Motion to Take Note
My Lords, I am grateful for the opportunity to open this debate for this Grand Committee to take note of the United Kingdom’s approach to negotiating the future relationship with the European Union. I am looking forward to the usual extraordinarily well-informed and wide-ranging views that we will no doubt hear from your Lordships this afternoon.
It is over four years since the British people voted to leave the European Union in the largest democratic exercise in this nation’s history. It was an historic vote for freedom, parliamentary sovereignty and change. Since then, two general elections have underlined and cemented the Government’s mandate. The road has been hard and, at times, I confess, difficult—not least in this House and sometimes the other place. However, at the beginning of this year, thanks to this Government, Britain left the European Union.
As the 19th-century Danish philosopher, Kierkegaard, once said:
“Life can only be understood backwards; but it must be lived forwards.”
In that spirit, I believe that we must not lose sight of where we have come from. The principles of our approach for a future relationship are rooted in the mandates that the British people have repeatedly given the Government—and, indirectly, all political parties—to regain our political and economic independence. No matter what happens in the negotiations, by the end of this year we will leave the customs union and single market and become a fully independent and sovereign country.
There is no mystery about where the British people and Government stand. We have been clear from the outset that we are seeking a relationship that respects the independence for which the British people voted and for an agreement with a free trade agreement at its core—one similar to those that the European Union has readily agreed with other countries. We are asking not for a special or bespoke relationship but for one which is grounded in precedent, which is aligned with the parameters agreed in the political declaration and which builds on the European Union’s own past offer of a Canada-style deal. We have also always been clear that such a deal must of course accommodate the reality of the United Kingdom’s well-established position on state aid and fisheries and fully recognise the United Kingdom as a sovereign equal party.
However, the European Union has continually insisted not only that we must accept continuity with EU state aid and fisheries policy, but that this must be agreed before any further substantive work can be done in any other area of the negotiation, including on legal texts, making it unnecessarily difficult to make progress. There is still a lot of work to do, but it remains our goal to reach an agreement and we will continue to work hard to do so.
We have kept the House updated throughout the negotiations. I have issued Statements after each round of negotiations when the House has been sitting and did so most recently on 14 September. I can now update the House again on progress and I welcome the opportunity to be able to do so in a debate of this kind.
We have entered the final phase of negotiations with the European Union. The chief negotiators and their teams met in Brussels last week, as planned. As set out in the terms of reference published online, UK negotiators have continued informal discussions with the Commission between formal rounds. These informal discussions continue today in London on a range of areas. The next formal negotiating round—round nine—will take place in the week commencing 28 September. Before that, there were useful exchanges in the eighth negotiating round, with all issues being covered in some detail, including the most difficult ones. There are large areas of convergence in many areas and we will keep working to bridge the gaps.
However, differences still remain, including on fish and state aid, where the EU continues to ask for continuity of the status quo. On fisheries, we have been clear that we will not accept any proposals that compromise United Kingdom sovereignty over our fishing waters. We are seeking a relationship based on the European Union’s existing bilateral relationship with Norway. In order to make progress, the European Union must accept our position as an independent coastal state and any agreement on quotas must reflect that reality.
On state aid, the World Trade Organization rules are an internationally recognised common standard. Many major economies do not regulate subsidies beyond these rules. The European Union’s state aid rules are unique and have been developed specifically for the single market. The United Kingdom’s offer to the European Union goes further than World Trade Organization rules. We still believe that it would be straightforward to agree a free trade agreement, like those that the EU has agreed with other close partners around the world, and that this could be done quickly, but only if the European Union drops its unreasonable demands on fisheries and state aid.
As the Prime Minister has set out, there needs to be an agreement with the European Union by the time of the European Council on 15 October for it to be in force before the end of the transition period on 31 December. If there is no agreement, we would have a trading arrangement with the European Union like Australia’s. This would still be a good outcome for the United Kingdom. It would represent us reclaiming our independence as a sovereign nation, and that is what the British public voted for—twice. That said, I repeat that we remain committed to working hard to reach agreement by the middle of October.
Whatever the outcome, we have already done a lot of work to prepare businesses and citizens for the end of the transition period when we will leave the customs union and single market. In July, we launched a major public information campaign to encourage businesses and citizens to take action to prepare for the changes that will take place. In addition, we are taking a number of practical measures to prepare, particularly around borders. Also in July, we published the border operating model which, alongside a £705 million package of investment for border infrastructure, staff and technology, will ensure our borders are operational after the end of the transition period.
We have said that we will introduce new border controls in a pragmatic and flexible way in three stages up until 1 July 2021—an announcement that was widely welcomed. This approach gives industry extra time to prepare for the new procedures for goods coming into the United Kingdom, particularly in light of the impact of the pandemic. My right honourable friend the Chancellor of the Duchy of Lancaster made a full Statement on border provision, which I shall, with the permission of your Lordships’ House, repeat shortly.
As we set out in May’s Command Paper, we are committed to working closely with businesses to implement the Northern Ireland protocol to ensure unfettered access to the rest of the United Kingdom and to maintain and strengthen the integrity and smooth operation of our internal market. In August, we set out further guidance for how goods will move into and out of Northern Ireland and the support available for businesses. For example, our new free-to-use Trader Support Service, backed by up to £200 million of funding, will also deal with all of the formalities on behalf of traders importing goods from Great Britain or the rest of the world.
The United Kingdom Internal Market Bill will protect jobs and trade across the whole of the United Kingdom after the transition period ends. It will guarantee that companies can trade unhindered in every part of the United Kingdom, as they have done for centuries, ensuring the continued prosperity of people and business across the four parts of the United Kingdom, while maintaining our leading high standards for consumers, workers, food, animal welfare and the environment.
On the measures relating to the Northern Ireland protocol that have—how shall I put it—prompted much discussion, these have been included as the actions of a responsible Government with a duty to uphold our commitments to the people of Northern Ireland. The measures create a safety net that ensures that Ministers can always deliver on their obligations and could take steps to protect the transformational progress in Northern Ireland seen in recent decades. Your Lordships will, of course, have the opportunity to scrutinise the Bill shortly, and I look forward to hearing your views then.
I have set out today our approach to negotiations with the European Union and have given an update. I have outlined how the Government are preparing, and helping businesses and citizens prepare, for the end of the transition period on 31 December, regardless of the outcome of the negotiations with the European Union. We have been clear from the outset that we are seeking a relationship that respects our sovereignty and which has a free trade agreement at its core. We have been clear from the outset that we will not accept any proposals, such as the EU’s offer on fisheries and the so-called level playing field, which compromise UK sovereignty. We now need the European Union to understand the fundamentals of our position as an independent, sovereign country.
We believe there is still an agreement to be had with the European Union and remain committed to working hard to reach one by the middle of October. We need an agreement by 15 October; otherwise this will mean that we will have a trading arrangement with the European Union like Australia’s. Whatever the outcome of negotiations, on 1 January, the United Kingdom will regain its economic and political independence and finally, after four long years of debate, honour the wishes of the British people. I beg to move.
My Lords, I thank the Minister for his lessons for life at the beginning and for his update. However, I am particularly pleased that the wording that he chose for the debate is about the Government’s approach to the talks, given how very sadly the Government have managed to undermine trust—the trust that guarantees that “my word is my bond”. Well beyond our relationship with the EU, these tactics will affect our international relations beyond trade to “diplomacy and integrity”, in the words of our DPRR Committee. How the UK is seen globally, and whether we respect international law, affects our credibility, our moral authority and how other countries behave. It will also affect how Parliament is seen. As my PhD supervisor, and renowned Westminster watcher, the noble Lord, Lord Hennessey, mused to me, “All these years I’ve naively assumed that Parliament exists to make laws, not break them.”
Today, I want to touch on four points: obedience to the rule of law; state aid; UK citizens; and devolution. As Mrs May, other former Prime Ministers and Conservative Party leaders have stressed, disregard for the rule of law undermines trust in us as a nation, with the Government’s own chilling words, to
“disapply international and domestic law”.
To the outside world, renouncing of established international law or a treaty matters for the future. No. 10’s statement that
“unless the EU agree to each of the UK’s demands in the joint committee, the UK will breach the withdrawal agreement,”
will be quoted around the world, to the detriment of a rules-based international order. The Prime Minister says he will renege on the very detail he himself signed, by removing checks from the GB/NI border if no deal is reached, but why did he not see that that is what he signed up to?
Late last year, the Prime Minister told firms that they could put forms “in the bin” because they would not be needed. We told him checks would be needed. Northern Ireland politicians told him. The Road Haulage Association told him. As we have heard from the Minister, the Trader Support Service has been set up to help this. Over £500 million has been allocated to the system for moving goods into Northern Ireland, as they will need customs declarations—indeed, Fujitsu has won the contract to help with this. His own Cabinet Office wrote to the Northern Ireland Executive about new border posts at ports in Belfast, Warrenpoint and Larne, for checks on agri-food. How come the Prime Minister professes not to know this and moved a Bill giving Ministers power to disapply Article 10 of the protocol unilaterally, by regulation, breaching Article 4 of the withdrawal agreement?
Foreign Governments, with whom we will need to negotiate, hear Mr Johnson threaten to break the withdrawal agreement if he does not get his own way—a breach of the UK’s commitment, in Article 5, to implement it
“in full mutual respect and good faith”.
Those foreign Governments witness our Government unpicking their own “oven-ready” deal, jeopardising trust in our willingness to keep to the rules and keep our word. What does this do to the trust that we will need when we negotiate around the world?
Along with the Minister, we want a deal with the EU. The City of London Corporation stresses the need for a positive relationship for the sake of households and businesses, wanting close regulatory and supervisory co-operation to make a success of our relationship. Business wants a deal, and at speed, as its needs certainty and time to adjust. Siemens needs to be able to work closely with the EU for its future prosperity and for jobs here. PwC and others urge a deal, not least for our SMEs, which are woefully ill-equipped at the moment for a no-deal outcome. The Food and Drink Federation is aghast at the impact of no-deal procedures on its imports and exports, possibly in 100 days’ time, giving no time for adjustments. It is worse for some sectors—for the organic sector, for example, where, if mutual recognition of regulation is not sorted, it might not be able to sell into Northern Ireland, let alone the rest of the EU.
The economy is already in trouble, so our EU negotiations need to help, not hinder. We need a good deal, tariff-free trade, consumer protection for goods imported from the EU, and no two-day delays and the major back-ups that the Government anticipate. Today, we hear that they are even trying to put the blame on hauliers rather than on their own negotiating failure. Why are the Government willing to sacrifice a good deal, which I and others think is already there and ready to be done, as well as our reputation, on the altar of being able to write our own state aid rules and move away from a level playing field?
On state aid, it is hard to understand why a Government, unwilling to use the freedoms they already have over state aid, would risk a deal for the ability to do more. As it is, the Japan trade deal commits the UK to stricter state aid curbs than those being discussed with the EU. If this is all about tech companies, have not the Government noticed that Silicon Valley did not grow on government handouts? It is the same across the piece. Whether in our negotiations with the USA or any other country, the same questions will arise on environmental, worker, safety or consumer standards and over dispute resolution mechanisms or redress. That is the meat of trade deals.
Thirdly, what does the Government’s approach to the talks mean for our citizens? Those living in the EU and following this delayed “I won’t move” process worry about their status. As Ruth Woodhouse, a Brit living in Spain wrote to me from Malaga:
“UK citizens residing in the EU thought we had secured a relatively good, guaranteed level of protection in the withdrawal deal. However, if the government can tear up the rule book, clearly anything can be changed on a whim and nothing is guaranteed. I fear that our hard-fought rights could be just as easily be removed.”
Yesterday, we learned that thousands of Britons living in the EU were told their UK bank accounts will be closed, with Lloyds, Barclays and others taking action due to the lack of a post-Brexit trade deal. It is no easier for employees, with JP Morgan sending staff off to other EU capitals, due to lack of confidence that an agreement will arise on services. Jobs, money and people’s lives are all at risk because the Government are failing to negotiate.
Without a deal, there will be trouble for travellers, whether by air or sea. When the police imposed full border checks at channel ports last week—nothing to do with Brexit—the main road to London was snarled up within hours, with trucks parked up on the M20 motorway, a reminder of how any delay quickly causes chaos and will not solved by lorry parks across Kent or, indeed, around Holyhead.
