Trade Bill

Lord Purvis of Tweed Excerpts

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

[Baroness Jones of Moulsecoomb (GP)]

My Lords, I support Amendment 16, which is a crucial amendment to debate within the Trade Bill. The general principle of state aid rules, which is that the Government do not go around doling out money to big business in ways that are unfair or anti-competitive, is a good one. At the same time, there are concerns about state aid rules being used as a vehicle for predatory capitalism to dismantle the state and override democratic control of quite important parts of our economy. This is particularly important for Greens, because Greens are not as concerned with the electoral cycle as with the future of humanity and this planet. If we are going to listen to the IPCC report, which says we have 12 years before we have to face dramatic climate emergencies, then we need to transform our economy and make it fit for the future.

And that is the role of this House. The other place deals very much with the day-to-day—what happens on Monday or Thursday mornings. We here have a responsibility to the future. A green new deal is one of the answers. It would create 1 million well-paying climate jobs and set us on a sustainable footing for future generations. It would require active fiscal and monetary measures that would favour more sustainable production and consumption over more ecologically destructive options. Sometimes the state would have to pick winners and losers—that would be part of it—particularly in relation to natural monopolies such as railways and the energy system. Even the Government are recognising that the market is failing on some of these important issues, and that state intervention is required. Much of this could be called state aid, depending on what definition is used.

For these reasons, it is absolutely essential that our hands are not tied in any way which might interfere with our ability to tackle the climate emergency that we are facing, as well as all the other big issues facing our economy.

[Lord Purvis of Tweed (LD)]

My Lords, I seek some clarifications when the Minister responds, broadly in response to the constructive contribution from the noble Lord, Lord Lansley. With the withdrawal Bill, there was much debate in Committee and this House regarding how existing EU law will be migrated into UK law. There were 12 competences the UK Government believed were reserved and would therefore be fully within the competence of the UK Government, but that the devolved Administrations believed were either devolved or had a direct impact on devolved powers.

State aid was one of those areas where there was no agreement. That means that if there continues to be no agreement, then the amendment in the name of the noble Lord, Lord Stevenson, is absolutely critical. It means that for regulations brought for the continuity agreements, there needs to be far more enhanced consultation with Administrations that believe this is touching on their direct competences. If there has been agreement, then perhaps the amendment is less necessary for the continuity agreements; but as we come to further amendments, this sets the tone for what will be necessary for future agreements. When the Minister responds to this group, I hope he will be able to provide clarification on where the discussions are, regarding whether there is agreement on where state aid lies within this area of competences.

[The Minister of State, Department for International Development (Lord Bates) (Con)]

My Lords, I join others in thanking the noble Lord, Lord Stevenson, for moving this amendment. In response to my noble friends Lord Trenchard and Lord Lansley, I think that the noble Lord intended this as a probing amendment, as he said, to give the Government the opportunity to put some issues on the record. It has been very timely, not least because under the EU withdrawal Act, mentioned by the noble Lord, Lord Purvis, on Monday we laid the regulations on state aid before the House. That 77-page document will now make its way through the rigorous scrutiny of the Joint Committee on Statutory Instruments and then the Secondary Legislation Scrutiny Committee. Then, of course, it will be subject—because it is by the affirmative procedure—to scrutiny later in this House. For that reason some of the specific issues referred to by my noble friend Lord Lansley and the noble Lords, Lord Purvis and Lord Lea, might be usefully dealt with in that area.

Clause 2 is not about making changes to existing agreements, and the regulations cannot be used for future free trade agreements, as my noble friend Lord Lansley rightly identified. In answer to the noble Lord, Lord Stevenson, we also need to recall that the Competition and Markets Authority has been given this responsibility domestically, across the UK jurisdiction. When it comes to free trade agreements and the EU, the Trade Remedies Authority would undertake that responsibility.

To provide further reassurance that we do not expect to need to use these powers to set up a domestic state aid regime, I can inform the Committee that we have laid the instrument I referred to. This instrument, the State Aid (EU Exit) Regulations 2019, will be made under the European Union (Withdrawal) Act 2018 and establish a domestic state aid regime that will work for the whole of the UK at the point that this is required. No doubt Noble Lords will be offered an opportunity to scrutinise this in detail.

Subsection (2) of the proposed new clause requires the Government to consult relevant stakeholders prior to laying implementing regulations under Clause 2 which make provision on state aid. We have been clear that proportional consultation is of the utmost importance to us. We have engaged with a large number of stakeholders through our programme of trade continuity. The Government will always consult stakeholders as appropriate, so to set out specific provisions concerning consultation on state aid is not needed at this stage. The Bill already requires the Government to lay reports before Parliament in which we will provide detail of any real-world changes to free trade agreements. These will be laid before the agreement is ratified or regulations are laid under the Clause 2 power in relation to that agreement, whichever comes first.

Any significant differences in agreements that are relevant to state aid would be identified in these reports and Parliament would then be in a position to take an informed decision in relation to the making of the regulations or the conduct of the ratification process. I say again that we do not expect to need to make regulations under this power in order to implement state aid commitments in existing free trade agreements.

I turn to some of the specific points that were raised. My noble friend Lady McIntosh raised the horserace betting levy and the tripartite agreement. This is something we will come to in Amendment 48 in a later group, so perhaps I can leave it to the lead Minister, my noble friend Lady Fairhead, to respond, but the relevant provisions of the horserace betting levy were notified to the Commission and approved by the Commission under state aid rules. I confirm that the TRA—the Trade Remedies Authority—will not be responsible for state aid prioritisations in FTAs. It will be a matter for individual free trade agreements to establish a dispute mechanism.

[Lord Bates]

That is correct. I am grateful to the noble Lord for setting that out. My noble friend Lord Trenchard mentioned the Government’s commitment to the state aid system. That point is contained in Command Paper 9593, The Future Relationship between the United Kingdom and the European Union, which says in section 1.6.1:

“The UK has long been a proponent of a rigorous state aid system—this is good for taxpayers and consumers, and ensures an efficient allocation of resources”.


Moreover, the political declaration which accompanies the withdrawal agreement points out in section XIV, paragraph 79:

“The future relationship must ensure open and fair competition. Provisions to ensure this should cover state aid, competition, social and employment standards”.


That will all be fleshed out as the future economic agreement is worked on. Again, I thank the noble Lord for the opportunity to clarify some points on the record.

[Lord Purvis of Tweed]

Will the Minister clarify that since the Sewel convention continues to apply, the UK would not legislate ordinarily on devolved matters if the Government have brought forward this regulation? Last year, during the withdrawal Bill process, the devolved Administrations believed that this touched on their competences with state aid. Has there been agreement with the devolved Administrations that this is a fully reserved issue?

