EU Withdrawal

Lord Wallace of Saltaire Excerpts

Wednesday 13th February 2019 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, I agree with a great deal of what the noble and learned Lord, Lord Hope, said in his excellent speech. If this goes on much longer I fear that the noble Lord, Lord Newby, will run out of jokes and perhaps the noble and learned Lord, Lord Hope, out of apposite analogies.

As the Commons struggles it its paralysing three-way trap and the search goes on for the holy grail of alternative arrangements, the question again is how your Lordships can best help with advice on escape hatches, if any exist. The position has now been clarified and reclarified to the point of almost total unintelligibility. Either there is an Article 50 delay—short, medium or long—although for what purpose no one openly has an answer, as the noble and learned Lord, Lord Hope, emphasised; or there is the so-called crash-out, managed or otherwise; or, the best hope, the withdrawal agreement treaty scrapes through at the end of February or the end of March, still unopened but somehow reinterpreted by a codicil or instrument to make it temporary and conform to the consent required under the Good Friday agreement, a point that often tends to be overlooked. The device being examined for that is called a joint interpretive instrument which can be attached to the treaty. So that is what is behind the withdrawal agreement.

Behind the delay lobby is the obvious wish for another referendum, which we have heard about, although the questions remain of who knows where that would lead, what it would settle and whether the legislation to launch it could ever pass through the other place.

Behind the no deal, walk away or crash-out option on WTO terms, we have the assurance of my noble friend Lord Lilley that there are 30 reasons not to worry. Unfortunately there are many others who have at least 30 more reasons to worry a great deal—not least farmers, most of industry and business, the police and many other major concerns of this nation.

As for the withdrawal agreement scraping through before the end of March, behind that is the hope that both the EU negotiators and, here at home, the famous ERG diehards in the other place will all yield a bit and make concessions, along with 50 or 60 Labour MPs who are said to be now seeing sense, or so I read.

On top of this, we now have the letter of the leader of the Opposition, Mr Corbyn, to the Prime Minister asking for agreement on “a permanent customs union”. It is a pity that he did not ask instead for an evolving customs partnership because that in the end is what we are going to get. Not only do customs authorities in and out of the EU co-operate closely all the time anyway but most goods travel under simplified procedures.

However, more than that, behind the Corbyn letter there is an alarming and pitiful ignorance—admittedly widely shared by many Members of Parliament and the media—about the radically changed nature of all trade today and of the real meaning of a customs union in modern conditions. This is where your Lordships can help—if we can get heard above the cacophony of disagreements in the other place. The McKinsey Global Institute reminds us that today—and even more tomorrow—most international trade is not going to involve customs machinery at all. Already the bulk of both service trade and just-in-time import trade is conducted without any reference whatever to customs unions or customs delays.

Services do not do customs or customs unions. Services which are not traded through frontiers at all already constitute more value in global trade than goods. This dominance of services, which have grown 60% faster than goods trade in the past 10 years, is completely obscured by traditional trade statistics. The conventional statistics—last year’s Bradshaw, as the late Harold Macmillan would have described them—fail to track soaring cross-border flows of digital services and intangible assets between affiliates which are becoming a huge part of the trade picture. I do not know who does the research for Labour or advises the excellent but obviously frustrated Sir Keir Starmer, but they should get on top of this.

In short, the whole idea of a permanent customs union with the EU, which Mr Corbyn is calling for, is becoming marginal to boosting our trade and, therefore, our jobs in the digital age. As the Governor of the Bank of England was saying this morning, there is indeed a new order in cross-border commerce lying ahead. By the end of the two-year transitional period, if the withdrawal agreement allows, it will be even more so. I hope that the noble Baroness, Lady Hayter, whose speeches on this matter are always a treat that I enjoy, will be able to tell us exactly where Labour has got to on this new situation. We have heard nothing about it so far.

The other area where Commons experts plainly need help is in their mistaken conviction that the EU today is a fixed system on a fixed path. In fact, the old EU model is being rapidly overtaken by all the obvious pressures of digitalisation, notably populism, massive centrifugal forces and decentralisation—all causing what the New Statesman, which I do not often quote, calls a new European schism. Eastern and central Europe are breaking with Brussels, southern “Club Med” Europe is rejecting the north, I now read that the French are withdrawing their ambassador from Italy, and Greece has been putting on trial its chief statistician for the crime of telling the truth. As for the core of EU countries, France—our long-standing ally and friend—magnificent Germany, also now our good friend, are both in deep stress and political instability. We should be working out how to assist them instead of arguing with them over outdated trade practices.

Ireland, too, should be our closest friend these days, not our opponent. I strongly agree with the noble Lord, Lord Hain, who made that point the other day. This is a close neighbour that is now richer than us in terms of per capita income, is increasingly ready to forget old bitterness, faces undoubted dilemmas with which we should strongly sympathise, and actually wants to engage more closely with the Commonwealth and stick closely to the Good Friday agreement, as well as the common travel area and a dozen other relationships that both sides should treasure.