Finally, the UK’s approach to the talks has challenged the devolution settlements, by excluding the devolved Governments from its thinking and talks. We see it in the internal market Bill described by the Welsh Government as,
“an attack on democracy and an affront to the people of Wales, Scotland and Northern Ireland, who have voted in favour of devolution on numerous occasions.”
I remind the Minister that it is not just the referendum result that should be recognised but those votes for devolution. Indeed, the treatment of the Welsh Government led to the resignation of the Conservative MS, David Melding.
Sitting suspended for a Division in the House.
My Lords, just as the Welsh Government felt offended because they were not consulted on the internal markets Bill, and because the powers that it gave to the Government took away from the devolution settlement, there is a similar feeling about these talks, because they have been neither fully involved nor consulted in the Government’s discussions with the EU. Do the Government not see that every time they upset the devolved Administrations, that challenges the very future of the union?
The economic disruption of leaving the transitional period without an agreement, or indeed with a deal which falls short of the Government’s promises, would worsen the hit already caused to the country by Covid-19. We have left the EU but it remains our closest neighbour and most important trading partner. We still share a continent in which security and judicial co-operation help to keep all our people safe. The Government’s approach to negotiations is weakening rather than strengthening our ties and mutual trust, and is therefore to be regretted.
I call the next speaker, the noble Lord, Lord Wallace of Saltaire. Lord Wallace? We might have a chance to come back to him later. In the meantime, I call the noble Lord, Lord Kerr of Kinlochard. Lord Kerr? Oh, there are some technical difficulties. We will adjourn until they are sorted out.
My Lords, the Committee will now resume. I call the noble Lord, Lord Wallace of Saltaire.
My Lords, I hope you can hear me. Good.
In his opening speech, the Minister talked about the Government’s well-established position on state aid. I am puzzled by that and I hope that he can explain. My understanding is that the European Union rules to which we now object were largely drafted by British Ministers and officials under Margaret Thatcher’s Conservative Government and that the Government’s current position on state aid has changed radically since last December, largely under the influence of the Prime Minister’s special adviser Dominic Cummings, but is not yet entirely clear. Perhaps he can explain.
We are now approaching the end of the transition period. That means, as the City of London briefing spells out, that we have to focus on what it describes as
“the necessities of the UK’s future trading relationship with the EU”—
and not just the trading relationship. Britain cannot escape its geography, for all the nonsense put out by Brexit Central and others after the referendum about the irrelevance of geography to Britain’s future. The number of British citizens who travel abroad for holidays, study, or work to the European continent dwarfs the number who travel to Australia, New Zealand and the western Pacific. The City memorandum points out that 75% of the data flows across the UK’s borders are with European countries. Cross-border crime is predominantly a matter affecting neighbouring countries. Britain’s security, society and economy will all continue to be profoundly affected by the ease or difficulty of interaction with our neighbours across the channel.
The maintenance of close relationships requires a legal framework that is treaty based, as again the City memorandum stresses. Treaties limit national sovereignty: they build relationships of “shared sovereignty”, as Sir Geoffrey Howe—that great and true Conservative—used to argue. The closer the levels of interchange, the denser the network of legal agreements that is needed to ease cross-border working. British Border Force personnel work in France under a bilateral agreement. British police exchange data on criminals with their counterparts in the Netherlands and Spain within a legal framework that safeguards confidentiality. British researchers collaborate with respected counterparts in Germany, Sweden and Finland. British holidaymakers have benefited for the past 40 years from access to a European health card in case of illness—a mutually advantageous arrangement, from which a large number of Conservative voters have benefited over the years and which the Government are now, sadly, determined to abandon.
To manage this future relationship, from 1 January 2021 —three months from now—we need a legal agreement: a partnership, spelled out in treaty form. One of the most dishonest statements that the Government keep making to the public is that we can opt for an “Australia-type agreement” with the EU, when no such agreement exists. A no-deal future relationship threatens damage not only to our economy but also to our security and to the openness of our society.
Successive British Governments, from James Callaghan and Margaret Thatcher onwards, have negotiated agreements with our neighbours to manage the rising intensity of interactions between us—within the framework of the European Union. Our current Prime Minister signed up to a declaration 11 months ago on our future partnership, which envisaged a network of agreements to manage our unavoidably shared interests. Since then, however, he has retreated, under pressure from the ultras in his party and those now in the Cabinet who were previously in the Referendum Party or UKIP. The noble Lord, Lord Frost, has spelled out a doctrine of sovereignty that would suit North Korea but makes no sense for a democratic country with an open economy.
Worst of all, the level of hostility expressed by Ministers, Conservative MPs and the right-wing media towards the Governments of France, Germany and the other members of the EU has risen alarmingly. The City of London briefing that we have all received expresses
“growing concerns that acrimony between the UK and EU may result in a failure to reach an agreement … a no deal outcome would be likely to engender ill will on both sides and damage the future UK-EU relationship.”
Even if the Government reach a last-minute deal, the image of a Government who distrust their neighbours and break international treaties when they feel like it will damage Britain’s ability to sort out the unavoidable problems that will follow from our more distant relationship. The Prime Minister talks about a global Britain and an independent foreign policy, but the failure to maintain close co-operation with our European partners in international organisations and negotiations across the world would leave us dependent on the limited good will of whoever comes out of the contested American presidential election and our distant friends in New Zealand and Australia.
Before the noble Baroness, Lady Noakes, repeats yet again her accusation that any criticism of the Government’s stance flows only from remoaners who never wanted to leave, I stress again that we are now debating the future, not the past. We are debating the framework within which our holidaymakers will travel next summer, the difficulties that British banks will encounter if agreements on data flows and financial flows have not been reached, and the obstacles that British police and intelligence will face if there is no clear legal structure within which to maintain the co-operation that they have built within Europol.
The noble Lord, Lord True, is a real Conservative, not one of those who have entered the party from more right-wing groupings as more moderate Conservatives have left or been expelled. I hope and trust that if the Prime Minister deliberately crashes the final stages of the negotiations and leaves without a deal, the noble Lord will follow other colleagues and resign. The national interest requires a deal, and the Government will betray the national interest if they fail to agree one.
How should one react if one’s Government deliberately, knowingly, admittedly and formally break international law? Like the noble Baroness, Lady Hayter, I think that Mrs May got it exactly right in the other place on Monday, and I congratulate her on her honesty and courage.
What matters for our debate today is how the 27 will react. They will have been as shocked as was Mrs May by the Bill that the Government produced, and shocked again when our Prime Minister had the nerve to accuse them of bad faith. However, I do not see them breaking off the negotiation; I see them starting infraction proceedings. The European Union runs on laws and pacta sunt servanda. I do not see them rejecting an agreement if the Barnier-Frost negotiations are to produce one but I cannot see them signing it—not without suspending its coming into force if our Government persist with what is now Clause 45 of the internal market Bill. Suspension seems to me to be the minimum on which the European Parliament would insist.
Why are we in this mess and how can we get out of it—indeed, will we? Let us not waste time on the fanciful story, for which no evidence has yet been produced, that the 27 were planning to blockade Northern Ireland’s food supplies. Who would enforce the blockade—the Commission navy, under Admiral Ursula von der Leyen? I suspect that the more banal context is our refusal to say what our future regime will be for sanitary and phytosanitary checks. Perhaps we are refusing to say because the chlorinated chicken war may still be raging in Cabinet.
The withdrawal agreement leaves Northern Ireland in the single market. Third-country suppliers of foodstuffs to the single market need a working SPS regime but the noble Lord, Lord Frost, seems to be telling the EU that ours is none of its business. Surely that is a stalemate that is relatively easy to solve, with the solution entirely in our hands. As for the other three problems that we have now discovered in the protocol, first, the Article 5.3 issue—how to ensure that export declarations and goods moving to the mainland apply only to those originating in the Republic—is an obvious task for the joint committee, and a relatively simple one. Secondly, the Article 5.2 issue, relating to goods at risk of entering the Republic, disappears if there is a free trade agreement.
Thirdly, the Article 10 issue—reach-back into the mainland on state aid—falls away if the level playing field argument is settled. This could be the crux of the matter. On state aid, the EU has dropped its unrealistic bid for dynamic alignment and CJEU jurisdiction, but it wants to know that we will have an effective regime with an independent authority, transparency, legal redress and, where trade with it is concerned, a dispute settlement mechanism. However, we seem to have said again that all that is none of its business and we are not going to set up our system until next year—so there.
This is serious. I do not believe that there can be a UK-EU free trade agreement unless on state aid we meet the EU half way. It has moved but we have not; indeed, we have regressed, resiling on last October’s political declaration when we agreed:
“Given the Union and the United Kingdom’s geographic proximity and economic interdependence, the future relationship must ensure open and fair competition, encompassing robust commitments to ensure a level playing field.”
The EU still believes that that is needed because it has heard far too much talk of Singapore-on-Thames, so I do not see us getting an agreement if on state aid—as on food standards, the environment, fish and carbon trading—we stick to saying, “Sorry, mind your own business, we’re taking back sovereignty.”
It is the sovereignty point, so stressed by the noble Lord, Lord Frost, that really puzzles me most. I would say that France and Germany are sovereign states and that their sovereignty was not diminished by their commitment to co-operation. I would say that we never lost our sovereignty; indeed, we have just demonstrated that by using it to leave. Sovereignty does not just mean the right to be left alone. Without sovereignty one cannot make treaties, but having sovereignty does not confer the right to dictate, or unilaterally revise, the terms of treaties and does not preclude binding commitments to co-operation.
Of course, I may be being naive. If, contrary to today’s reassuring remarks from the noble Lord, Lord True, we are actually on the ERG’s preferred policy of no deal then “none of your business” and the Clause 45 blunderbuss are easily explained. Avoiding commitments to high SPS standards might make sense if one’s priority was a deal with the United States. If so, there is a fatal flaw in that logic: if we blow up the Good Friday agreement, there will be no deal with the EU or with the US. The US is a guarantor power of the Belfast treaty, and American support for the Good Friday agreement is deep and bipartisan. The Foreign Secretary’s attempt last week to convince Washington that the threat to it comes not from us but from Brussels was not British diplomacy’s finest hour; it did not wash, nor will it.
I still hope for a second UK-EU treaty. That can only be thin now, but even a thin one would be better than nothing. However, it will not be agreed if we stick to our exceptionalist “mind your own business” sovereignty, and it will not come into force if we blow up the first treaty, which is only eight months old.
My Lords, it is a pleasure to take part in this debate. I thank my noble friend Lord True for his usual masterful summary in opening the debate. It is also a pleasure to follow the noble Lord, Lord Kerr of Kinlochard, and to confirm that our views remain some way apart. Given the amount of excitement in the House that is normally engendered whenever our relationship with the EU is raised, I am quite surprised that our numbers today are rather modest. However, I am grateful for the fact that at least we have a decent amount of time to speak, which is rare in this ghastly hybrid House, and we must treasure the opportunity.
When we celebrated our freedom from the EU on 31 January this year, it seemed such a huge relief. We had put behind us the disastrous negotiations by the previous Administration and the prolonged period when Parliament tried to thwart the will of the people. We might briefly have cherished the thought that negotiating the future relationship was going to be the easy part after all that. But that did not last, and we have had to face the reality of trying to negotiate with an EU that does not yet accept us as a sovereign equal. It is completely natural for the EU to prioritise its own interests, but the EU seems also to want to punish the naughty child across the channel for its temerity in leaving. The EU knows that if we make a success of Brexit, other EU countries may well question the value of staying locked into the European project.
I pay tribute to my noble friend Lord Frost for the calm, measured and thorough way in which he has conducted the negotiations so far. It is certainly not his fault that we have failed thus far to deliver a deal on the basis of our own very reasonable requirements. We have asked for a free trade agreement like those that the EU negotiates with other trading partners. The EU has responded by saying that, because of our geographical proximity, we must have more restrictions placed on us, in particular in the area of the so-called level playing field. We have been clear, as my noble friend Lord True emphasised, that sovereignty is of paramount importance, but I do not think that the message has yet been received in Brussels. In the case of the level playing field, we do not need anything beyond WTO terms.