[Lord Bates]

Perhaps I could write to the noble Lord on that to make sure that I get that absolutely correct. I will write to him. Does the noble Lord want to come back on that?

[Lord Purvis of Tweed]

I wonder if the Minister is able to write before we get to the next grouping because this is going to be relevant. Whenever the Minister can provide clarification, it will be welcome to the Committee.

[Lord Bates]

I have a sneaking feeling that some clarification may be coming via my noble friend Lord Younger by the time we reach the next grouping. I am sure the noble Lord will have an opportunity to respond to that. Failing that, I will be very happy to write before Report. I thank the noble Lord and ask him to consider withdrawing his amendment at this stage.

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[Lord Purvis of Tweed]

My Lords, I am grateful to the noble Lord, Lord Stevenson, for outlining the amendments so clearly. I want to add something in only a couple of areas. In doing so, I welcome the fact that the noble and learned Lord, Lord Mackay of Clashfern, is in his place. He and other colleagues will recall discussing—in debates on the withdrawal Bill—translating EU retained law into domestic law in a number of areas that either impinge on or link directly to what are currently devolved competences. At that stage, the Government made a number of concessions and changed their position so that the presumption was to devolve powers—and that was welcome.

Therefore, the sticking points, to some extent, were issues in what the Government termed the “framework agreements” with the devolved Administrations, where there had been no agreement with the devolved Administrations on what was in the reserved or devolved competences basket. In the previous group, state aid was one such major issue. Of the 157 areas, there was no issue with 49 of them; in 82 of them, the Government and the devolved Administrations agreed that the common framework would be needed; 24 areas required further discussion; and in 12 areas, the UK Government believed that the competences were reserved but the devolved Administrations believed them to be devolved. That is relevant to discussions about how the regulations for the continuity agreements will take place and will give an indicator for the future, as the noble Lord, Lord Stevenson, said. I seek further clarification on the other areas.

These issues are not esoteric. The 12 areas are: equal design and energy labelling, which is an important part of trade agreements now, as we discussed in Committee on Monday; product safety and standards relating to explosive atmospheres; elements of the network and information security directive; environmental quality in the timber trade, which is of considerable significance to the Scottish economy; data sharing; food geographical indications and protected food names, which are core parts of trading relationships; medical devices; migrant access to benefits; data protection; radioactive source notifications; state aid, as mentioned; and vehicle standards, including the various types of approvals and directives for roads.

Those 12 areas are part of existing trade agreements and will be key elements of future trade agreements, but in 2018 no agreement was reached with the devolved Administrations on them. It would be helpful if the Minister could update us on whether agreement has been reached on them, so that our concerns can be allayed, or whether discussions are continuing on them. This is important for both continuity and the future, because—as the International Trade Committee in the Commons has discussed and as the Scottish and Welsh Governments have published—there are proposals for how future trading arrangements would need to be put in place.

One of the options—as the Scottish Government have called for and as the UK Trade Policy Transparency and Scrutiny report called for—was a joint ministerial committee or intergovernmental trade committee to complement the advisory committee that the Government have established. The Commons committee made a very constructive set of proposals that it would be a mechanism through the devolved Administrations as part of the consultation process. There would be a formal advisory role through the mandate process and another formal advisory role throughout negotiations. No doubt there will be further discussions about any dispute resolution mechanisms and whether such measures have to be approved by the devolved legislatures in addition to consultation with the Administrations.

The noble and learned Lord, Lord Mackay, put forward very constructive suggestions about how intergovernmental relations could operate. These are both necessary for the continuity agreements and vital for any future agreements. I am grateful that the noble Lord, Lord Stevenson, highlighted this area, and I hope that the Government will be able to give clarification on where we are with the understanding of where these competences lie and the role of the necessary consultation.

[Lord Hain (Lab)]

My Lords, in speaking in support of both these amendments, in a way I am dealing with the points I raised with the noble Baroness, Lady Fairhead, which she did not respond to—inadvertently, I am sure. Maybe both she and the noble Viscount, Lord Younger, could consider writing to me about this. As I described at the last sitting, it gives rise to concern that we will see an action replay of the power grab that Whitehall tried to pull on the devolved Administrations in the course of the withdrawal process. There was an attempt by Whitehall to repatriate to London those policy areas—for example, the environment and many others—that were devolved but held at a European level because of our membership of the European Union. That caused great aggravation with the devolved authorities, particularly—in the absence of Northern Ireland’s Government—with Wales and Scotland, which in the case of Scotland is festering on. An agreement was belatedly reached with Wales.

In this process, particularly when making regulations, we will potentially see these same issues arising. There is therefore a strong argument for the proposal put forward by my noble friend Lord Stevenson in Amendment 17 for the joint ministerial committee or some equivalent body to be given the overall supervising authority here. Having been a member of the JMC at various times in government, I was never very impressed with it. It was a bit of a talking shop. Since 2010, under the coalition Government and now, I hear from successive First Ministers of Wales and individual Ministers for Wales, with whom I am in direct and regular contact, that nothing has changed.

Yet the issues over Brexit are even more serious and of even more constitutional and policy importance than prior to this whole sorry horror show unfolding. The Government need to consider putting in place, preferably in this Bill and in the form specified by these amendments or some equivalent form, procedures that are recognised and have to be abided by, before we run into the same kind of problems that arose earlier in this whole Brexit saga.

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[Viscount Younger of Leckie (Con)]

My Lords, the Committee will notice that we have another change of driver—or perhaps a navigator having temporary control of the wheel. If I read the noble Lords, Lord Stevenson and Lord Purvis, correctly, the intention behind the amendments is to ensure that the voices of the devolved Governments are heard in relation to trade agreements. That is something that the UK Government entirely support. Indeed, the Department for International Trade is in discussion with the devolved Administrations on their role in future trade agreements.

To give a little more information to the noble Lord, Lord Purvis, the UK Government are committed to working closely with the devolved Administrations to deliver a future trade policy that works for the whole of the UK. But it is important that we do this within the context of the current constitutional make-up of the UK, while acknowledging that international trade policy is a reserved matter. To go further, we are currently having detailed discussions with the devolved Administrations at official level on their role in future trade arrangements, with the aim of agreeing new working arrangements before EU exit. In fact, we are continuing this engagement later this week.

I am happy to provide assurance to the House that our clear intention is that there will be a formal and regular intergovernmental ministerial forum to consider future trade agreements. The devolved Administrations already participate in other ministerial forums, such as those for EU negotiations. Frequency and any terms of reference are subject to further discussions and agreement with the devolved Administrations. However, we expect the forum to include our Minister for Trade Policy and his or her counterparts in the devolved Administrations.

