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Brexit: Aerospace and Automotive Industries

Volume 779: debated on Tuesday 14 March 2017


Asked by

To ask Her Majesty’s Government what recent discussions they have had with United Kingdom aerospace and automotive industries about continued access to the European Union single market.

My Lords, we engage closely with the UK aerospace and automotive sectors. We have frequent conversations about the challenges that leaving the EU poses and the opportunities that will become open to us. Both sectors have effective partnerships with government through the Aerospace Growth Partnership and the Automotive Council respectively.

My Lords, the Foreign Secretary has said that it would be perfectly okay to leave the EU without a deal on Brexit, but how can this possibly be true in the case of two of our most crucial industries—the automotive and the aerospace industries? In evidence to this House, they have shown not only how important exports to the European market are but how they are part of European integrated supply chains, how much they benefit from the movement of trained European workers across European countries, and how they benefit hugely from participation in funding and key European research and development and other programmes. How can the Foreign Secretary’s statement be true for these industries?

My Lords, clearly, trading with the countries of the European Union is extremely important. What we are discussing are the terms of that trade. The Prime Minister has made it very clear that she hopes to negotiate a deal that means trade that is as free and frictionless as possible. On that basis, there is a very good outlook for both industries.

My Lords, the Vehicle Certification Agency is our national approval authority for new road vehicles and it is involved with EU policy formulation. Its approval certificates are recognised without question throughout the EU, bringing enormous access benefits to our vehicle manufacturers. What future do the Government see for the VCA’s activities post Brexit and what do the car manufacturers think about that?

My Lords, the issues raised by the VCA are broadly the same as those for the EASA, the MHRA and lots of other regulatory authorities in this country. The relationship between our national regulators and the European regulatory authorities is obviously extremely important and will be the subject of negotiations over the next two years.

My Lords, can my noble friend confirm that there is not an Audi, Mercedes or Volkswagen that is not assembled outside this country? German exports of these cars to the United Kingdom are absolutely massive, and the Germans will have every interest in seeing that that trade continues without tariff barriers.

My Lords, it is clear that there is a huge mutuality of interest in negotiating a free, frictionless trade agreement between the EU and the UK. In the car industry and industries where, as the noble Baroness indicated in her question, there are integrated supply chains, it is doubly in the interests of both parties to negotiate such an agreement.

Why is it that the Foreign Secretary says one thing and the Prime Minister says another? Surely, the industry knows what is good for itself. The industry is quite clear that we need a deal, but the Foreign Secretary says that it is unimportant and we can walk away.

My Lords, I think it is clear, as the Prime Minister has said—and the Government subscribe to the views of the Prime Minister—that we would like to negotiate a free trade agreement with the European Union with as few non-tariff barriers as possible. If we are not able to negotiate such an agreement, we will fall back on the WTO rules.

My Lords, does my noble friend not think it is very nice to hear spokesmen for the Labour Party saying day after day how important it is that government should do what business wants? Oh, if only that had been the case in past Labour Governments —and I hope it will be if we ever get one again.

My Lords, in both the aerospace and automotive industries, for a number of years we have had an extremely close partnership between industry and government, to the benefit of both parties.

It is reassuring for this side of the House to see the noble Lord, Lord Tebbit, scraping the barrel. To enable integrated production around Europe, is it not just a question of tariffs? As the Road Haulage Association said, instead of needing one piece of paper to get from Munich to Toulouse, for example, we will need 60 pieces of paper, unless we are part of a European arrangement for all these technical standards.

My Lords, the integrated supply chains that have developed over a number of years are not just limited to the EU. The aerospace industry is a case in point: its supply chains are global supply chains—and, of course, under WTO rules there are no tariffs for aircraft or aerospace parts. We should raise the horizon away from just the European Union.

Following on from my noble friend’s Question on continued access to the European Union single market, what is the Minister’s reaction to recent House of Commons Library research which shows that none of the G20 countries trades with the EU on WTO rules alone? They all have some sort of preferential trade agreement. Does he think that, in the event of our having to rely solely on WTO rules in two years’ time, we will also leave the G20?

I think that the Prime Minister has made it absolutely clear that it is our intention to negotiate a free trade agreement with the European Union. That is the policy priority over the next two years.

My Lords, has the Minister considered the situation of Airbus, which is in Flintshire in North Wales and employs 7,000 people, as well as people in the ancillary industries? The wings are produced in Broughton, and there are plants in Filton, near Bristol, Hamburg and Toulouse. The whole of the European Union is involved in building the Airbus. How will we secure the future of those jobs, not only in Wales but in the rest of the European Union?

The noble Lord makes an extremely important point. Airbus, in a sense, is globalisation writ large. France, given the huge investment in Toulouse, Germany and the UK—Wales and England —have a very great mutuality of interest in negotiating a deal that enables Airbus to compete competitively with Boeing. So it would be extraordinary if we cannot negotiate a deal that enables Airbus to continue to prosper.