The issue of sovereignty is also at the root of the lack of agreement on fisheries. Our fishing industry was decimated by the EU’s quotas, which allowed France and Spain in particular to take our fish. We have said, perfectly reasonably, that we want sovereignty over our fishing waters back and that we will set the agenda for access for other countries. The EU thinks that it can carry on as before.
Northern Ireland was never going to be easy. It was the most difficult part of the withdrawal agreement, and it looks as if it is going to be the most difficult part of the long-term arrangements. The EU’s bully-boy tactics of threatening to stop food imports into Northern Ireland from the rest of the UK are completely unacceptable, and I have it on very good authority that those threats were actually made. We should perhaps have expected trouble. Although he has denied it, Martin Selmayr is believed to have said that Northern Ireland is the price that the UK will pay for Brexit. While Mr Selmayr has been moved to somewhere he can do less damage, I expect that his spirit lives on in Brussels.
I shall support the Government when the internal market Bill comes to your Lordships’ House. I believe that it is necessary to create the powers that are in that Bill to allow us to reconcile the conflicts between the withdrawal agreement, including the Northern Ireland protocol, and the Belfast agreement. I regret the clumsy initial characterisation of it as a breach of international law, because it is no more than a reserve power to deal with problems. I hope that we do not have to use it, but the EU needs to recognise that we are not giving it carte blanche in Northern Ireland, which remains a sovereign part of the United Kingdom.
I do not know how many other problems remain in the negotiations with the EU. While it would be interesting to have a bird’s-eye view of the negotiations, they are best conducted behind closed doors. I was grateful for the update from the Minister on the negotiations when he introduced this debate. At the weekend, however, I read with incredulity that the Channel Tunnel, governed by the bilateral Canterbury agreement between the UK and France, is now part of the EU’s power grab. I certainly hope that that story is untrue; perhaps the Minister can comment on it when he winds up.
I have always said that, while I favour a deal with the EU, it would not be the end of the world if we left without a deal. It would certainly be inconvenient and would cause some confusion in the early part of next year, which would not be helpful given the damage already done to our economy from the public health response to the coronavirus pandemic. But we would survive. We are a resilient nation and are capable of overcoming that. In the meantime, the Government are pressing ahead with free trade agreements with other countries, and will seek to join the Trans-Pacific Partnership next year. While the EU is certainly a large market, around 90% of global growth is expected to arise outside the EU, and that is where we must set our sights.
My Lords, just three months away from the end of the Brexit transition period, there is still no clear idea of a “landing zone” for the negotiations on the UK’s future relationship with the EU, with the UK Government’s latest threat to break international law destroying our negotiating trust and threatening a massively damaging hard or no-deal Brexit, compounding the economic recession resulting from Covid-19.
In March this year, your Lordships’ excellent EU Committee report contrasted the latest negotiating position of the EU as a “development” of the political declaration, which the British Government had solemnly agreed, with London’s new approach of turning its back on that. Within a couple of months, it had become clear that the EU was leaning towards an inclusive approach to the negotiations, with extensive consultations achieving consensus among member states, a willingness to engage in open and interest-based discussion aimed at problem-solving, and high levels of transparency. The UK approach, on the other hand, focused upon defending predetermined red lines, and decisions taken behind closed doors.
Now the Prime Minister has lurched into reneging on the treaty commitments for joint decision-making, in an agreement not yet a year old. This may be pure brinkmanship—upping the ante, either to prepare to blame the EU for no deal or to retreat into a “thin deal” under the guise of triumphal Boris Johnson tub-thumping, as happened last October. The EU, although shocked at this tactic—which calls into question whether any treaty signed by the UK is worth the paper it is written on any more—and despite declaring its intention to mount a legal challenge, is still negotiating, to its credit under the present German presidency. It appears that its real objective is to get a deal, although not at any price.
One of the main bones of contention is state aid, where the UK Government were warned by civil servants in January that provisions in the Northern Ireland protocol could potentially “reach back” into the rest of the UK. It is very strange, therefore, that according to the Financial Times on 14 September, the recent trade agreement with Japan commits the UK to tougher restrictions on state aid than the ones the Government are currently offering to the EU.
If a solution to the state aid issue can be found—the Institute for Government has recently proposed a possible solution—there is every likelihood that compromises on other outstanding issues, such as fisheries, can follow. However, we still have no clarity on what the Government’s aims are, apart from bombastic “sovereignty” slogans, which they continue, tragically, to confuse with UK power. No. 10 apparently wishes to see its discretion to subsidise “pet” projects unfettered by any agreement. Sir Ivan Rogers, the former UK ambassador to the EU, told the Irish Times on 16 September that he thought the Boris Johnson-Dominic Cummings view on state aid would prevail, with no deal the outcome. Perhaps we should hope that the Prime Minister, who was given six months to save his premiership in the Daily Telegraph last week, will decide there is a political premium from even a “thin deal” which, as the Centre for European Reform think tank argues, would at least provide a platform on which to build a more substantial EU-UK relationship going forward. Meanwhile, UK businesses are reduced to reading the tea leaves in trying to decipher what will be the trading environment for them after Christmas with the market which constitutes nearly half of the UK’s trade.
Britons make almost 60 million trips in a normal year into mainland Europe. Next year, will they still enjoy the protection of the European health insurance card, will pet passports still be valid, and will the current extension of UK mobile phone deals to EU countries, which means no roaming charges, still apply? Otherwise, UK citizens will need to take out costly health insurance, travelling with pets will be extremely onerous—with a new four-month process, including having cat or dog blood samples tested at an EU laboratory—and costly mobile phone charges will return. UK travellers will need at least six months’ validity on their passports, and drivers will need one or more of three different types of international driving permit.
The UK imports 50% of its food, with 30% coming from the EU, and the Food and Drink Federation anticipates tariffs of 23% on £35 billion-worth of imports of food. There will be higher prices, lower quality, and less choice.
A large percentage of medical supplies come from the EU, and the Government wrote to suppliers in August advising them to stockpile, as “significant disruption” to trade was likely for six months. Pharmaceutical firms have told the Government that disruption caused by Covid-19 has meant stockpiles have been “used up” and it may not be possible to replenish them in time.
Manufacturing is threatened with tariffs and disruption to Europe-wide supply-chains, with the more than half a million cars exported to the EU last year facing in future a duty of 10%. Road haulage will face a limit on the number of permits, and two-thirds of UK firms will not be able to operate in the EU at all. In finance, many firms either have or are planning to relocate to mainland Europe. Restrictions on EU migrants will make it more difficult for UK businesses to plug their gaps with European workers, and the UK will be unable to return migrants crossing the channel without negotiating new bilateral agreements. It will become illegal for EU servers to send personal data to the UK. Law and intelligence agencies will lose access to pan-European criminal databases, and shared arrest warrants would be limited. In addition to the ending of trade agreements with the EU 27, the UK will lose the benefit of deals that the EU has with up to another 70 countries, except where these have already been renegotiated.
The list of potentially catastrophic consequences of a no-deal Brexit is endless. In Hemingway’s 1926 novel The Sun Also Rises, a character is asked how he went bankrupt. The answer is: “Gradually, and then suddenly.”
My Lords, that was a massive contribution from the noble Lord, Lord Hain, and a tremendous catalogue of the disadvantages that we will face. Monsieur Barnier reflected recently that the demands of the UK so far as concerned the road haulage sector—for this purpose, that includes short-sea shipping—were too close to the existing Common Market rights without meeting any of its obligations. I want to concentrate on road haulage because it is so essential to our economy and so vulnerable to any disruption.
What Monsieur Barnier said should have sounded warning bells, meaning we should prepare ourselves for a no-deal Brexit, particularly in the light of the steadily worsening relations with the EU and the rhetoric emanating from Downing Street, to which the noble Lord, Lord Hain, drew our attention. Business is not prepared for a no-deal Brexit and the likely disruption of supply chains affecting both food and production lines, which are dependent on just-in-time delivery.
Whatever Michael Gove is saying, the effect on the UK economy is potentially calamitous and awful. When the noble Lord, Lord True, replies to the debate, I wonder whether he will be a little less opaque than usual, not brush those real issues aside, and confirm that the Government will have a new freight management system before we leave the EU. That certainly is not the view of the logistics industry, which we heard this morning. Those people were mostly warm supporters of the Government’s wish to leave the EU and feel angry that matters are now in some sort of limbo. Any special permits likely to be available will in no way be sufficient to meet demand. We heard in a debate on Monday that there were bilateral agreements on the way, that there would be more permits, and that there would be a need for further negotiations. None of that bluster, if I can call it that, actually faces up to the fact that we are in a desperate situation.
Since the UK has been involved with Brexit, the EU has been developing a new mobility package, which it published at the end of July and which impacts on freight transport access and access to the profession. Of course, the UK was not a party to those negotiations, but have the Government made any assessment of the impact of the new arrangements on the UK?
Assuming a worst-case scenario now—I am afraid that we have to—enormous lorry parks will be necessary for goods to await clearance. How large will those semi-permanent additions to local landscapes be? How will local planning consent be required to establish them, or will the Government simply ride over local wishes and dump them on unwilling localities that they choose? Will such facilities incorporate places for people to sleep, service lorries, refreshment and trans-shipment facilities? Who will pay for all this? It is a lot of money. In other modes of transport, it is usual for the operator to build his own facilities. Ship operators build their own ports. Train operators build their own stations. Bus operators build their own bus stations. But these facilities are likely to be very large impositions on neighbourhoods. I want to know how they will be policed, as I fear that they will be centres of totally unregulated crime, affecting both goods and people.
Those are a few of the problems on which the House, and more particularly the logistics industry, wants answers.
My Lords, it is a great pleasure to follow the noble Lord, Lord Bradshaw, in this thought-provoking debate; I thank the noble Lord the Chief Whip for finding such a substantial slot for this important Motion at a critical period in the lead-in to the final tableau of the Brexit drama. I also thank the Minister for his time in recent weeks, both virtually and physically, and for the courteous and frank way in which he engages with my committee.
In the period leading up to Sunday 6 September, I had thought that the two interrelated strands of UK-EU discussions implementing the withdrawal agreement and the negotiations on the future relationship were on some sort of glide path to actual landing rather than crashing, albeit that the rhetoric between the parties had become sharp and the temperature had risen somewhat. It was on that day that the rumours of what was in the internal market Bill surfaced and boiling point was reached instantaneously.
Perhaps I could step back and start with the withdrawal agreement and its Ireland/Northern Ireland protocol. The protocol is a masterly fudge which left much to the joint committee structure to resolve. We reported on that in June this year, but I remind the Committee that the protocol consists of two pages of recitals, 19 articles and more than 40 pages of the seven annexes, which are really just lists of legislation.
The essential problem that it sought to address was to maintain the Good Friday agreement absolutely while protecting the EU and UK single markets. The soft recitals contain a number of very comforting paragraphs for the UK including
“DETERMINED that the application of this protocol should impact as little as possible on the everyday life of communities in both Ireland and Northern Ireland”
and later on
“HAVING REGARD to the importance of maintaining the integral place of Northern Ireland in the United Kingdom’s internal market”.
The hard text of the articles suggests, that in the absence of further agreement at the Joint Committee, every EU customs rule and practice will apply on everything moving to or from Great Britain to Northern Ireland or the border in the Irish sea.
We were critical in our June report of what we saw as a lack of early government pace in implementing the withdrawal agreement. It is now our impression that this has been addressed, but still marrying up the aspirations of the recitals with the hard fallback position of the articles has not yet happened. This failure of process, of statecraft, on the part of both parties is also of great concern and will potentially have damaging consequences for all on the island of Ireland.
The withdrawal agreement as a whole contains plenty of dispute resolution mechanisms but, instead of going down this path, the Government now propose to take powers under the internal market Bill to allow them to disapply parts of the protocol. My committee anticipates reporting on these aspects of the internal market Bill in time for its Second Reading in this House, and we have written to the Chancellor of the Duchy of Lancaster asking for clarification on various assertions made by the UK since 6 September and why the dispute resolution mechanisms under the withdrawal agreement are not used. We expect a response at the end of this week.