The noble Lord, Lord Purvis, asked some questions on this point. The UK Government view securing an agreement with all the devolved Administrations as the best possible scenario, and it is the one that we will continue to work towards. We are committed to securing LCMs for the Trade Bill and have worked closely with the devolved Administrations to understand and respond to their concerns. As a result, we have made amendments to the Bill that answer many of those concerns.

The requirement for Ministers of devolved Administrations to seek the consent of the UK Government when making regulations that come into effect before exit day, or that relate to quota arrangements, has changed to a requirement to consult, of which I suspect the noble Lord will be aware. We will continue to respect the devolution settlements as they relate to trade agreement continuity and future FTAs. We will not normally legislate in areas of devolved competence without the consent of the devolved Administrations, and certainly not without first consulting them.

The amendment, however, would apply to existing trade agreements only and is, in this context, not proportionate. Clause 2 will be used only to ensure the continuity of existing trade agreements that are already in force. It will not be used for future trade agreements. Therefore, Amendment 17 would add risk to the swift and timely rollover of existing trade agreements. Given that these agreements are or will be already in force and that the purpose is to ensure continuity, the amendment is, at best, disproportionate and could mean that we were unable to deliver crucial continuity for businesses and consumers throughout the United Kingdom. For that reason, the Government cannot support Amendment 17. I hope that I have provided sufficient assurances on our intentions for engagement with the devolved Administrations in trade agreements.

[Lord Purvis of Tweed]

On the first point, it is very helpful to hear about discussions taking place through ministerial forums. This would be, I think, outwith the memorandum of understanding process in the joint ministerial committees, which have now been well established for 20 years as the intergovernmental framework between the devolved Administrations and the UK Government. I am sure the Minister is always very careful and specific with his language: I heard him say “forum” but I did not hear him say “joint ministerial committee” or “intergovernmental committee”. A little more information about that would be helpful.

[Viscount Younger of Leckie]

I can help the noble Lord. I was very careful to use the word “forum”—but perhaps I should have used “fora”, which of course is the plural. The reason for that is that the process is designed to mirror what has worked with the EU up to now. We want to replicate the terms that are used for EU negotiations by not calling it a joint ministerial committee. But I understand the intention behind the noble Lord, Lord Stevenson, using that term.

[Viscount Younger of Leckie]

We may be dealing with semantics here, but I will certainly write to the noble Lord, Lord Stevenson, and the noble Lord, Lord Purvis. My understanding is that there is a reason, but it is not a particularly big reason, which is that the difference between a joint ministerial committee—the expression that the noble Lord, Lord Stevenson, has just used—and a forum is that for a forum the devolved Administrations are seeking and are getting more regular and frequent conversations with us in the UK Government. I think a letter should clarify that.

[Lord Purvis of Tweed]

I am grateful that the Minister will be providing a letter. As the Commons committee and others have said, such a forum, which will include other groups, including representatives from the Administrations, should not be seen as an alternative to the mechanism of joint ministerial intergovernmental committees, which, as the noble Lord, Lord Stevenson, said, are more about the discussions that take place about legislative competences. As the noble and learned Lord, Lord Mackay of Clashfern, indicated, this is important now. The Minister said it is important that the continuity agreements are done swiftly. These continuity agreements may be in place for three years at the least, but they can be extended time and again. The agreements currently in place with the EU are permanent agreements, therefore we would be bringing into UK legislation what could well become permanent agreements. It is therefore important that if there are outstanding issues about where those competences lie, they are cleared through some form of intergovernmental process. If those points could be addressed in the Minister’s letter, I would be most grateful.

[Viscount Younger of Leckie]

I will certainly address the extra points that the noble Lord has made. The point I want to emphasise to the Committee today is that this forum is being regarded as particularly serious in the times that we are in. I have mentioned some names to be included as part of that forum, but this is work in progress.

On Amendment 76, the UK Government recognise the important role each devolved Administration will play in the implementation of the Trade Bill. The Government are also committed to ensuring that withdrawal from the EU is a successful and smooth process for the whole of the UK. The use of concurrent powers is in keeping with existing devolution arrangements. It allows for regulations to be made once for the whole of the UK where it makes practical sense to do so. The intention behind this is legislative efficiency.

The noble Lord, Lord Purvis of Tweed, asked about the implications for the Trade Bill of the freezing power in the EU withdrawal Act. We have been clear that the regulations to freeze competence to preserve our existing frameworks are not a mechanism for avoiding seeking legislative consent when creating our future frameworks. Without wishing to labour the point, I reiterate my earlier commitment that the UK Government will not normally use these powers to amend legislation in devolved areas without the consent of the relevant devolved Administrations and certainly not without first consulting them.

I acknowledge the mini-debate started by the noble Lord, Lord Hain. In essence, he asked whether the concurrent powers amount to a power grab—I think that is the expression he used. Under the Trade Bill, every decision that the devolved Administrations can make before exit they will be able to make after exit. The augmentation powers in the Trade Bill will be held by both the UK Government and the devolved Administrations. This approach will provide greater flexibility in how transition agreements are implemented, manage legal risks where competence boundaries are unclear, and allow for a reduced volume of legislation. The noble Lord invited me to write, and if he is not satisfied with that answer, I will certainly follow up with a letter should he wish.

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Moved by

[Lord Purvis of Tweed]

18: After Clause 2, insert the following new Clause—
“Status of the United Kingdom
Before exit day, a Minister of the Crown must lay before Parliament a report specifying which countries and organisations must amend their own domestic legislation in order to ensure that the United Kingdom is treated by that country or organisation as if it were a member of the European Union for the purpose of free trade agreements or other international trade agreements during the period between 30 March 2019 and 31 December 2020.”

[Lord Purvis of Tweed]

My Lords, I will also speak to Amendment 19 in this group. At Second Reading of this Bill, the Minister, the noble Baroness, Lady Fairhead, said that this process was about transparency. Amendment 18, which is a probing amendment, and Amendment 19 seek some transparency in a rather opaque set of situations—I listened to the Secretary of State for International Trade this morning from Davos adding even more confusion to the current position on the continuity agreement discussions.

On Monday, I referenced the fact that, through our membership of the EU, the UK has a trading relationship in place with 35 countries; 47 are partly in place, and there are 22 pending country agreements. These represent 66% of UK trade. Some are extremely complex. Some have been split into trading arrangements and investor dispute mechanisms, and some are of critical importance to certain sectors of the British economy. It is incredibly important that, between now and 29 March, we have a much greater understanding not only about what they are and how they will be translated into British law but also about the relationships that we have with other countries.

