association, and that too will continue to be part of our ongoing discussions. As Prime Minister said, after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us, including through our respecting its remits where we agree that the UK should continue to participate in an EU agency.

The noble Lord asked about access to the EU market. He is right that the Prime Minister has said, in relation to hard facts we have to face, that in certain ways our access will be less than it is now. But we are also seeking the broadest and deepest possible agreement, covering more sectors and co-operating more fully than any free trade agreement anywhere today, and of course we will have the freedom to negotiate new trade agreements—so the future is bright.

The noble Baroness and the noble Lord touched on the very important issue of Northern Ireland. I repeat again that, as we have said constantly, we want trade at the border to be as frictionless as possible, with no hard border between Northern Ireland and Ireland or between Northern Ireland and the rest of the UK. We believe this can be achieved by a commitment to ensure that the relevant UK regulatory standards remain at least as high as the EU’s and by a customs arrangement. We acknowledge that there will be technological solutions to this, and we believe we have set out a structure by which we can begin and continue the negotiations with both the Irish Government and the European Commission to make sure we all achieve the aims that we have all clearly set out and to which we are extremely committed.

The noble Lord asked about future free trade agreements. I assure him that we have opened 14 informal trade dialogues with 21 countries, including the US, Australia and the UAE. These will form the groundwork for future FTAs. The Department for International Trade has a presence in 108 countries, and we have begun appointing a new network of trade commissioners. We are committed to new trade and new opportunities across the globe, but of course maintaining a strong, deep and positive relationship with the EU is what we are focused on in our negotiations with it.