The debacle on the withdrawal agreement has spilled over into the negotiations on the future relationship with the EU, and it could not be otherwise. After all, Michel Barnier is Maroš Šefčovič’s deputy and alternate on the joint committee on the withdrawal agreement and the interrelation is shown by the simple fact that the deeper any future relationship agreement between the UK and the EU goes, the lighter the burden should be on the withdrawal agreement customs administration. We reported in March this year on the material available on the negotiating positions of the EU and the UK and compared them with the political declaration. The Committee will recall that both sides had moved their positions away from the mutually agreed, but admittedly not legally binding, political declaration.
While the gap looked quite wide in March, the British position was that everything that they were now asking for was precedentially to be found in other EU international agreements. The EU has pushed back on this with various arguments, and I do not want to rehearse them here, save for one comment made to me by a senior EU official this month. He said that the UK had selected the best-in-class precedents on each of the difficult topics. It is, however, greatly to the credit of the two negotiating teams that, despite the very short time period, the additional problems posed by Covid-19 and the non-discussion of some issues due to the EU tactic of parallelism, they got to the point at the start of September where the finish line was within sight, just about, albeit with a small number of the most difficult issues to be resolved.
As I said, my strong impression was of progress at the start of the month. Nothing was tied down—the principle of nothing is agreed until everything is agreed applies—but the key differences between the two sides in terms of the future relationship were boiled down to state aid and fish—difficult, but, one would think, manageable. What the internal market Bill has done is place trust at the centre of the debate. It raised the already high temperature but also took these two separate but linked strands, each of which is difficult in its own right, and combined them into a single strand. It has doubled both the stakes and the difficulty, and has done so in the most public and confrontational way possible. The glide path for this single strand is much harder to discern and, without a bit of calm on both sides, I fear the prospects of a mutually beneficial landing are not good.
We heard much on the progress of the talks from the Minister in his opening, and I thank him for that. He covered the Northern Ireland protocol in his speech and the internal market Bill provisions that have caused so much uproar. My only question for the Minister is: will he explain why the dispute resolution mechanisms in the withdrawal agreement were not a sufficient safety net so that this extra safety net was necessary?
In closing, I note that with so many challenges facing us, surely it is time for some old-fashioned diplomacy to bring the two great democratic sides together.
My Lords, it is a privilege for me to follow the noble Earl, Lord Kinnoull, on whose committee I serve and which—before I joined it, I must hastily add—has done so much to clarify the position in relation to Northern Ireland and other aspects of the negotiation. I thank the Minister for his clear and courteous introduction to this debate.
So many of the points I would have wished to have made have already been made, but I shall take three as briefly as possible. First, on the inclusion of the devolved Governments, I do not believe it is too late, even at this 11th hour, for there to be more involvement of the devolved Governments in the formulation of the final strategy and in the final negotiations. What has happened in the past few days in relation to co-operation on Covid-19 has, without doubt, been beneficial to the whole of the UK. Why not do this in respect of the UK negotiations? It is a sad conclusion to say that what has happened to date is wholly inadequate—as the noble Baroness, Lady Hayter, so eloquently pointed out—judged, as people should be judged, by deeds rather than words.
Secondly, it is important to move forward in a way that produces a good long-term relationship while respecting the sovereignty of the United Kingdom. A positive future relationship with the European Union is, without doubt, in the interests of the UK and throughout the EU. I make one point regarding the development of the law. We live in a world that in my current day-to-day experience is, despite the effects of the pandemic, becoming more global than ever. Online meetings and discussion fora have driven globalisation, dialogue and interaction at a faster and more inclusive pace over the past six months, and I think it is inevitable over the next six months. It is so easy to contribute worldwide without having to travel and yet to make the points powerfully at meetings, conferences and negotiations. Moreover we have seen how data is ever more easily transmitted, which is driving and building an even more valuable market quite apart from progress in digitalisation. This means that the law must develop apace. To date, the UK has exercised a considerable degree of influence in the development of the laws that underpin trade, commerce, including trade in data, and other aspects of the digital economy and our financial and professional services. We are currently leaders, and this is hugely beneficial to the UK. From the new year, we will be on our own. In relative terms we must accept that we are a small-sized player, and in such circumstances our reputation and integrity will be central to our continued ability to punch above our size. Apart from integrity and reputation, we need close working relations in order to drive forward legal development. What matters is that we have in place a good structure for legal development and also regulatory co-operation, supervisory arrangements and the management of data, which are allied to it. The City’s suggestion of a memorandum of understanding is well made and entirely consistent with sovereignty, however you may wish to describe it. Relying on unilateral actions, such as the equivalence decisions, is not the way forward in our globalised world.
Our ability—and this is the third point that I wish to make—to move forward and build our position for the future must be done on good, sound legal foundations. It is a common experience for a lawyer that people disagree about the meaning of agreements, even those that may have been made only a short while before. I was not entirely surprised that there might be disagreements about the meaning of the Northern Ireland protocol or difficulties in working it through, but we agreed it. In such circumstances, what is expected is that the parties try to resolve their disagreements through provisions such as those in the protocol and the withdrawal agreement, and if they cannot resolve it by agreement, they do what litigants always do, and that is use the dispute resolution mechanisms. If a quicker decision were needed than through the mechanisms contemplated in the agreement, then modifications would be proposed. That regularly happens when a dispute arises that needs urgent resolution. I see no reason why the current dispute could not be resolved in a matter of a month or more. If the British Government believe that they are right, why not propose that?
Therefore, it is very difficult to understand why that obviously right course was not followed. However, what is entirely understandable is the resignation of the two expert leading government lawyers, Sir Jonathan Jones and the noble and learned Lord, Lord Keen, who carry the highest degree of respect in the profession and have so expertly advised and helped the Government throughout this period. In following what is required, you uphold the rule of law and you comply with the law. As the Civil Service Code reminds us, complying with the law is an essential aspect of integrity. What you do not do is deliberately break an agreement or threaten it. Many have spoken powerfully about that, and I need say no more about it or about the consequences, but there are due consequences for the areas about which I have spoken.
First, the rule of law, our adherence to it and respect for it, is central to our position in the world and our leadership in the development of the law and those other areas of commerce and trade underpinned by the law: financial and professional services and the digital and data economies. That is central to our future, and we do ourselves enormous damage by pursuing the current course. Secondly, we need agreements with the EU and others for the future. Who wants to deal, or at least deal on good terms, with those who break or threaten to break agreements rather than have recourse to dispute resolution? I very much hope that the Minister will be able to explain, as the noble Earl, Lord Kinnoull, has already asked, why we are not pursuing that course.
My Lords, Germany’s Europe Minister, Michael Roth, is reported this morning as saying:
“We are really really disappointed about the results of the negotiations so far ... Please dear friends in London stop the games. Time is running out.”
Well, Herr Roth is, of course, right in this respect: the clock is ticking in the countdown to our freedom, but he is wide of the mark if he thinks the Government’s tenacity and resolve amount to games. They do not. Thankfully, the Government’s commendable approach is serious and earnest precisely because, as Herr Roth will be acutely aware, the stakes are so high.
His remarks took me back to when I was in Berlin with a parliamentary delegation shortly after the referendum. Two memories in particular stay with me. One is of a member of the UK delegation, with tears in their eyes, telling our opposite numbers in the Bundestag, “I hope you give us a good kicking, so we realise our mistake.” The other memory was of being berated by our German hosts, who said, “How could you do this to us? We thought you were our friends. How could you leave us to foot the bill?” Those are my abiding memories, and I for one am not at all surprised that Herr Roth should be so disappointed or that Germany should be so keen to punish us, as my noble friend Lady Noakes pointed out in her excellent speech. No wonder we are on the naughty step.
For Germany will pay far more. For them, and for the EU, this only underlines why it is so crucial that there must be no reward for daring to step out of line. As I said before, the stakes could not be higher. We are on the threshold of liberty, of growth and of a brighter future outside of the EU, but in co-operation with the EU, Europe and the world and they know it. They are desperate that our freedom is seen to come at a price that deters any other member state from following the courageous example of the UK.
But the EU is not Europe, and Europe is not the EU. The EU will come and go, as all empires do. Europe will remain. While the EU, as an empire that is overreaching itself, cannot afford for Brexit to succeed, Europe cannot afford for it to fail. For though I do not wish for this to happen, if the eurozone implodes, as some commentators predict, if the EU disintegrates under the weight of its own anti-democratic contradictions and if Europe breaks free from the shackles, it is vital that the UK is able to reach out and offer the steadying hand of friendship, stability and economic security that will underpin our future relationship and peace and prosperity in Europe and the wider world.
So I thank the Minister, my noble friend Lord Frost, whom I was so proud to introduce, along with my noble friend Lord Ahmad, to your Lordships’ House only recently and, above all, our brave Prime Minister for their admirable restraint and resolve. To them I say: hold firm, and the best of luck in fighting Britain’s corner in these crucial negotiations.
My Lords, certainly the noble Lord, Lord Shinkwin, has held firm to his own particular views.
It takes two to negotiate and, of course, the EU is not the easiest of negotiating partners. It is excessively legalistic because of the treaties and continental traditions—plus, of course, there is the need to build consensus among 27 countries, which leads to rigidity and delays, as we saw for example with the seven years of negotiations with Canada over a trade deal—but the EU can be relied upon to honour agreements once reached, as used to be the case with us.
We in the UK prided ourselves on our pragmatism. That has now been replaced by dogma and ideology, impaling us on the altar of sovereignty, autonomy and a clean break. No wonder then that any objective observer will readily conclude that there is little to show so far on our negotiations. Is this just yet another example of the gap between promise and delivery so much a feature of the Prime Minister?
Understandably, the emphasis on a trade agreement—plus Covid, of course—has pushed other areas of policy into the shade because of the immediacy, hence the trumpeting of the deal with Japan as a triumph. Yet it is only marginally different to the current position and is relatively small compared with the big prizes of the European Union and United States. It is very clear that negotiations with both the US and the EU have been soured by the Government’s threat to breach international law in the internal market Bill. Is it just posturing? If so, it is very dangerous posturing.
I remind noble Lords of Article 26 of the 1969 Vienna Convention on the Law of Treaties, which is entitled “Pacta sunt servanda” and which states:
“Every treaty in force is binding upon the parties to it and must be performed by them in good faith.”
Further, Article 27 states that no domestic legal provision can protect a party if it breaches the terms of an international agreement, which is surely very germane, and the right response, to the internal market Bill.
On 16 September, in her state of the union address, Frau Ursula von der Leyen, President of the European Union, quoted Mrs Thatcher, saying that breaking a treaty
“would be bad for Britain, bad for our relations with the rest of the world and bad for any future treaty on trade”.
Mrs May spoke in similar terms on Monday.
Surely a stated willingness, readiness or threat to break international law is almost as bad as the act itself. Further, any parliamentary endorsement of the illegality is irrelevant—illegality will remain illegality. I have enormous respect for Bob Neill, in the other place, but I believe he sold himself and his own position too cheaply. Apparently, the Attorney-General, a leading member of the European Research Group, did not seek the advice of leading Treasury counsel but that of three outside lawyers who are all prominent Brexiteers: two law professors and, wait for it, Richard Howell, a barrister who is just out of pupillage. None of the three is on the Attorney-General’s panel. Having put politics before objective legal advice, she deserved her scorching at the recent meeting of the Bar Council and should surely consider her position.
In the early 1970s, I was Parliamentary Private Secretary to Sam Silkin, then Attorney-General. I was also deputy to the noble and learned Lord, Lord Morris. Neither of them would have taken that position, I am sure. Neither would have put a political position before their commitment to the law.
The relevance of this to the negotiations is clear. For the European Union, it will raise questions about our trustworthiness in future deals, as my noble friend Lady Hayter said. For any prospective deal with the US, the position is clear: the Irish lobby is powerful and the US Congress, with its key constitutional role in trade negotiations, has responded with outrage. Surely the Government, who were advised by our embassy, should have anticipated this response.
As a member of your Lordships’ Sub-Committee on Security and Justice, I have witnessed similar neglect adversely affecting our citizens in areas such as consumer protection and criminal and civil justice, including the dangers of losing the European arrest warrant and the damage to family law co-operation. The UK’s new proposal on unaccompanied migrant children has been met with the EU response that their negotiators have no mandate. Surely the Government should have been aware of that.