One of the reasons that Dr Fox has given for why we have not been presented with the trade agreements to roll over into our legislation is the reluctance of other countries. He has given a number of reasons why they are reluctant, which I will come to later, but one of the areas that Amendment 18 seeks to clarify is our Government’s understanding of what our partner Governments need to do. On a visit last year to a country in north Africa, I met with its foreign affairs and trade representatives and MPs. A representative of the British Government who was present asked them explicitly whether they needed to change any of their domestic legislation purposes if they were then going to respond to what the EU was going to ask them to do, which was to consider the UK as a member of the EU for the purposes of international agreements during the implementation period—that is, on the basis that we have an agreement—and they were not able to answer. I suspected that this was now a routine set of requests from British government representatives of our partner countries.

My amendment asks for a report on what our understanding is of the domestic processes that those countries need to go through. If we know that, we are able to take Dr Fox’s statement at face value: they are simply not carrying the weight or working hard. Or, if we know that their own domestic processes are more complex than one may have thought, then we may have greater sympathy with the Government that this may be a more complex process than we had been led to believe.

In 2017 and 2018, we seemed to be living in a much easier world, because Dr Fox suggested at the Conservative Party conference, reportedly to cheers from activists, that it would be a breeze to get all the existing trade agreements in place before March. I remind colleagues that he said:

“believe me, we'll have up to 40 ready for one second after midnight in March 2019”.

He added:

“All these faint hearts saying we cannot do it—it’s absolute rubbish”.


That was endorsed on Twitter by the Minister’s predecessor, the noble Lord, Lord Price. When challenged on the basis that it might not be as easy as what Dr Fox had said, the noble Lord said on 24 October 2017, in response to someone saying that we would be out only on WTO rules:

“Ed we won’t only have WTO in event of no EU Trade deal. We will roll over the 60 odd other deals we are party to currently”.


Someone then responded that it would be difficult to do that. He then replied,

“All have agreed roll over”.


I just do not think that is correct. We now need absolute clarity because the clock is ticking.

When we debated this four months ago at Second Reading, I specifically asked the noble Lord, Lord Callanan, if the position of Dr Fox and the Government—that at the second after midnight next March they will all be ready—still stood. He replied:

“The Government’s position is exactly what the Secretary of State for International Trade said”.—[Official Report, 11/9/18; col. 2201.]


We need to know what the domestic processes are in those other countries and we need to know now very clearly, through a report, where we currently stand. That report should give the number, type, scope and extent of those agreements.

The agreements that we currently have in place are a mixture: free trade agreements; deep and comprehensive free trade agreements; economic partnership agreements; association agreements; stabilisation and association agreements; customs union arrangements—with Turkey and Andorra, which we will be discussing later on; interim economic partnerships; stepping-stone agreements; and modernisation agreements. We are also in the process, although they are not yet inked, of investor dispute mechanism agreements.

We have heard nothing at all from the Government about how we intend to roll over these different—in some respects, significantly different—types of agreements, and the consequences that that could potentially have on UK law. Dr Fox, in a slight moment of reality, said to the Commons committee that a simple rollover may not be as easy as previously stated. That is the only time—that I could find—where there was a degree of reality from the Government.

As I have said previously, the clock is now ticking. The Government still hold the position—if the noble Lord, Lord Callanan, is to be believed—that we are to transfer all of these agreements into UK law. They have not deviated from that position; indeed, Dr Fox did not even deviate from it this morning when he was asked, which is the latest information. So this report under Amendment 19 is necessary.

Because of the complexity of these arrangements and because some of them are very large—the totality represents 66% of UK trade—it is necessary, in subsection (2)(d) of the proposed new clause, for us to specify the consequences for the United Kingdom. In failing to replicate the terms of the existing agreements, it is necessary that we have a report which indicates the impact on the UK economy. Subsection (2)(a)(i) to (iii) in Amendment 19 means that there will be a much greater degree of clarity on what our partners need to do.

Finally, why is this even more important? At a lunchtime meeting that I had with colleagues in the House with a delegation from the Canadian Parliament, the Prime Minister’s trade envoy to Canada had a very interesting row with another Conservative MP. As a Liberal Democrat, the only good thing I could do was be an observer. The trade envoy said that one of the opportunities of rolling over the CETA agreement was to change it. That was immediately slapped down by the other Conservative MP who said, “No, we just need to get this through”. Our very close Canadian colleagues were bamboozled by this. They were also bamboozled when I asked them the same question that I am asking the Minister: what is necessary for Canada to implement this into their domestic legislation? So far, the Canadian Government have not indicated to their parliament that this is in the pipeline or that this is to be ready. Therefore, all I am asking is for the Government to tell us.

Now is the time for clarity—absolute clarity—not only for Parliament but also for businesses that rely on this trading relationship. I remind the Minister of the resolution of this House on Monday: that if this clarity is not provided then this Bill will not proceed.

[Baroness Jones of Moulsecoomb]

My Lords, when I first came to your Lordships’ House just over five years ago, I found some of the procedures absolutely incomprehensible. It has taken me a little time to find my feet. Quite honestly, a lot of those procedures lack common sense.

I do not understand why it was ever necessary to draft Amendment 19, let alone for it to be moved. It is common sense: of course we need this sort of information. It is asking for such basic information which, in any sensible universe, would be published as a matter of course. This is transparency which helps all of our businesses and our economy. We are now only weeks away from Brexit day, and we are still completely in the dark about all these things. There are many supply chains which depend on this sort of information. They depend on our existing trade arrangements. Businesses do not have the slightest clue whether they will be able to continue on existing terms in just two months’ time.

I would have thought that, if the Government had everything lined up ready to roll over these trade deals—which I very much doubt—then Ministers would be telling us about it and about what a great job they have done. The Minister would do a great service to the Committee, and to the country, by giving us a full account of where the Government are in these negotiations. It should not have to be an amendment to the Bill—it is so basic—but if the Government will not tell us then we have to compel them.

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[Baroness Fairhead]

My Lords, I can confirm that that is why we want to have an agreement with an implementation period. That is why it is definitely the Government’s plan A, while a no-deal scenario will bring real challenges. I hope that your Lordships would not accuse me of saying that there are not complications or that we do not need to go through many agreements. As I said in this House at Second Reading, it would be extraordinarily challenging to get everything done by 29 March—and I do not resile from what I said.

The noble Baroness referred to the future tariff policy and what happens if we get to no deal at one second past midnight. We are working to develop an independent tariff policy, but no decision has yet been taken on what the applied tariff rates will be post an EU exit, notably also in the case of no deal. We are looking at a full spectrum of options and will consider carefully all the evidence available before making a final decision in the interests of British industry and consumers.

