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Brexit: Trade Arrangements

Volume 777: debated on Thursday 12 January 2017


Asked by

To ask Her Majesty’s Government what steps they are taking to ensure continuity and stability in trading arrangements for United Kingdom businesses in the period between the conclusion of the Article 50 Brexit negotiations and the commencement of new trade arrangements between the European Union and the United Kingdom.

My Lords, we want a smooth and orderly exit from the EU, and to provide certainty where we can. How the Government achieve that will depend on the nature of the agreement reached with the EU, but it would not be in the interests of either side—Britain or the EU—to see disruption. The Government are considering all possible options, focusing on the mutual interests of our own country and of the EU.

I thank the Minister for that familiar Answer. The case for government working on a transition deal to provide continuity and certainty for Britain, and for British business in particular, at the end of Article 50 is overwhelming. For one thing, it is difficult to find a single person who thinks that a successful exit and incorporation of EU law into British law can take place within two years; for another, we know that the negotiation of a new arrangement cannot start until the Article 50 process has finished. Either the Government are not working on a transition deal, in which case they are severely letting Britain and British business down, or they are, but they are not telling us. Which one is it?

The noble Lord, with his usual forensic skill, puts me in an interesting position. Let me just repeat what has been said. As a Government, my fellow Ministers and I have had numerous conversations with business, and the noble Lord is absolutely right that there is a considerable amount of interest and concern in certain quarters as to what will happen at the end of the two-year period. We are very focused on that. As the Prime Minister has said, we want to avoid a cliff edge. We want to provide certainty where we can and are looking at all the options, although I am not in a position here and now to go into that. Clearly, some of those options will be dependent on what comes out of the negotiations, but rest assured we are very mindful of this issue.

Would my noble friend distinguish between a transitional negotiating phase and the transitional implementation phase? Surely there is no reason why the negotiations might not be completed in two years, whereas the implementation, in order to avoid a cliff edge, might take place over a longer period. But that is entirely different from what the noble Lord was suggesting.

My noble friend is absolutely right, and once again we need to be very precise in the use of our language here. In many treaties there are periods for implementation. In other treaties, heads of terms might be negotiated and they are a bridge between those heads of terms and the end date. We need to be very clear what we are talking about.

My Lords, to remove potentially years and years of uncertainty over tariffs and regulatory instability for business, would not the clearest signal to British business be for the Government now to indicate their intention that the UK retain membership of the customs union? Have the Government ruled this out?

The noble Lord raises an issue that the Government are analysing and assessing. There are a range of options open to us regarding the customs union and other aspects of our relationship with the EU. I will just repeat that we want to have a smooth and orderly exit, and as the Governor of the Bank of England pointed out yesterday, such an eventuality is in not just our interests but the interests of the EU itself.

My Lords, would the Minister perhaps respond to the point made by the noble Lord, Lord Wood: that you cannot start the negotiations for the new external relationship until after the withdrawal negotiations are concluded? I know that is the view of some people in Brussels, but I hope he will say that it is not the Government’s view and that their intention will be, after triggering Article 50, to begin the negotiations on a new external relationship without delay, and not to accept that they have to wait until the other negotiation is complete.

The noble Lord speaks with great authority on this, and he is absolutely right: there is nothing in Article 50 to suggest that we cannot negotiate the exit treaty and our new relationship with the EU at the same time. Indeed, paragraph 2 of Article 50, which I have in front of me, makes the point that the arrangements for a country’s withdrawal will be negotiated,

“taking account of the framework for its future relationship with the Union”.

My Lords, does the Minister agree that Article 50 implies that it can be revoked within the two-year period? Is a corollary of that not that if there is any doubt about that—this goes back to the question of the noble Lord, Lord Hannay, about what has to happen within the two years—or if the negotiation is not reaching a reasonable conclusion, the Article 50 Bill can make provision to reverse engines or revoke the Article 50 timetable?

The noble Lord makes an interesting hypothetical point; however, the Government are aiming to have a successful outcome to the negotiations. It is a matter of government policy that, once given, our notification will not be withdrawn.

Will my noble friend confirm that we remain full members of the World Trade Organization in our own right, and will he tell us what we get for our £5 million annual subscription?

My noble friend is absolutely right. We will continue to remain a member of the WTO and place our schedules with the WTO in due course. In terms of our contribution to the WTO, our membership is very valuable in a range of ways. We will seek to build on that relationship in the years to come in order, as my right honourable friend the Prime Minister has said, to become a global beacon for world trade.

My Lords, in response to the previous Question, the noble Baroness, Lady Williams, said that the Government will be working for the best possible outcome for the UK. Can the Minister say precisely what that is, in terms of jobs and the economy?

First and foremost, it is critical that we continue to build on the excellent competitive edge that this country already enjoys, the good statistics we have seen coming through and what the Governor of the Bank of England said yesterday about the outlook for our economy. That means providing certainty in the short and medium term, building on that and making sure that our businesses enjoy access to the markets of Europe in as free and frictionless a way as possible, while ensuring that trade from Europe continues with the UK.