I conclude with a few observations on foreign and security policy. The EU has shown itself ready to negotiate by publishing a draft agreement on future co-operation in this field on 18 March. Why have the Government chosen not to respond? We have led missions in the past and acted as a bridge between the US and the EU. We have lost EU solidarity, as shown by the Chagos Islands vote, and are largely irrelevant in key issues, such as Nagorno-Karabakh, Ukraine and Belarus. Yet the EU has shown some good will and a willingness to co-operate by bringing us into discussions on sanctions at a pre-adoption stage. Our strategic interests are broadly the same as those of the EU, faced with the Russian threat under “Putin the Indefinite” and with China’s new assertiveness. Do we wish to work together? Have we ruled out foreign policy co-operation?
Finally, Liam Fox used to tell us that trade deals would be easy. After all, we could simply transpose existing EU deals. The reality has proved very different. Ideology rules okay—and we have not missed an opportunity to miss an opportunity.
My Lords, as far back as February 2020, the European Commission laid out its negotiating position, covering general arrangements, values, principles and governance, economic arrangements, trade, level playing field guarantees, fisheries, security arrangements, law enforcement, judicial co-operation in criminal matters, foreign policy, security and defence. Then, in May, the UK published a draft free trade agreement in a series of separate draft agreements covering fisheries, air transport, civil aviation safety, energy, social security co-ordination, civil nuclear, law enforcement and judicial co-operation in criminal matters, the transfer of unaccompanied asylum-seeking children, and readmission of people residing without authorisation.
Between March and September, we have had eight rounds of negotiations. At the end of the eighth round, the EU’s chief negotiator, Michel Barnier, accused the UK of refusing to include indispensable guarantees of fair competition in our future agreement, while requesting access to our market and said that
“the UK has not engaged in a reciprocal way on fundamental EU principles and interests.”
The noble Lord, Lord Frost, the UK’s negotiator, said that the UK had
“consistently made proposals which provide for open and fair competition, on the basis of high standards, in a way which is appropriate to a modern free trade agreement between sovereign and autonomous equals.”
So what if there is no agreement? What if there is a so-called Australia-style agreement whereby we will trade with the EU on WTO terms? The Prime Minister said in early September that a trading agreement like Australia’s
“would be a good outcome for the UK.”
Can the Minister confirm that this is the case? We have of course also had the whole issue of the internal market. In his statement after round eight, Michel Barnier said that:
“The EU remains committed to an ambitious future partnership with the UK. This would clearly be to the benefit of both sides. Nobody should underestimate the practical, economic and social consequences of a ‘no deal’ scenario.”
I speak as president of the CBI, which has been urging both the UK and EU to renew efforts to get a deal. This is essential in order to protect people’s jobs and living standards amid one of the worst recessions in living memory. Time is running out. We have to avoid a cliff edge. This must be the utmost priority for both sides; the UK and the EU cannot afford a no-deal scenario, which would weaken the economies already impaired by the Covid-19 crisis. Business preparations on both sides have not only stalled but have gone backwards. Firms have had to use their stockpiles and reserves—previously built up in the run-up to the threat of no deal last year—to survive the pandemic. There is now next to no capacity to rebuild reserves while directing resources and attention to dealing with the impact of Covid-19 and now a potential second wave of the virus.
Over the last six months we have seen extraordinary levels of ambition, determination and collaboration between businesses and Governments across Europe. These efforts have helped weather the immediate impacts of the Covid-19 pandemic and must be redoubled for the challenges that lie ahead. This same level of determination and creativity is now needed by both the EU and the UK to deliver a Brexit deal for growth.
A deal will have tangible, positive benefits for firms employing thousands of people across Europe in industries such as advanced engineering, manufacturing, green technology and digital and cyber technologies—I could go on. It will also underpin economic recovery on both sides, protecting our younger generation and the future of our public services. Does the Minister agree?
A deal will form a foundation for a strong, growing relationship between the UK and the EU in the future. It will create space for both sides to focus on shared challenges, such as creating jobs, rather than needlessly adding red tape, extra costs and paperwork.
A deal will also be a catalyst to address the global challenges of our time, from tackling climate change at next year’s COP26, which we are going to be privileged to host, to strengthening international institutions, including the WTO, and global co-operation during the UK’s presidency of the G7. It will be crucial for the UK and the EU to work hand in hand to be at the forefront of these issues.
The CBI is committed to working closely with BusinessEurope—which we will continue to be a member of although we have left the European Union—and its sister federations to champion a strong and open Europe on the global stage. In short, the size of the prize is real. Ending years of division and delay by securing an agreement between the EU and the UK will help our economies during the biggest challenge of our generation.
This has been such a turbulent period, not least because of Brexit, but talks are on and the efforts to get a good deal must continue. Business cannot afford anything else. Amid all the noise of the negotiation, businesses in the UK and the EU remain clear that a good deal is essential. Let us not forget that a negotiated outcome is the official position of the UK Government. Can the Minister reassure us about this once again?
An agreement will be the foundation for post-Covid recovery across the continent. It will protect jobs under pressure from the pandemic by duty and quota-free trade, closer customs co-operation and easing the implementation of the Northern Ireland protocol. We must remember that the protocol was the compromise needed to avoid a hard border in Ireland. For Northern Ireland’s businesses and communities it must be implemented in an effective and sustainable way. For that, we need a deal.
A deal will provide a platform on which the UK’s world-beating services industry can continue to trade with its biggest market and stay competitive. It will also be a great fillip for UK exporters, allowing them to focus on R&D, not red tape. Getting a deal requires political leadership and compromise from both sides and is needed urgently in the coming weeks.
As I have said, the reality is that many businesses are still struggling to deal with the fallout from Covid. That is why getting the deal over the line is so important. It means a greater choice for consumers. It means prices of groceries do not rise during a recession. This is vital to help people who are struggling. It will allow businesses to concentrate on helping the Government’s levelling-up agenda. It means building more schools and hospitals, better-quality housing, and growing our economy through the creation of green jobs, and it will be a catalyst for the global challenges of our time. Ultimately, a deal with our biggest trading partner provides a platform on which future trade agreements can be built.
Businesses have shown extraordinary resilience over the previous four years—and over the past six months. We need this deal urgently in the interests of everyone, both in the UK and Europe.
The noble Baroness, Lady Meyer, is not contributing, so I call the noble Lord, Lord Berkeley.
My Lords, I address my remarks this afternoon to the frontier controls and customs arrangements because we have three months to the end of the transition. Many noble Lords have spoken about whether we are going to get a deal but many of the frontier issues will be similar, if not the same, whether we have a deal or not. Businesses should still be ready and still expect the Government in their dealings with them to be open, transparent and inclusive with information and with what has to be done.
As is so often the case in this sphere, we have heard lots of good words from the Government which are mostly, sadly, motherhood and apple pie. We seem to be getting into a big blame game, with the Government seeking to blame business, the EU and the electorate for their own failings. I know that the electorate voted in favour of Brexit, but I do not think they voted in favour of the chaos that we are seeing. As many noble Lords know, the devil is in the detail. It can have a massive adverse effect on business, as many noble Lords have already mentioned. We are not told the detail at the moment, nor even the options. In some of the discussions I have heard, I question whether Ministers themselves actually understand what is needed or listen to their officials who clearly do know.
In the Guardian today there is a report of a letter that the Chancellor of the Duchy of Lancaster wrote to the haulage industry and customers earlier this month —I have a copy of it—saying that we face some 7,000 trucks in a queue in Kent. Mr Gove claims that the cause of the delay is the traders not being ready. That is blaming the traders again. The Secretary of State for the Environment, George Eustice, similarly blamed other people for the delays. After Mr Gove wrote the letter, industry representatives had a meeting last week with him, the Secretary of State for Transport and the noble Lord, Lord Agnew, from the Treasury. They discussed three separate issues: the need for intermediaries, the readiness of systems, and the physical infrastructure. All these are needed, whatever the outcome of the negotiations. I think about 40 people were at the meeting. A report of the meeting said that there was
“frustration over the lack of clarity and too many unanswered questions.”
On intermediaries, questions were asked about
“how the cap on state aid could be lifted and potential use of government loans”.
It was questioned how systems
“could be made ready earlier to allow training and familiarisation to take place”.
Of course, this should have happened many months ago. The Government are blaming the industry for not having 50,000 intermediaries to do it for them. We do not know who is going to pay for it. It is a serious issue. At the port there are quite a few structures required and arrangements. Who is going to pay for them and when are they going to be in position?
Then at the meeting we heard more motherhood and apple pie when the Chancellor of the Duchy of Lancaster was quoted as saying that
“he hoped that the EU would not take a rigid interpretation on all legislation”.
Well, isn’t that lovely? Why should the EU give way on this when we are digging our heels in as hard as we possibly can?
In the end, the Chancellor of the Duchy of Lancaster said, in summing up,
“if businesses haven’t prepared they will suffer against what is a known change”.
Does the Minister know what the “known change” is? Has he told anybody? Has the Chancellor of the Duchy of Lancaster told anybody? It is clearly still a secret.
All the Government talk about now is in the export direction. We have heard very little about what might happen on the French or the continental side apart from the fact that the Government have decided that they will not require all the paperwork to be complete on the incoming direction for six months—but only for certain cargoes. We know that cargoes will not be allowed on to the ferries unless they have all the right paperwork.
It is really wrong that the Government are allowing this to carry on, with George Eustice saying that the queues are down to “slipshod” EU lack of planning. That is not a good way—indeed, it is a very bad way—to conduct negotiations. It is no way to undertake a trade negotiation with our major trading partner. As many noble Lords have said, something like 40% of our exports go to the EU.
I believe that Ministers should know most of the detailed changes that will be required, whatever the outcome, but the Government are failing miserably to share this with businesses so that their systems and their staff can be ready for the changes. Do they really know what has to be done? Should they not be proactive and positive in helping? I am afraid that, if they are not, many businesses will give up and, after a few weeks or months, settle fully on the continent. I hope I am wrong. But I wish the Minister would confirm that the Government will stop blaming businesses, the EU or the coronavirus crisis. It is down to the Government to sort this out.
My Lords, I remind the Committee that the time limit for contributions is a maximum of seven minutes. I call the noble Baroness, Lady D’Souza.
My Lords, despite ministerial denials, we appear to be marching inexorably towards a no-deal Brexit and a consequent reliance on WTO trading rules. There are two issues I wish to put to the Minister. One concerns the potential impact of a reversion to WTO terms of trade, and the other is about reaching a decision on continued participation in the EU Erasmus+ programme.
From the start of the legal process at the end of last year, there was a disconnect between the EU’s mandate to uphold common high standards in areas of state aid, social and employment standards, environmental standards, climate change, relevant tax matters and other regulatory measures and practices, set against the UK’s statement that its
“primary objective … is to ensure we restore our economic and political independence”.
No wonder the negotiations have run into trouble. Apart from the major issues taken up by your Lordships so far—the Irish border, fisheries and state aid—I would like to revisit some of the other consequences of a no-deal departure, which would kick in on 1 January 2021.
The expressed hope that the UK might achieve a Canada-type relationship would not go even half way to resolving the current negotiation sticking points. For a start, the CETA is not, as yet, fully implemented, despite being agreed in 2014 and provisionally in force from 2017. Tariffs on certain food items would remain, requiring lengthy examinations at ports. Furthermore, 53% of all UK imports are from the EU, and 45% of all UK exports go to the EU. Those figures do not compare well with the equivalent Canadian figures of 10.5% and 7.9% respectively.
The Australia-style deal—another “solution” championed by the Government—is essentially a WTO agreement, and would allow the EU to impose punishing tariffs on some goods, such as dairy produce, which in turn would impact badly on British farmers. There is no FTA between the EU and Australia, so it is difficult to understand why the UK Government ever thought this might be a useful model.
The recent removal of some existing EU tariffs by about 20% was, and is, welcome, until it emerges that these concessions refer to items such as pistachios in shells, sewing thread and vacuum flasks—not necessarily key trade items. Nor will WTO rules allow most favoured nation status: any UK trade concessions would have to apply to the rest of the world as well. The 20 or so additional agreements via the EU with countries around the world have not yet been rolled over, further restricting UK trade transactions. Most importantly, in the absence of a trade deal the non-tariff barriers will require all produce standards and safety regulations to be checked at borders.