[Lord Purvis of Tweed]

I wish to have one final go on Amendment 18. It is predicated on what the Government are working to, which is to have an agreement. That agreement will come with a request from the European Union to those third countries to treat us as a continuing member of the international trading agreements. The Minister has told the Committee that the Government know of countries where that poses no difficulty but also of countries which have said they do have difficulties. This means that, even in the event of leaving with a deal, some of our trading arrangements will not be in place after exit because those countries cannot put them in place. Which countries have indicated to the Government that that poses no difficulty and they will treat us as a continuing member of the international treaty, as the EU has asked? Which countries have said that it poses difficulties, and which have said that they do not wish to make it public?

[Baroness Fairhead]

My Lords, if I may address the point made by the noble Lord, Lord Purvis, if we leave with a deal there is an implementation period until the end of 2020. There is much greater confidence, as I believe this House would accept and appreciate, about getting all the arrangements fully continued and rolled over within that time period.

There are two issues here. The first is the notification by the EU that the UK is to be treated as part of the EU during the implementation period. The second is what third countries need to do to enter into continuity agreements. The first is a matter of third countries accepting that they will treat us in that way; on the second, we are engaged in detailed discussions with individual third countries to try to help them ensure that they are in a position to enter into the agreements on time. I stress, as noble Lords have highlighted, the difficulty of the timing if there were no deal.

[Lord Purvis of Tweed]

I apologise, but can the Minister then confirm whether my understanding is wrong? I understand that they will be asked to consider us as being in an agreement during the implementation period—to carry on treating us as if we were a continuing member of that organisation—but the Minister has said that the Government do not know whether all countries will do that. So, even if there is an agreement with the EU and an implementation period, there may be countries where the international relationships that we will have will not be in effect after exit day because the third country will not be in a position to treat us as a continuing member. The Minister has said that to the House. So all we want to know is which countries they are, because it is very significant if, even in the context of leaving with an agreement, those relationships might not carry on.

[Baroness Fairhead]

My Lords, what I can say is that all the countries we have spoken to have agreed with the principle of continuity. Therefore, one could expect that if they agree with the principle of continuity, they would see that that was a key part of making sure that their businesses and UK businesses—their people and our people—are protected.

Amendments 19 and 97 both concern the publication of a trade agreement progress register, so I will take them together. As agreed in the other place, the Government have already committed to lay reports in Parliament to explain any changes made to continuity agreements. These reports are intended to aid Members of both Houses to understand our continuity agreements. It is critical—as the previous discussion has just highlighted—that we do not delay the ratification of the agreements and unintentionally create a cliff edge for our businesses through a process addition. There will simply not be time, particularly with no deal, to create a detailed progress register in advance of bringing the majority of provisions in the Trade Bill into effect. That would be the effect of Amendment 97. As I stressed, we want to keep Parliament informed. Although we are committed to transparency and clarity in what I have laid out regarding our process reports, we are also mindful that we need to deliver the programme to time, and this additional reporting requirement risks delaying it.

Our Clause 3 reports are proportionate and will provide Parliament the transparency it requires. I take fully the comments made by the noble Lord, Lord Purvis, about the number of agreements—FTAs, EPAs, MRAs and association agreements. I have also laid out to the Committee some of the more technical aspects that we will cover, such as what happens with tariff rate quotas and rules of origin. I believe we will discuss those later today. Extensive work has been undertaken to ensure the continuity of our agreements for more than two years. We are engaged with our international partners to deliver this in the event of no deal. We have been working to deliver successor bilateral agreements with third countries and treaty partners, which in the event of no deal we would seek to bring into force from exit day or as soon as possible thereafter. Progress has been encouraging. Ministers and officials are engaging regularly with those partner countries to support and complete the work. As I said in the previous discussion, all have supported the principle of rolling over, because it is in their mutual interest.

I reiterate that we are aiming not to have any significant changes. As such, we believe there is little benefit in having a report analysing our continued participation in the EU FTAs. The vast majority of the elements are already being implemented, and our businesses are already benefiting.

The amendment in the name of the noble Lord, Lord Purvis, would require us to provide detailed progress on private Government-to-Government discussions. To provide such updates would create a considerable handling risk with our partner countries. As the noble Lord will appreciate, there are commercial sensitivities, and regulations and procedures in third countries, and we would not be able to commit to providing those updates without first seeking the agreement of the relevant partner countries. Again, this could end only in slowing down the negotiations. We believe these amendments are inappropriate and I ask the noble Lord to withdraw Amendment 18.

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[Baroness Fairhead]

My Lords, on the 11.01 pm—or one minute past midnight—point, technical notices have already been sent out and no-deal planning has been ramped up, as the noble Lord will have seen in the Prime Minister’s announcement. Communications are planned for businesses and there are training programmes to make sure that the Civil Service and various departments are ready with information as required. Clearly, our primary focus is on achieving plan A and a deal, and therefore this is contingency planning, but that planning has been ramped up in the event—that we do not want—that there is no deal. I cannot say the exact moment that those notices will come out but I understand the noble Lord’s concern, and businesses’ concern, about what will happen in the following hour. Obviously, that will be taken into account.

As for third countries and where they are, I do not think I can add to what I said, which is that we are actively engaged and if there is a deal followed by an implementation period, we will be an awful lot more comfortable about the process.

[Lord Purvis of Tweed]

My Lords, I am grateful to the Minister and to noble Lords who have taken part. The Minister said that the Government will keep Parliament informed. Parliament has not been informed until now. We have no idea, because nothing has been presented to Parliament, about notification of the status of the potential agreements. We were not informed in advance about Switzerland, which is the only one so far; we have been asked simply to ratify it and to consider whether or not we accept what comes with it.

I tried to probe the Minister’s comments on Amendment 18. She told us that in discussions with third countries, if there is an agreement and the EU asks them to consider the UK as a continuing member of the European Union for the purposes of international treaties and trading agreements, the Government will not provide the information to Parliament on which countries that poses no difficulties for, which countries have indicated that that may require them to change domestic law, and which countries are refusing to make the discussions public.

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[Baroness Fairhead]

Again, when countries are in the middle of negotiations, blow-by-blow accounts or reporting stages are highly irregular. I hear and understand this House’s concerns and I will see what more information can be given.

With Switzerland, it will not just be a case of ratification, then all done. As we committed to, parliamentary reports will be laid before the House so that it can see whether any changes have been made and, if so, what their impact is. Today, it was announced that a free trade agreement has been reached in principle with Israel. I say this not because two out of 40 is the vast majority but because I want to provide reassurance that progress is being made. As noble Lords will be aware, the agreement with Switzerland is one of our most important FTAs with the EU—in fact, it is the most important.