All in all, the Brexit situation ought to be perfectly able to be handled by a properly informed and functioning Parliament ready to support a step-by-step approach into the utterly changed conditions lying ahead—the first step being precisely what the withdrawal agreement, maybe with some codicils, offers, as my noble friend Lord Lansley pointed out a few minutes ago.

[Lord Wallace of Saltaire (LD)]

My Lords, I am doing my best to follow the noble Lord’s argument. I do not entirely understand what a widening customs partnership is. It is an unclear concept. We all agree that in a digital age and where standards and regulations are at least as important as tariffs, we are in a different world. When Margaret Thatcher was Prime Minister 30 years ago, she accepted that having a single market was more important than being in a customs union. Can the noble Lord explain how a widening customs partnership would deal with the harmonisation of standards and regulations, which—I think he is arguing—are more important than customs these days?

[Lord Howell of Guildford]

The explanation would take longer than the time I have available. I shall share it with the noble Lord afterwards but the basic point is that services are the expanding side of international trade. Standards have to be negotiated with America, the European Union and so on, and within the EU of course, but also with all the great new markets of Asia, Africa and Latin America, where the big expansion of services will be. There never was a clear single market in services. We hoped for it but it never worked. We face the same problem there as we are facing throughout the world. It is perfectly straightforward that in this area old-fashioned customs arrangements affect only solid physical goods; they are a declining part of the system. Therefore, concern with old-fashioned arrangements is becoming less relevant.

--- Later in debate ---

[Baroness Meyer]

I will cover that particular point in my next paragraph. I will continue because I am not yet confident enough to speak without notes, but beware: it will happen one day, and noble Lords might regret it.

I was living in Germany. We were there in September 1989, the first time that the East Germans were allowed to leave East Germany. We ran to the border and saw people coming out on bicycle, on foot and in their little Trabants. The West Germans lined the street and welcomed the East Germans. It was an unforgettable moment—the celebration of freedom from a state of oppression. This moment remains in my mind and will do so for a long time. My children are half-German.

The EU had nothing to do with it. It happened because of the fall of communism, mainly because of its inadequacies. If any international organisation contributed to the fall of communism, especially of the Soviet Union, it was NATO, not the European Community, as it was called then. If any international statesman helped the Berlin Wall come down, it was President Reagan, who called to Mr Gorbachev in 1989, “Tear down that wall”.

If we cannot agree on the future of this country, the least we can do is not reinvent the past to gain advantage in Brexit debates. Let us not forget that Paris and London were strongly opposed to the reunification of Germany in 1990 for fear that it would become too powerful. Let us not forget that Chancellor Kohl told the German people in 1997 that EU integration and the adoption of the euro were the price that Germany had to pay to dominate Europe without alarming its neighbours. Let us also not forget that Kohl pledged to his people that the euro—which led directly to economic crises in Greece, Spain, Portugal and Ireland, and to the impoverishment of Italy today—would be no less strong and stable than the deutschmark.

[Lord Wallace of Saltaire]

My Lords, we all have our historical memories and interpretations of history. In 1990-91, I spent a lot of time in the transforming societies of eastern Europe—Poland, Hungary, Romania, et cetera. The first thing that their new Governments wanted to know was how soon they could join the European Community. It was partly the attraction of the European Community which had led those Governments, including that of Hungary—who were a good, progressive Government in those days—to believe that reform was possible. My participation in this was different from that of the noble Baroness, and I saw something rather different too.

[Baroness Meyer]

I completely understand what the noble Lord is saying and completely agree with him. In the east, they all wanted to join the European Community. It was seen as a symbol of freedom. This is not my point. My point is that it was implied in the previous debate that the European Union—when it was called the European Community—played a role in liberating the communists, and that this is entirely wrong. It had no role whatever.

--- Later in debate ---

[Viscount Ridley]

No, because I do not know the details, but I have not heard that it broke any rules. I have not actually finished the quote, which goes on:

“It is highly regrettable that the Juncker Commission chose not to implement this recommendation. The Ombudsman looks forward to its implementation by the next Commission”.


Good luck with that, because we all know who is going to be pulling the strings in the next Commission —Mr Selmayr. We are asked to put our faith in a good faith pledge from an organisation that will not even obey its own rules. We should remember that Mr Selmayr was the prime suspect behind the—

[Lord Wallace of Saltaire]

Allow me to correct an error. Mr Juncker regularly appears before the European Parliament where in the past he has been heckled by Nigel Farage, who I am sure the noble Viscount feels is doing his best to hold him to account. That is part of what the Commission has to do and the European Parliament is part of that accountability mechanism. Of course, the European Union is a 28-member country, therefore accountability is complex, but it is not entirely absent.

[Viscount Ridley]

If the noble Lord reads Hansard he will find that I did say that he appears before it—I said “once in a blue moon”. There is no question that he appears before it an awful lot less than my noble friend Lord Callanan appears before us, which was my point.

[Lord Wallace of Saltaire]

He does not smirk as much.

[Viscount Ridley]

Did the noble Lord say from a sedentary position that my noble friend does not smirk as much?

[Lord Wallace of Saltaire]

My Lords, I did. Those of us on this side notice, I suppose I should say, the ironic expression which often flits across the noble Lord, Lord Callanan’s, eyes. I hope that that is a little more polite.