An exit based on WTO rules would present a huge challenge for the service industries, in that there would be a loss of guaranteed access for bankers, lawyers, musicians and chefs, among other trades. The financial services sector is a huge contributor to national income, estimated at approximately 10% of all tax receipts. Preserving the integrity and reputation of the sector should be an absolute priority, yet there is still no agreement on the legal status of contractual relationships, which in turn affects a whole tranche of SMEs and the job security of up to 2.3 million people who work in the financial services industry. The City of London Corporation has said that even a deal with limited coverage of financial and professional services would be preferable to no deal.
Above all, the current acrimonious nature of negotiations will do nothing to generate a positive future relationship with the EU, which is surely in the interests of each and every household and business in the UK. It is difficult to understand why the Government have remained tranquil about a possible no deal, and are apparently satisfied to engage on WTO terms. The cost of achieving, by 31 December, political and economic freedom from the EU could be very high.
In the political declaration of October 2019, both sides agreed to establish general principles, terms and conditions for the UK’s future participation in EU programmes, including youth, culture and education, and further agreed that this would be subject to the conditions set out in the EU’s own legal instruments establishing such programmes. In February, the UK set out its overall approach, saying it was ready to consider third-country participation in certain EU programmes, and on Erasmus+—the most successful EU exchange programme—that it would consider options on elements of the programme on a time-limited basis. None of the papers or draft legal texts published so far refers to UK participation in Erasmus. As we have heard, the EU published a draft new partnership agreement on Erasmus with the UK in March. However, no detailed information on negotiations is available.
The Government are now apparently considering the option for a domestic alternative to Erasmus. This is despite widespread praise, both within and without the Government, for the programme and its investment in forging international friendships and co-operation. Universities UK calculates that leaving Erasmus could cost the UK up to £243 million a year.
In an Oral Question in June, the noble Baroness, Lady Coussins, questioned the Government’s plan for continued participation. The Minister repeated that while the matter was being discussed no further details would be given. Nor was any leeway allowed to the devolved nations to negotiate their own participation deals. In answer to the question about what possible advantage the UK would gain by leaving Erasmus, the Minister, rather lamely, stated that the Government wished to encourage mobility beyond the 27 EU member states. Continued participation in Erasmus would in no way impede this.
Overall, the lack of transparency and willingness to consult with the many sectors affected is a severe failure. The Government’s overriding priority of escaping any EU controls on any aspect of political, economic and cultural life is not based on sound economic impact assessment. Thus it does not serve the British public now, and it certainly will not serve them in future.
Since the noble Lord, Lord Vaizey of Didcot, will not be contributing to our proceedings this afternoon, I now call the next speaker, the noble Lord, Lord Judd.
My Lords, there are sinister and ugly forces at work in Europe. They evoke too many reminiscences of what happened in the 1930s. One of the reasons why I shall always be sad that we are no longer a member of the European Union is that I believe we should be at the heart of the European community, with those who stand firm for democracy, justice and human rights. We should be strengthening the resolve of Europe, and the people of Europe, to see off these new tendencies.
Not for the first time in this debate, I was greatly cheered by the thoughts of the noble Lord, Lord Bilimoria, who seemed to get it absolutely right. He certainly seemed, if I may say so, to live in the same world that I live in. The first reality of life and politics is the total interdependence of human society. It is there in migration, climate change, health and the virus with which we are now contending. There is no way we can look to the interests of the British people and their well-being without full co-operation with others across the world. What is called for at this stage in our history is statesmanship, wisdom and leadership of that calibre, leading a Britain of which we can all be proud to be a part because of the respect with which it is held in the world because of what it is contributing to the solutions that are necessary.
On the immediate front of our preoccupations this afternoon, we should not in any way allow the importance of Northern Ireland to slip from our priorities. The people and institutions of Northern Ireland have taken the Good Friday agreement and all that followed from it as an opportunity to start building stability and hope for the future. Many people in Northern Ireland—this came out in the referendum—as they determined to try to build a new reality in that part of our country, felt reassured by our membership of the European Union and the other institutions that were there. That is no longer there, so what is terribly important—more than ever—is certainty and trust. I simply do not understand how the present state of uncertainty and double talk can possibly be helpful as the people of Northern Ireland struggle and work to build their future. That is why that issue is crucial, together with the deal.
I conclude with the point that I made earlier. Vocabulary and demeanour are terribly important in leadership and in weighing the place we want to have in influencing world affairs. We want to be seen as a nation that is wise and statesmanlike, not as one that is selfishly and opportunistically playing all sorts of unpredictable games. It is a serious time—this debate re-emphasises that—but I believe that at the centre of our concern for the future is the character and calibre of leadership in this country. It certainly must not fall into the hands of unelected people in No. 10 who have a very unfortunate view—to put it mildly—of what kind of Britain they want.
My Lords, it is a pleasure to follow the noble Lord, Lord Judd, who has reminded us in a timely fashion that the whole idea of the European Union is about more than trade and visiting the continent. His words need to be listened to.
I thank the Government for providing this debate, even if it is overdue. I know and understand that they do not wish to give a running commentary on negotiations, but our citizens and Parliament are entitled to know where we are headed, particularly since there is such a short time until 31 December, and an even shorter time until the Prime Minister’s October deadline.
We started this Parliament with the famous oven-ready deal, which was negotiated, at least to a small extent, by the Prime Minister. That agreement is now enshrined in the withdrawal Act and was accompanied by the political declaration, which was also changed from that negotiated by Mrs May. However, the Prime Minister’s declaration nevertheless contains ambitious aspirations for our future relationship with the EU. The Government should tell us openly and honestly how many of the hopes expressed in the political declaration have now been abandoned. It appears that the security partnership has been set to one side for now, and obviously the concept of a level playing field envisaged for trade agreement has vanished. What else are we not pursuing?
For those who have always wanted no deal or who have been relaxed about its prospect, this may be of no great concern. However, for others, who may have been supportive of Brexit or who, like me, have had to accept the reality of Brexit, the dash for the door and the apparent desire to cut as many of our ties with the EU because it is the EU is unnecessary and undesirable. There is a temptation, to which the Government seem willing to succumb, to blame everything on the EU negotiators. Perhaps we have never understood that the EU is a law and rule-based union, so the negotiator has to stay within his mandate until it is changed by the other 27. Nor do we seem to acknowledge the special position we occupy by geography and more than 40 years of membership. We are not just an ordinary third country. The withdrawal agreement especially and the political declaration are assumed to be settled and binding upon the parties, and there is a presumption that we will see them in the same way. That we do not is evidenced by the Internal Market Bill. Indeed, I say no more than has been said by Sir John Major and Theresa May, who both brought to the office of Prime Minister the dignity and integrity that we expect. They have been supported by other eminent Conservatives from both sides of the Brexit/remain debate.
Although we understand that nothing is agreed until everything is agreed, I urge the Minister to persuade his colleagues in government to let us have some kind of statement setting out what has been discussed to date, what has been agreed in principle and what in the political declaration is no longer an aspiration. Many of the issues are of importance to individuals. If you visit the Government’s website on visiting Europe from 1 January 2021, it tells you, as set out by the noble Lord, Lord Hain—I will not repeat what he said—all the possible problems that you will face as a traveller to Europe post 31 December. I will take one example only, which is the problem you will have trying to take your dog with you. The site advises you that it may take four months to make the arrangements, but we will be out by then. Four months has long since gone. I am told that some matters in the list are for bilateral agreements, but where are we with the 27 on drivers’ licences and disabled people’s blue badges? Which member states have been able to agree the same arrangements? Almost every aspect of the negotiation process gives cause for concern.
We were assured during the passage of the Immigration and Social Security Co-ordination (EU Withdrawal) Bill that EU citizens with settled status and social security rights are safeguarded by the withdrawal agreement and the Act passed by this Parliament, and I have been assured that Clause 5 of that Bill could not be used to change their benefit entitlement unfavourably with EU citizens. I read the Government’s Factsheet 4 on that Bill; it is not easy to read and seems to have a number of perhaps unintended ambiguities. It says that the Bill contains a power to
“amend the retained EU social security co-ordination rules and deliver policy changes at the end of the transition period.”
It says that the SSC regulations may be changed and modified by “an appropriate authority”, and that
“The EU (Withdrawal Agreement) Act 2020 establishes a cohort of citizens to whom the EU’s current social security co-ordination rules will continue to apply after the end of the transition period, whether or not a future relationship … is agreed”.
However, it says that changes to these rules will be made only under the Bill and
“will not be applied to this group for as long as they remain in scope of the Withdrawal Agreement.”
What, in the view of the Government, does that mean? We have already seen that they have read certain agreements in their own way when it did not actually suit. The factsheet says:
“The government would require clause 5 to repeal those areas of the retained regulations not covered in a reciprocal agreement with the EU.”
So where are we on no deal? These are all matters where clarity, openness and honesty are needed. I pose the question again: can Clause 5 of that Bill, in any circumstances at all, be used to leave EU citizens with settled status in a less-favourable situation than UK citizens?
It is not easy to have trust in the Government in the light of their abandonment of the aspirations of the political declaration signed by the Prime Minister, either in ignorance or with the notion that “Well, it’ll all be all right, and we can change it if we desire it.” I wish that we had stayed with the words of the political declaration, where we were
“determined to work together to safeguard the rules-based international order, the rule of law and promotion of democracy, and high standards of free and fair trade and workers’ rights”,
and many other things. In that position we would have established a broad, deep and flexible partnership. That is what we should have with our near neighbours and friends.
My Lords, it is always a pleasure to follow the noble Lord, Lord Bowness.
I hope that the negotiations succeed and I am glad that Michel Barnier is in London today to push them along. I cannot believe that either side would willingly allow them to fail. For the Government to do so, and to heap more difficulties on an economy already reeling from Covid-19, would be the height of folly. After the ferocious blame game that would surely follow, the more sober commentators and historians would blame both sides for a massive failure of statesmanship—surely not the legacy that any Prime Minister would seek.
There are of course difficulties still to be overcome, particularly, though of course not exclusively, Ireland. For many of us, even before the referendum, Ireland has always seemed the most difficult issue of all. That is why the EU Committee’s first report after the referendum, which I launched at a press conference in Dublin, was about Ireland. The dilemma is simple: you can have a border between the north and the south, risking violence and intimidation with which a depleted Northern Ireland police force would have difficulty dealing—for which, let there be no doubt about this, both sides would be blamed—or you can have a border between Great Britain and Northern Ireland, which would damage the integrity of the United Kingdom. Let us hope that the keenest minds in Whitehall are working with their Irish counterparts and the EU to find a way through. I confess that I cannot easily see it. However, to do anything to jeopardise the Good Friday agreement would be folly.
The worst possible course would be to go back on a treaty that the Government signed with much aplomb less than a year ago and, in doing so, to break international law. That would not solve the problem of the Irish border, but threatening to break international law, and saying quite openly in the House of Commons that that is the Government’s intention, raises an issue far larger than Brexit, and no midnight compromise would make any difference to that. It is the threat to break international law because it happens to suit us that puts us on the same level as countries that we have sought and will seek to influence. Such influence relies on trust, and it is trust that is vanishing. Threatening to break international law does nothing to advance Brexit but it seriously damages our pretensions to branch out beyond Brexit and find an influential role as global Britain—a real and depressing double whammy.
My Lords, on the basis that it is never too late to avoid making a bad decision, I want to set out what I think should be the Prime Minister’s guest speech to the European Council in mid-October:
“As leader of the UK, I have been having a think about the future. I have not so much changed my mind as reverted to my original views when I said:
‘We are, and we will remain, a paid-up, valued, participating member of the single market. Under no circumstances, in my view, will a British Government adjust that position.’
As I said before the referendum:
‘I would vote to stay in the single market. I’m in favour of the single market.’
It is not true that only in 2019 I understood the meaning of the single market. I now have the knowledge and experience that leads me to want to avoid damage to my country, its stability, economy and culture, by simply allowing the current negotiations to linger on into no deal. There are a host of issues that are very damaging, and I am going to refer to a few of them.