I hear the concerns and challenges from noble Lords across the House. We have provided information and I cannot say that there has not been transparency; we have been reporting to the ITC and through ministerial Statements. I will seek to find out what further information can be provided before or during Report.

[Lord Purvis of Tweed]

One element that concerns us is when Ministers move seamlessly from saying that this is merely a technical exercise to roll over existing agreements to, in the next sentence, saying that they are engaged in confidential negotiations—but what are they negotiating? If this is simply a technical legal exercise to ensure the translation of legal competences into UK law, what are the Government negotiating? As soon as Ministers say that confidential negotiation is needed, that should trigger the existing, proper processes of transparency. As the Government said, these agreements are existing agreements with the European Union. They could not have been made without regular updates to democratically elected bodies. That is what we are asking for; it is a modest request.

The Government’s response is concerning and has not provided the degree of clarity sought, especially since the public justification for why these agreements have not been brought forward to Parliament by the Secretary of State is to blame other countries. If we get to the next stage of the Bill, much more information must be provided by the Government because this issue is significant for our trading relationships. Until that point, we on these Benches will reserve our position. At this stage, I beg leave to withdraw the amendment.

Amendment 18 withdrawn.

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[Baroness Fairhead]

My Lords, I begin by addressing Amendment 20, tabled by the noble Baroness, Lady Henig. The Government agreed in the other place to lay reports in Parliament to explain the changes made to continuity agreements in advance of any continuity agreement being ratified or in advance of the Clause 2 power being used. This amendment, which requires an independent body—albeit one with the stature the noble Baroness refers to—would place a considerable time constraint on the delivery of these reports, which would in turn have a really serious impact on our ability to bring those continuity agreements into force. The reporting requirement placed on the Government is intended to be an aid to Members of both Houses to understand the continuity agreements as the agreement text is also laid in Parliament for ratification.

The noble Baroness also raised the issue of standards and the potential to lower standards. We had a very long, detailed and comprehensive debate on standards on the first day in Committee on this Bill, and I want to reassure noble Lords again. EU standards come directly into UK law. We will remain party to international standards bodies under international law, as we are today. This Government have reiterated their commitment to high standards, which are both demanded by our consumers and the right policy for our country.

I turn to the idea of an independent report. Noble Lords with experience of trade matters will appreciate that these agreement texts are lengthy. The CETA text with Canada, including annexes, is about 1,600 pages long. The reality of the situation is that it is simply not feasible, in the time available, to generate independent reports before our agreement needs to be ratified. I again refer to what we have said: continuity is what businesses and our consumers are asking for. I appreciate the points that the noble Baroness, Lady Henig, makes. Our reports will provide relevant analysis on the impact of any changes made to those agreements. I hope these reports are helpful, both to the noble Baroness and to this House.

[Lord Purvis of Tweed]

I wonder if the Minister might just be able to clarify what may be my misreading of the legislation. The Minister said “any changes”. My reading of the legislation is that it is “any significant differences”. I wonder if the Minister might be able to say, because they are not the same.

[Baroness Fairhead]

My Lords, if the change is literally a cut and paste, I am not sure it would help your Lordships to have a report saying “‘EU’ changed to ‘UK’”. It would be changes seen to be of any significance. If there were any economic impact, that would be included in the report. The reports are designed not to take time in an exercise of proofing but to identify the significant changes and those of value for the House to be aware of. As the noble Lord correctly says, it does refer to “any significant differences” in “trade-related provisions”.

The continuity agreements will be subject to the procedure under the Constitutional Reform and Governance Act. This House will be able to use the contents of these reports to inform their engagement with that process.

I turn to Amendment 21, which requires the Government to provide updates to Parliament on the status of negotiations. I stress again that we do not expect significant changes. I have referred on many occasions to the technical changes on TRQs, rules of origin and other such changes that we will need to cover later. That, together with this very tight timetable—as I think we all agree—would mean that the level of reporting is unnecessary in relation to that programme.

The continuity programme is separate from our programme to develop a future trade policy. On that, there has been very active engagement with businesses and trade associations. We meet on a very regular basis because it is trade policy for them and therefore it is absolutely critical. For example, we launched four consultations on possible future trade agreements. The window for consultations has recently closed and we are currently considering stakeholders’ views, so there is active consultation both in person and through that. Any future trade agreements with new partners will follow a separate scrutiny procedure. It was set out in outline by the Secretary of State for International Trade on 16 July 2018, but I ask for the House’s indulgence because in group 19, later today, we will be discussing exactly the scrutiny of future trade agreements.

I understand that the Committee is keen to know what progress we are making on transitioning the continuity agreements. The noble Baroness, Lady Henig, referred to the ISDS update that was given by Europe. On the DIT website, we provide updates of the meetings that have taken place and of any working groups. I have a list here of all of the working groups and, where we can, we say what was discussed there. We are able to provide that level of transparency. I do not want to go back to the discussion that we just had about the private Government-to-Government discussions. I stand by the commitment that I made to the Committee on that last measure to say that I will look to see what further can be done. My understanding is that it could create a considerable handling risk for those countries.

I have listened with interest to the arguments and points raised by the noble Lord, Lord Stevenson, concerning Clause 3. As has been set out in great detail and discussed over the course of these debates, the Government are seeking to roll over the effects of the EU’s trade agreements as much as is practically possible. This is particularly important in relation to pre-ratification reporting requirements, as any potential delay could risk a cliff edge in those trading relationships. In supporting this process, we are producing reports which will explain any significant changes—as I said to the noble Lord, Lord Purvis—from the effects of our existing agreements to the new ones. We believe that this provides the transparency that Parliament has called for while also being proportionate. These reports will help Members of the House, businesses and the general public to better understand the impact of the programme.

I trust that the Committee will accept that this provides balance, but I repeat my commitment to see what further information we can give. Our amendment to produce these reports received support in the other place as a proportionate approach to providing transparency to Parliament. I hope that this reassures the Committee, and I ask the noble Baroness to withdraw her amendment. Additionally, I hope that noble Lords will agree that Clause 3 should stand part of the bill.

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[The Lord Bishop of Chester]

My Lords, it is always a pleasure to listen to the noble Lord, Lord Patten of Barnes, especially when religious imagery creeps into his speech with gospel truth and sacerdotal approaches. His opening remark reminded me of Trollope’s definition of hell: an eternity of listening to one’s own sermons. I do not know whether the noble Lord, Lord Patten of Barnes, has similar feelings about his speeches, but they are always wonderful to hear.

