European Free Trade Association

Paul Masterton Excerpts

Wednesday 7th February 2018 Westminster Hall

[Paul Masterton (East Renfrewshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Gapes. I will be very brief so the other two speakers have a chance to get in.

From the conversations I have had across East Renfrewshire in recent months, people are increasingly fed up. They do not want to hear any more about a hard Brexit, a soft Brexit, a red, white and blue Brexit, a “Brexit means Brexit” Brexit or even a “Brexit means Breakfast” Brexit. It is time for practical, workable solutions to be put forward in the national interest. They do not want ideology. If we have to give it a name, they want a “smart Brexit”, as my hon. Friend the Member for Wimbledon (Stephen Hammond) put it in a recent article.

We must be pragmatic, sensible and honest about the situation that faces us. Should we be optimistic? Yes, we can be and we should be, but that optimism has to be grounded in reality. It is far too simple an argument to say that the Germans need us to buy their cars and the French need us to buy their brie so it will all be great.

Just as Government contingency planning for all scenarios must cover a no deal, it must also cover us entering EFTA with the EEA bolt-on. I simply ask that that option is not taken off the table. Let me be clear, that is not necessarily a final destination—although we should not rule that out—but a safe harbour or staging post that would give us a suitable and workable framework from which to work while the free trade agreement is thrashed out and formalised.

EFTA guarantees to people who voted leave that we are implementing their democratic will to leave the European Union. If anything, it finds that sweet spot in reflecting that the EU referendum result, although decisive, was not overwhelming. We will be in the single market but not members of the EU. We will leave the EU sensibly—even conservatively—if we recognise that trade is only one part of our integrated and co-operative relationship that needs to be unpicked.

In EFTA, from day one, we will be outside the broken CAP system and the hated common fisheries policy, which are totemic issues that lie behind the largely ignored but sizeable minority leave vote in Scotland. Any question of ever closer union would be gone; we would not be under the direct jurisdiction of the European Court of Justice, as there is no direct effect and no supremacy of EEA law, and our membership dues would be significantly reduced. Freedom of movement can be dealt with flexibly within the EFTA system because, contrary to what is commonly asserted, Schengen is not part of the EEA agreement.

EFTA will also give us scope to form trade deals across the world from day one and to take advantage of the bloc’s existing FTAs while we create those bilateral agreements. Preferential access to EFTA’s markets while we finalise our new global trading relationships would provide a good basis for British business. Arguably, EFTA’s suite of trade agreements are a better fit for the UK than the EU’s, given our trading patterns, and they are more comprehensive. EFTA’s size and nimbleness as a bloc has allowed it to adapt its approach to free trade agreements to cover trade in services. EFTA would ultimately allow us to start our journey to our destination, while giving us the flexibility to ready ourselves for what may lie ahead.

If the referendum was not just about the economy but about increasing national sovereignty, I believe EFTA would tick that box too. That is why it is an option that also finds favour among many moderate leavers and it should not be dismissed out of hand by the Government. When we look back in 10 years’ time, we will not regret taking the time to get what was needed, but we will regret rushing to leave the European Union as quickly as possible to meet an arbitrary, self-imposed hard deadline.

--- Later in debate ---

[Peter Grant]

As I said, our best option is to respect the wishes of the 62% not to be dragged out of the European Union, but if that option is taken off the table—

[Paul Masterton]

indicated dissent.

[Peter Grant]

I note that Scottish Conservatives want to pooh-pooh the idea that 62% of the population of Scotland can just be ignored. My concern about EFTA is not that I do not like what it offers, but that it does not offer nearly as much as we have now. In particular, it does not involve membership of the customs union.

Switzerland does not have what it regards as a hard border with the European Union. Apart from its border with Liechtenstein, it is completely surrounded by land borders with EU countries, but most people travelling in and out do not notice anything like a hard border. Nevertheless, it estimates that approximately 2% of vehicle traffic is stopped and searched. Applying that model to the only land border that the United Kingdom will have with the European Union would result in 200 stop-and-searches a day near the border on the island of Ireland. That is simply not acceptable, and it cannot be allowed to happen.

Even the most favourable—or least unfavourable—scenario for leaving the customs union is likely to create significant security problems in Ireland. It is not just about having a hard border. We have an agreement on all sides that there will be no infrastructure on the Irish border, but it is very difficult for somewhere inside the customs union to have a border with no infrastructure whatever with somewhere outside it. There will be significant repercussions for the whole of Ireland if the United Kingdom leaves the customs union.

--- Later in debate ---

[Mr Walker]

The Government are ambitious about the extent of the trade agreement we can do with the EU. The EU has a number of trade agreements with other countries where there is mutual recognition and regulatory alignment, but not the absolute harmonisation of rules. I do not accept the premise of the hon. Gentleman’s argument.

I will not be able to cover all the comments, so I want to focus a little more on international trade. Members have asked why we do not plan to rejoin EFTA as a way of continuing our trading relationships with its members and trading with the wider world through the adoption of its existing free trade agreements. As I have already stated, EFTA has a network of 27 free trade agreements as compared with the EU’s 40 FTAs. While many of those agreements significantly overlap, EFTA agreements still focus on traditional areas of market access and therefore tend to be less comprehensive and more goods-focused than those of the EU. It is also notable that some EFTA FTAs specifically exclude trade remedies that the UK may seek to have as part of our independent trade policy. The UK is in many ways different from those countries.

[Paul Masterton]

Will the Minister give way?

[Mr Walker]

I will give way for the last time.

[Paul Masterton]

Is the point not that by joining EFTA, we can roll into the existing EFTA trade agreements and agree a new bilateral trade deal at the same time? We would be protected while striking out our own trade deal.

[Mr Walker]

My hon. Friend makes an interesting point. It is certainly true that a number of the EFTA states have those bilateral arrangements, but it is important to note that even if EFTA members were to welcome us back—as the hon. Member for Glenrothes pointed out, that is not a certainty—we would not have immediate or automatic access to their 27 FTAs. Our entry into each one would need to be negotiated individually with the third countries involved. That process would take time, with no guarantee of success. EFTA is not an off-the-shelf model that would deliver ready-made trade deals, as some have suggested. Instead, as I said earlier, leaving the EU offers us an opportunity to forge a new role for ourselves in the world: to negotiate our own trade agreements and to be a positive and powerful force for free trade. As Members know, we are committed to delivering continuity in the EU’s existing trade relationships with third countries.