“Our energy security will be put at risk. I cannot possibly preside over power cuts to gas and electricity while leaving the EU’s internal energy market. If the UK were a member of EFTA or the EEA then we could have had a Norway-type energy arrangement, but my predecessor ruled out such membership.
“I have only recently been made aware of the importance of the chemical industry. I had no idea that the UK uses over 21,000 substances that are registered for safety under the EU-wide chemical regulation system. Only around 5,000 of those are registered in the UK; the others, the great majority, are under the control of the EU. The market is huge in terms of exports from the UK to the EU. I do not think we can take the risk of less safe chemicals being dumped on the UK.
“Furthermore, I had never heard of ADNS, RASFF, EASIN NOTSYS or EUROPHYT. I have asked my advisers why not, since these are so valuable to UK citizens and the economy. ADNS is the Animal Disease Notification System, which registers and documents the development of infectious animal diseases. RASFF is the Rapid Alert System for Food and Feed, which enables swift and timely exchanges of information on health risks. Only EU members, along with EFTA and Switzerland, can be members. Approximately 10 alerts per day are issued. RASFF came into being only in our time as an EU member so there is no previous system for us to fall back on. The other two systems involve alien species and plant health notifications, which are both highly important. Witnesses to Select Committees in the UK Parliament such as vets and the Agriculture and Horticulture Development Board said that they were in favour of the UK remaining a member of these systems, which give instant access to information. We cannot do that with no deal, thereby putting the UK at risk.
“I have woken up to the fact that no deal will lead to some real problems, such as a prolonged period of uncertainty, which we have had far too much of already. Half of UK export goods will face disruption, and there will be a reduction in the safety of UK citizens by leaving the EU arrest warrant system. No one explained to me that leaving with no deal means that future negotiations with the EU will be outside the Article 50 framework, meaning they will be much more difficult. If the disruption were prolonged, it is likely that in January and February next year there would be shortages of food in the UK. While residency rights are to be protected—and we have all agreed that—UK expats will lose their right to have bank accounts in the UK. This is a disaster.
“No deal will not bring Brexit to an end. It could go on for a decade, as warned in the UK Government Command Paper 9216 on the process of withdrawing from the EU, which I had not seen until now. The holy grail of the world trade terms would mean the UK economy growing more slowly. After Covid, I cannot possibly countenance this. Therefore, I say to my colleagues—still colleagues, EU Council members—that I will not put the unity of the UK union at risk or the safety of the population and the economy in a danger zone. Therefore, I request a further extension of the transition period of two years for the United Kingdom to enter into meaningful arrangements to continue membership of the single market and the customs union. If that requires rejoining EFTA, we will willingly come to a mutual agreement.”
That is the substance of the speech that the Prime Minister should make.
The noble Baroness, Lady McIntosh of Pickering, is not with us this afternoon. I therefore call the noble Viscount, Lord Waverley.
The noble Lord, Lord Rooker, is always a hard act to follow. The Minister saying that life is “better understood backwards” reminds me of the Irishman who, when asked for directions, replied, “If I were you, I would not be starting from here.”
We should have exercised our minds on EU negotiating strategy four years ago. Positions appear, regrettably—from afar anyway—to be well entrenched, with now limited manoeuvrability. Fighting one’s corner on a principle is coming to an end, with the direction of travel and endgame becoming clear. It seems probable that we know where we are going to end up; doomsday scenarios will have to be replaced with innovative solutions in the national interest. That does not mean that much does not remain to be done.
I wish to address two specifics: trade policy and relationship building. I start at the outset with a question to the Government, and I would be grateful if the Minister would undertake to write with a considered response and place a copy in the Library. Simply, what is the UK’s trade policy? Many around our country are deeply concerned on that lack of clarity. I would welcome a considered response. My remarks should be perceived not as negative but rather, I hope, as attempting to be constructive. This applies equally to a newly formed APPG this week for trade and export promotion, which I have the honour to co-chair. The first three buckets under consideration are veering towards trade policy, trade finance and trade export promotion, addressing—as an example—SME export strategy for new FTAs. We look forward to the opportunity to engage with government in all these matters. Endeavour was made to ensure that representatives from all quarters of the union are serving officers.
It appears that we have launched into negotiations with some of our largest trading partners, the EU, the United States and Japan, without a clear position on what is wanted to be achieved—and, specifically, what people wish for, for or from across the European Union. It should be acknowledged also that, within the private sector, unions, consumers and civil society are all equal stakeholders in the UK’s future. That the mantra is to deliver and get Brexit done is clear, but at what cost? I advocate a retrenching exercise, bringing together all the disparate bubbles that exist in our country—industry representatives and multipliers—to sort ourselves out in advance, knowing all that all hearts and minds are behind an implementation strategy. That should include government looking closely at what its principal functions are and focus on delivery of them, recognising the strengths of the private sector as paramount, and have that firmly at the policy table. Government should focus on where it adds value, not competing and undermining the private sector. In a word, we need a more inclusive process in the decision-making process.
The time has come to review what the role of government is in providing trade support. The private sector has long been undermined by heavily subsidised services when it can in many cases deliver the job better. We are also now faced with Henry VIII powers in the Trade Bill with clauses that would feel more at home somewhere between Russia and China. No serious independent trading nation delivers trade policy and support in this way.
To date, beyond the two substantive deals with Switzerland and Japan, the remainder are continuity deals to avoid disruption. They will all need to be negotiated as proper deals at some point. We need a strategy on trade in services through every trade negotiation, whether bilateral or multilateral. We need a trade strategy that reflects our obligations to climate and sustainable development goals. We need a legal reform programme that unlocks growth and removes barriers to digital trade. We need action to tackle the growing trade finance gap, which has doubled during Covid to $5 trillion. We need a strategy that invests in our Commonwealth relations and bridges the gap between developed and developing economies, while articulating what we want in trade in services, which accounts for 80% of our economy. A plan for what we want at multilateral level and how to use bilateral negotiations to achieve that is also urgently required. It is not as though our future is about just doing trade deals. It is about having a more inclusive decision-making process so that deals that are done succeed and have better long-term outcomes for everyone.
Public trust must be the centre of rebuilding in trade, and Parliament must play a critical role in scrutinising the process and ensuring that everyone’s voices are heard. We must come to terms with the fact that we are no longer part of the three big trading blocs, but we can play to that as a strength by being an influencer in the next tier with the likes of Japan, Australia and Singapore and a broker between developed and developing nations and between the large blocs advocating for pragmatic process on trade liberalisation, as a country that stands for the rule of law, best practice and high standards. We can no longer be woolly about these things. We need to regroup, get the right strategy in place that upholds the values for which we stand, and from that point execute a clear negotiating position.
My Lords, I agree with so much of what colleagues have said today that I do not want to repeat it. I shall just emphasise that I accept the reality of Brexit and want to see the best possible deal negotiated with our European friends. However, overarching this, we have to ask ourselves a much bigger question, and this is what I would like the noble Lord, Lord True, to address in his conclusions. What do we envisage as the relationship between the EU and the UK in 10 years’ time? Where are we going?
At the moment it seems to me that the Prime Minister has to resolve in his mind where he is. He seems torn between a Churchillian sense of Britain’s role in the world and a desire to make populist, semi-Trumpian appeals to his electoral base. He has got to resolve that in his mind. I was very interested that it was said that Mr Johnson took as some of his holiday reading Brendan Simms’ book on Europe. As I understand Professor Simms’ argument, it is that Britain has for centuries been inextricably bound up with the future of Europe. He is supportive of Europe’s efforts to unite to heal its century-long divisions but he argues that it is legitimate for Britain not to want to be part of that because of the unique circumstances of our history.
I do not believe that argument, but there are two propositions there that I would like to hear the Government accept fully. The first is that our future is inextricably bound up with the European continent, both in economics and security, and in our attitudes to the rest of the world, our values and our interests. The second is that we actually want the European Union to be a success. The Government should say that. They should reject the view that Michael Gove put forward in the referendum campaign, that Brexit would somehow be the prelude to the breakup of the European Union. The Government should also support further steps towards European integration. The success of Europe—[Inaudible]—to accept that point of view.
It seems to me that on many of the big questions we take a much more European than American view of the world. Take, for example, climate change, Iran, our attitude to Israeli annexation of the Occupied Territories, sanctions against autocrats, and even a reset of the Chinese relationship that does not result in the creation of a new cold war. Many of us, of course, hope that Mr Trump will be defeated in November. But my forecast is that if we have a President Biden, his first instinct in relation to Europe will be to repair relations with Germany. Instead of feeling left out of our special relationship, the UK should welcome that, because it is what Europe needs.
We must have a constructive attitude towards Europe, and we must demonstrate it in everything we do. That is true of the security relationship. The Government will not tell us where the negotiations are going on that. I do not think that that bodes well for them. But if, after a couple of years, we discover that where we are on security represents a significant detriment compared with where we are today, will the Government commit to have a rethink, and think about a new security treaty with the European Union in which we are prepared to recognise the need for some common judicial order, if we are to have deep security co-operation?
Similarly, on the economy, one of the great puzzles about the present rows is that, yes, we are having this enormous row about state aid—but for what purpose? Is it seriously suggested that having freedom on state aid is a bigger benefit to Brexit Britain than the avoidance of tariffs and quotas at our borders? That is a ludicrous proposition. What is even more ludicrous is that the Government cannot even tell the EU what they want that state aid freedom for. We talk about divergence but there is no analysis to underpin where we want to diverge, so the EU is bound to be suspicious of our motives.
In the present situation we must put effort into avoiding a catastrophic breakdown and try to rebuild a positive relationship with our partners step by step. We should welcome the future track of deeper European integration, and recognise that what happens in Europe is as decisive for the UK’s future when we are outside the EU as it was when we were inside.
My Lords, I was delighted to hear the noble Lord, Lord Anderson, refer to the 1969 Vienna Convention on the Law of Treaties because I believe it will have a profound effect on the final resolution of our recovery of sovereignty on a number of issues. I would like to read an extract from Article 53 of the convention. It states:
“A treaty is void if, at the time of its conclusion, it conflicts with a peremptory norm of general international law … from which no derogation is permitted and which can be modified only by a subsequent norm of general international law having the same character.”
I suggest that that is a convenient way out for us. It avoids the confrontation of having to argue to take back areas of our sovereignty which are not lawfully given by Europe. We can effectively just wait for the European partner to initiate its own action—under what it sees is available to it under that convention—to try to force it on us. In that case it will have to revert to a plea to the bar of world opinion by going to the United Nations. Good luck to it. I do not think it will succeed on much. I think we have a soft way out that we should not overlook.
Everything else I want to say is about sovereignty issues. The principal concern when the vote was taken was the recovery of sovereignty. Of course, the European Union’s acquis communautaire—or ratchet mechanism—is steered towards ever-closer union. It has directly encroached on our sovereignty on so many issues in a manner not necessarily understood and foreseen at the completion of the treaty of Lisbon.
I have 13 sovereignty concerns that I wish to see resolved. That is too many to cover this afternoon, but I will try to go through eight of the most important ones. On 28 January, I obtained an Answer to a Written Question which assured me that there was no intention whatever for Britain to enter into the European defence union nor to forsake any of our Five Eyes capability to Europe. I was very pleased to get the answer saying, “You are right. Nothing is intended.”
Since that time, an eight-minute film has been put out by the European Union. It is easily available on a video link. It shows what the EU considers to be the celebration in Bosnia-Herzegovina of the first meeting of the armed forces of the European defence union. It starts with the downloading of an RAF jet containing 200 members of the Parachute Regiment. The commentary says they are accompanied by 30 members of Special Forces, who I take to be the SAS. There is then a march past, behind the European flag, in front of a saluting base, and a Jeep is pulling a platform on which are the 27 flags of the European defence union, including the union jack. I want further reassurance that we are not part of the European defence union. That is hugely important.
That leads to my second point. All our defence forces have to be under direct oath of loyalty to our sovereign. The European defence union requires a direct line of commitment to Brussels. We cannot have that situation. It would get us straight into the issue of whether we are participating in a standing army, which has been strictly prohibited since the trial of Charles I. We cannot possibly encumber our sovereign with the burden and embarrassment of having to contend with that in the latter stages of her reign. This is a disgrace. Those issues are paramount and we must have a definitive statement on them.