I wonder what this amendment really means. The noble Lord, Lord Patten of Barnes, said that happiness is a relative concept, but it seems to me that the term “customs union” can mean more than one thing. The very fact that the amendment refers not to “the customs union” but “a customs union” prompts me to ask what it means precisely. If one looks, as I just have, at the WTO website and how it defines a customs union, it is not a hard-and-fast term and allows for exceptions, up to a point, to be made in an agreement. It refers to “substantial agreement” on issues of trade.

When one comes to the political declaration, what is the real difference between the following aspiration in the political declaration and a customs union?

“The Parties will put in place ambitious customs arrangements, in pursuit of their overall objectives … making use of all available facilitative arrangements … ensure no tariffs, fees, charges or”,


so on in the trading arrangements. It seems to me that that is not far from describing what might be called a customs union. No doubt the devil will be in the detail as to precisely what is included or excluded, but it seems to me that the Government’s intentions, and the agreement’s intentions in the joint political declaration, are not far off what one might describe as a customs union.

[Lord Purvis of Tweed]

My Lords, I hope that the Government will listen to what the noble Lord, Lord Patten, said in his contribution. The difficulty is that, even those in Government who listen to such a sensible case, find themselves locked into a situation where even sensible ways of maintaining a relationship with the European Union outside the European Union have been defined by many as “not leaving”. So the scope for leaving the European Union has become narrower and narrower.

One of the slight advantages of the delay to this legislation and the opportunity to debate a customs union now is that many of the prior assertions have been utterly debunked. Many of the valid concerns raised about leaving the European Union and its customs union have now emerged in reality. The then proposed “max fac” solution has been laid bare as simply unworkable. The Chequers agreement would not pass any definition of a sensible way forward. The White Paper which was then published had major deficiencies, and we saw the result of the Commons vote on the agreement. So we are left with a number of differing perspectives on the future trading relationship and customs arrangements on which we will need to find some form of common ground.

In previous discussions, we have heard from the Government that all these concerns can be set aside because of our positive relations with our trading partners—Dr Fox said that on the radio today. Canada has often been cited as a country which finds it very straightforward to have a positive trading relationship with one of our closest possible allies, especially as CETA has already been agreed by this Parliament. No doubt, there will be good will on both sides in these discussions. This is beyond question. We will trade with our close allies. However, Canada has prevented our schedules application at the WTO from progressing. It has lodged an objection. It is looking after the interests of Canadian farmers and industry—the United Kingdom would do exactly the same.

If we leave without any agreement, and if Canada, New Zealand and Australia do not withdraw their objections to our goods schedules at the WTO, then not only will we leave the European Union without an agreement, we will leave without any certified WTO schedules. We will not only be trading on WTO rules, but we will not have certified rules with which to trade with the rest of the WTO. The same has happened this past week over our services schedule—services are two-thirds of the UK economy—because Taiwan has lodged an objection. So the dawning reality must be that a change of course is necessary.

It is of no surprise to anyone that Liberal Democrat policy continues to be, as it always has been, to retain membership of “the customs union”. It is Labour policy currently to negotiate “a customs union” with “the customs union”, such as Andorra and Turkey have. It is the Government’s policy, or at least the Prime Minister’s though not necessarily the whole Cabinet’s—it is difficult to determine, between the Chancellor and Dr Fox, who speaks for trade now; it is significant that, at Davos, in one week, you have two Cabinet Ministers from one Government saying two different things at a critical time in our country’s history—that we negotiate a deep and comprehensive free trade agreement with a customs arrangement as part of it.

We propose that, ultimately, the people will have to decide on our preferred option. Under Labour, Article 50 would need to be revoked and a new negotiating mandate would have to be agreed at EU level, as the Prime Minister’s letter activating Article 50 is not competent—it states that withdrawal would be supplemented by a free trade agreement, not a customs union. The Commission’s negotiating mandate has not been on that basis. The Government’s position was defeated by the biggest majority in Commons history.

The Government’s position is predicated on making agreements with all other countries with which the EU has a trading relationship but without them knowing what our trading and customs arrangements will be. Reflecting on the previous debate in Committee, perhaps the biggest reason why those agreements will not be brought forward before exit day is the very sensible position that third countries are taking. They will not enter into agreements with us, even if we say they are simply a rollover, because these could well become permanent without them knowing what our relationship with the European Union is. Who can blame them? Perhaps Dr Fox can, but who really can blame them?

We know that the withdrawal agreement and the political declaration state that the future relationship will be based on the Northern Ireland backstop, which means that we would not deviate from the EU in our trading. It seems that the Prime Minister’s course of action now, in order to get an agreement through, is to remove the very thing that would offer reassurance to countries with which we have a third-party trading arrangement. The backstop would clearly break the “taking back control” mantra, so to some extent it is not surprising that many on the government side, in the Conservative Party, have said that this is actually not leaving the European Union at all. So it is hard to see how they move forward now.

Labour’s position is based on Turkey, where agriculture is excluded and where the country is obliged to use EU rules and abide by the European court’s interpretation of them. To some extent, this also means having the European court’s remit over our future relationship. Turkey’s agreement with the European Union explicitly excludes Turkey deviating from the EU’s internal regulations; it is bound by them. If negotiating “a customs union” with the European Union were to have any preferential terms over participation in decision-making, the European Union would then be bound to offer them to Turkey and Andorra, which it will not do. This is one of the difficulties about which we have to be open.

Labour’s position of being aligned with the single market but not part of it means that with the movement of goods comes the movement of capital, which also means some form of people movement. It has not said this so far, but I think we now have to be in a period of openness and honesty. This is clearly within the scope of the European Court of Justice—which Jeremy Corbyn has ruled out. Many people also say that this is not leaving the European Union. It does not remove the need for border checks. Some of the longest delays in border checks in Europe have happened between Turkey and Bulgaria—two countries which are part of a customs union. So, if we want British representation in a customs union, with British oversight and decision-making, and a seamless trading relationship with 49% of our trading partners and a further 17% of other countries with which we have trading relationships without tariffs, we have to retain membership of the customs union.

If the impossible government position is termed “not leaving”, and if Labour’s position is termed “not leaving”, then I think not leaving would be better done after the people have agreed it. Now the reality that we are embarking on is clear. For the first time in history, a country is seeking a trading arrangement with new barriers, additional regulations and enhanced restrictions. It is the first arrangement ever knowingly entered into that would reduce prosperity. This is the Government’s course of action outside the EU’s customs union.

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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.

[Lord Lansley]

My Lords, I do not want to go on at length about this issue, not least because I agree so wholeheartedly with what my noble friend Lord Patten of Barnes has already said. I am always loath to do it and I hope to make it a very rare event, but I voted for the amendment to the withdrawal Bill last April. To that extent, I think this House has made its view perfectly clear: it thinks, in the context of leaving the EU, that to retain membership of a customs union with the EU would substantially mitigate what would otherwise be the damaging economic effects of withdrawal.

I do not want to get into a debate about “the” customs union or “a” customs union but, on the face of it, if we are negotiating to leave but we are negotiating to have a customs union relationship with the EU, it behoves us to negotiate without necessarily subscribing to the customs union because the customs union is a product of the treaty. We would no longer be bound by the treaty, so we have the flexibility to think otherwise. That does not turn us into Turkey, because we might choose to do things quite differently. The EU has chosen not to have agriculture within the customs union with Turkey because it is in its own interests not to do so. We have very different interests and we might choose to pursue them differently. Indeed, as one can see from the structure of the backstop, we might choose to have an arrangement with the EU that was, as Ministers are fond of saying, a “bespoke arrangement” for the management of a customs union. And why not? If we could have such a thing under the backstop, surely we could have it without the backstop.

I do not want to go on at length. I hope that those in this House and beyond who are thinking next week about what is needed to make progress from the impasse that we appear to be in at present will read this short debate. While it exposes some of the difficulties in negotiating a future customs relationship with the EU, two things should become immediately apparent. First, many of the negative consequences of leaving the EU—most especially, leaving without a comprehensive agreement in place—will be dramatically mitigated by being in a customs union. When I talk to businesses, that is absolutely at the top of their wish list, and it is true for manufacturers as well. Secondly, I hope people will realise that this does not preclude us having a trade policy of our own. What are trade policies nowadays? They are generally called comprehensive economic partnership agreements because by and large they are not about tariffs; they are about broader relationships. Especially for the UK, given that we are predominantly a services economy, for the future those agreements should be about services. We should be negotiating trade agreements about services, the movement of capital and investment, and indeed we should have a negotiation with India that includes a discussion about the mobility of workers between India and other countries. That is happening in a very powerful way: the Indians are exporting skilled young people all over the world very successfully, and we should have that in mind as part of an economic partnership agreement with other major economies. If that is true and it also gets us out of having a hard border between the Republic of Ireland and Northern Ireland, but without creating a new border between Northern Ireland and Great Britain, why would we not want to do this? That is what everyone is trying to arrive at.

For the purposes of next week’s debate there are, therefore, essentially two questions. First: does offering to be party to a customs union with the European Union, as part of the future political declaration, enable us and the European Union to agree in a way that would—as they say in Brussels—have legal force? Would it enable us to put into the political declaration, and have agreed by the European Council, the kind of language and commitments that would allow it to be said that we will not enter into the backstop, if we go down that path in the future treaty? That is what it is all about: not going into the backstop in the first place. We need some reassurance that that will happen. That will automatically solve the essence of the problem associated with the backstop. If we do not have to go into it, we will have solved that issue. We will also have solved the question of unilateral withdrawal or otherwise. If we are in a customs union, we have a right to leave it. If we go into the backstop, we have no right to leave it—as it is currently constructed— and that is a very unhappy place for many who are against the withdrawal agreement at the moment.

The second question is: can we avoid the Turkey situation? It is a bit like when people talk about entering the Norway situation: we do not want to be in a position where we are simply rule-takers. With a customs union, at least we are not rule-takers on financial services and our service industry, but we are none the less rule-takers. We do not want to be in that position. Can we arrive at a customs union where we genuinely have a shared responsibility? I hope we can.

The trouble is, I entirely agree with my noble friend Lord Patten. Nearly a year ago, if only the Government had listened and put into the negotiation—at the time that led up to the White Paper and after it—a discussion about a customs union. Instead they put into the White Paper the suggestion that we could have a customs union, without calling it that, where the rules of origins are effectively waived so that anything that originates in the United Kingdom is treated as if it is European, and anything that originates in Europe is treated as if it is British. This, of course, is a nonsense; the European Union would never accept it. It would never accept that it would raise the money—

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[Lord Purvis of Tweed]

The Government’s position, already stated, is that they intend the future customs arrangement to be based on those aspects of the Northern Ireland protocol which require agricultural and goods regulatory alignment with the European Union.

[Lord Bates]

We have been very clear about this; we want a deep and special facilitated trading arrangement with the European Union which allows all the benefits of free trade while allowing us to take advantage of the new opportunities which are emerging. According to the EU’s figures, 90% of growth over the next 10 to 15 years will be outside the EU—in India, China and the United States. That is what we need to tap into. That is what we need to be focusing on. We need to have the freedom to negotiate those independent trade agreements. If you go for a customs union, you are going to surrender that opportunity, and we are not prepared to do that. You would also surrender the right to shape the rules that you are going to have to implement.

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[Lord Bates]

Because 17.4 million people decided that they wanted to leave, and that is what the Government are committed to doing. I want to be careful not to be flippant about the subject we are dealing with; it is very serious, and the positions have been well argued. Nor do I want to be disrespectful to people for whom I have huge admiration, such as my noble friends Lord Patten and Lord Lansley, and the noble Lords, Lord Hannay and Lord Kerr, whose expertise I respect. But the position of Her Majesty’s Government is very clear. We have a deal. We should take advantage of that deal. A customs union would have all the disadvantages with few of the benefits. That is the reason we do not accept the amendment.

[Lord Purvis of Tweed]

Before the Minister sits down, I wonder whether he could advance this clarity. The noble Baroness, Lady Neville-Rolfe, states that we have now agreed with Israel to roll over our existing trading relationship with Israel. Israel does not have a free trade agreement with the European Union, or with us now. It has an association agreement, which has been in force since 2000. That is part of the pan-Euro-Mediterranean cumulation on rules of origin. This means that if we are replicating our existing relationship with Israel, we are replicating the rules of origin relationship that Israel has with the European Union. It also has common rules of origin procedures with Turkey, so if the Government’s position is that we are simply rolling over all of our current trading relationships through an association agreement with Israel, it means that we are now going to be bound by common rules of origin procedures with the western Balkans, the Faroe Islands and Turkey in the pan-Euro arrangement.

I am not sure why the Faroe Islands is part of that, but the reality is—and this is the point I was trying to make in my contribution—that we have to be open. If you want complete independence of trading relationships in the way the world trades now, that is impossible, so the Government have to have some limitations on it. If it is replicating the Israeli agreement, it is replicating exactly the same rules of origin alignment that we currently have with Turkey, and Turkey is part of a customs union with the European Union. That is quite simple, too.

[Lord Bates]

The Committee will come to rules of origin shortly, but on that point, that is the reason why, in the agreement that we are proposing—the deal that is on the table—we propose that to ensure that trading goods between the UK and the EU remains frictionless in the UK, there will be no routing requirements for rules of origin on trading goods between the UK and the EU. What we are talking about with Israel is consistent with that.