Throughout the past three or four months, we have been frozen as to the defence contracts we can engage in as Europe is still insisting that, as part of the go-forward arrangements, we will use only the authorised European defence production capability, which includes its boatyards, its tank capacity and everything else. It has already allocated to Krups the order for the first 50 of the new key Type 51 frigates, which are very important to us for our own coastal defences, and we are therefore prohibited from placing the order for the remaining 30 or so which we need for ourselves.
Similarly, the most important vessel required for the British Navy at this time is the replacement for the fleet auxiliary. The original one has been sold off to the Far East to be turned into razor blades—I am sure it was a good price—and we now have a situation where we cannot put out an order for the new form of fleet auxiliary, without which our carriers are effectively port-bound. These issues really need to be resolved, and we need clear direction on them.
The fisheries have been talked of much, and they are a major issue, but I wonder if your Lordships know just how bad the situation is in certain places. I have a direct and particular interest in Bridport bay, and the situation there is rather like a war zone. The trawlers going in are of what is called the wedge variety, which means they are flat-bottomed, and they are used to scrape up the bottom of the sea. As a result, they have destroyed the entire spawning and breeding capability of the Bridport area for the future. They have encroached so far upon the beach that they have undermined the sands adjacent to the cliffs, so the cliffs are crumbling, and this is now the worst area of crumbling in the country. It is like a war zone, and it is quite unfair on the local community. This is not fishing rights; this is absolute aggressive intrusion.
If the exercise is correct, that we sent 200 paratroopers to participate in the jollification in Bosnia about the creation of the EDU, it was also significant that it was said in the commentary all to be under the direct command and control of the European development union, at the head office of the EU. I have been sent fortuitously, by an anonymous person, a complete set of the command and control procedures for the European defence union, and it is fascinating. If you are a corps of armed soldiers and you have occasion to take a defensive situation, or even fire a round, you are then not allowed to reload or fire another round until you have been through 16 levels of consent, up to Ms von der Leyen herself, for consent to reload and shoot—
My Lords, I have to confess that when I first had sight of this Motion coming from the Government, I wondered why as it clearly focuses attention on an aspect of the Government’s performance that leaves so much to be desired. I thank the Minister for his explanation today, but I think lots of questions need to be put, and answers need to be given.
I regard Brexit as a social and economic disaster for the UK, and in particular for Northern Ireland, but I accept that the UK has left and that the exit, however shambolic, will be completed by the end of the year, so the remarks I make here are not rerunning the Brexit debate. They are about the Government’s approach to the negotiations, which has been dreadful from the very start.
We set out with former Prime Minister May’s assertion that “Brexit means Brexit”, without any further elucidation. Contrastingly, the EU made its three requirements clear and patiently asked the UK Government to outline the kind of Brexit they wanted to negotiate, but it got no clear answer. Instead we have had the chaos of hard Brexit or soft Brexit, in the customs union or not in the customs union, backstop or no backstop, ERG and even a general election. We had a Brexit Secretary who did not like going to meetings and a Foreign Secretary who likened our negotiating partners to the Soviet Union.
Then we had a year of farce in the other place while the EU waited patiently, allowing more time for the UK Government to get their act together. Eventually we reached a withdrawal agreement which, along with the Northern Ireland protocol, settled the most vexed matter of all: the future of the EU-UK customs border. Then only in February this year, as the pandemic was starting to break around Europe, the UK Government finally said that they wanted a Canada-type trade deal.
Since that time, the UK Government’s approach to negotiating the future relationship with the EU has been characterised by bluster, brinkmanship and, I am sad to say, bad faith. There is a refusal to accept that along with the obvious benefits of the free trade agreement, which the EU actually wants to give us, we have to accept some responsibilities. Instead the Government want all of the freedoms and none of the obligations.
The negotiating strategy is based on “They need us as much as we need them”—surely one of the greatest untruths ever peddled in this country. With the introduction of the United Kingdom Internal Market Bill and some of the Prime Minister’s own recent utterances, the Government have taken that bluster, brinkmanship and bad-faith approach to a new level. Imagine legislating to disapply the withdrawal agreement while breaking international law in the process; ridiculously accusing the EU of bad faith when it is the other way around; ludicrously claiming that the purpose of the Bill is to defend the Good Friday agreement, when it threatens to do the exact opposite; and simultaneously grabbing power back from the devolved Administrations without their consent.
That is not all: while the Government’s approach has seriously damaged the prospects of a deal with the EU, we should remember that any deal with Mr Barnier has to get through an increasingly agitated European Parliament and EU 27, not to mention the warnings from Joe Biden and Nancy Pelosi about a US trade deal and the unnecessary damage to the UK’s relationship with Dublin.
This is doing real damage. Businesses in Northern Ireland, including hauliers, while apprehensive about new customs impositions, were satisfied that with the Northern Ireland protocol they could at last plan ahead. That has now been thrown into doubt. Only yesterday the Northern Ireland Assembly backed a Motion brought by my colleagues that roundly condemned the Government’s approach to the EU negotiations. Maybe the Minister could indicate what progress has been made on the deal relating to hauliers and indeed to fisheries? I think of both the Irish Government and the UK Government having jurisdiction in the Irish Sea. Will they be concluded soon? How will the Government protect our economy and society if there is no deal? How will they protect our devolution settlements?
Perhaps most ridiculous of all was the scene of Boris Johnson in the other place conjuring up fantastical images of the completely fictional threat of an EU blockade of UK food supplies, a nonsense that was brilliantly exposed by the colleague of the noble Baroness, Lady Hayter, Ed Miliband. Unfortunately, the PM still has to clown around with jokey notions of exports of Devon clotted cream being blockaded by the EU.
I am afraid for me and for the people of Northern Ireland. This has gone too far. We want to see a deal. We want to see those intricate sets of relationships that we have on the island of Ireland between north and south, within the north and between Ireland and Britain, as captured in the Good Friday agreement, protected and enhanced. We want no further nonsense such as we have seen espoused by the British Government. I hope the Minister can provide some answers today to those vexing questions on that vexing issue, because there was no doubt that the protocol provided an answer to that most vexed question of the border.
Since the noble Lord, Lord Loomba, is not contributing this afternoon, I call the next speaker, the noble Lord, Lord Wei.
My Lords, I want to say thanks to many of those who have contributed to this debate. I declare my interest as in the register.
There have been many speakers already, so I hope I do not have to take up all my time. I definitely do not want to repeat many of the excellent statements and comments that have been made so far. I am probably in a minority in this debate by wanting to actually congratulate the Government on the negotiations in a very tough situation, not least with Covid, the lockdown and all that is going on in the world, especially given all the activity of the last few years and the difficulties that we have had.
Ultimately, as other speakers and my noble friend the Minister have said, we have to negotiate from a position of safeguarding Britain’s sovereignty. That is the reason we are leaving the European Union. There has been a perception and perhaps a reality—sometimes it is both—that we have not always had full sovereignty over our own affairs. If you look at it through that lens rather than just requiring stability at all costs as we move into the next year, whether politically in terms of Northern Ireland or for economic reasons for our businesses and so on, we can see that there are many people in this country who voted to leave and who are willing to accept whatever pain may take place as we exit. That is because the issue of sovereignty is important.
I wish that I did not have to say this, but having listened to some of the remarks from other Peers, I thought that as a Parliament, we have made a vow to the Queen and to this country. I am therefore disappointed, quite frankly. Sometimes I feel like we are listening to opinions that sound so pro-European that they ought to be coming from the other side of the negotiating table rather than thinking about what we as a country really need. I accept that we need to have positive relations with Europe, but I feel that the Government have been doing their best against a very belligerent negotiating partner who, in my view, has not always played fairly.
Some have argued, and I would not disagree with them, that we have grounds to say that the withdrawal agreement has been violated even because of the way that we have sequenced the negotiations in Europe’s favour over the past few years. The discussion about fisheries has been made more important than other matters that are critical to the future of our relations with Europe. Again, in my view, that shows a high degree of bad faith, so I do not agree that the Government are necessarily the villain here. I do not think that that is generally the case because there is much to say about Europe’s behaviour.
On that note, I would like to ask my noble friend the Minister whether, when it comes to the negotiations, we are looking at other alternatives to just hoping that we are going to get a reasonable agreement or no deal. As we look forward to the future relationship with Europe, is it better, as other Ministers have mentioned, to work on other agreements, even in an Australian scenario such as the CPTPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, so that at some point we can come back to these negotiations as a more equal partner with a sizeable bloc to negotiate with rather than being treated like a minor counterpart?
I have another question, having observed the behaviour of the European negotiators. Do we need to build an economy that is more resilient because there is no guarantee that, at a future date, Europe might not seek to place demands on us that might affect our sovereignty again? For example, as a country we are strong in areas such as intellectual property, licensing and so on. These are things that are less impacted by tariffs and perhaps by certain regulations. If we can build a set of industries in the future that are all about spreading our knowledge with partners in other countries, maybe we will be less impacted by the rising protectionism that we are seeing both in Europe and around the world. Even our exporting expertise has value across the world in terms of raising the knowledge base in other countries. Could Britain be not just global but also a source of knowledge by building an even greater knowledge economy in the future?
Finally, I want to ask the Minister about what we are doing in terms of taking this opportunity. Sometimes, when you are up against a wall, whether in terms of these negotiations and we could say the same about the Covid situation, that can drive innovation. You can say, “We have these limitations.” Northern Ireland is the classic example. We have to try to fit the regulations of multiple jurisdictions.
We have talked before about the power of technology, and blockchain especially, to rewire our supply chains, so that with free ports and more generally in our relationships—not only with Europe but with multiple FTA partners—we can find ways in which to actually thrive in this world and benefit from being able to sit between different jurisdictions, rather than being dictated to, whether by the US, China or Europe, in what we do. It is about trying to find a way to work with multiple systems, to be what we have always been: a trading nation that has a powerful and seemingly neutral legal and regulatory framework that allows us to work with the best of those who want to work with us around the world.
What thinking has been done on this? From what I can see, as much as I and others would hope that we can get a deal—and the chances of going into an Australian WTO situation are high—what are we going to do as we come out of that? Negotiation with Europe will not stop there: we still have this set of partners that we have to work with. If they continue to show bad faith, even in that situation, do we need to build a set of negotiating positions—in our economy, our regulations and our technology—in such a way that we can be in a strong position to be an equal partner in future negotiations?
My Lords, I thank my noble friend the Minister for giving your Lordships a chance to discuss the Government’s approach to the negotiations with the EU, of which the eighth round has recently completed. Like my noble friend Lord Wei, I believe that the House should offer its strong support to the Government at this delicate stage in negotiations. In spite of the hype and noise made by certain newspapers, especially those of a remain disposition, I believe that the negotiations are being conducted in a more constructive mode than some would have us believe.
My noble friend Lord Frost stated after the last round of negotiations that he and his team have been consistently clear that they want to find a modern free trade agreement between sovereign and autonomous equals that provides for open and fair competition. This does not mean, as Monsieur Barnier still insists, that we must commit to EU standards on social, environmental, labour and climate regulations. He complains that there are too many uncertainties about the UK’s SPS regime, which we debated yesterday in your Lordships’ House. It is unfortunate that noble Lords opposite decided to reinstate amendments previously rejected in another place to commit to retain our existing rules on animal welfare and food production standards. Your Lordships also approved another amendment which, as my noble friend Lord Taylor of Holbeach, who speaks with enormous experience in these matters, said, would make it impossible for farmers to control noxious and persistent weeds and fungal infections on his farm.
Monsieur Barnier wants us to commit to maintain the EU ban on the import of hormone-treated beef. To read the Daily Mail, you would not know that the reason the WTO found that the EU ban on this violates its SPS rules is that it is not based on sound science and that levels of hormones as a result of the treatment are inconsequential. A 3 gram serving of hormone-treated beef produced 0.85 units of oestradiol, whereas the same serving of eggs produced 0.94 units.
During my banking career, I established many relationships with Japanese companies, including a life sciences company that is a major investor in this country and in several EU states. The chief executive of that company told me that he was not best pleased when Brexit came along because he had to spend $7 million on duplicating licences and strengthening his network of companies in Europe. He has now told me that he expects an upside of Brexit: that we should abandon the very prescriptive and cumbersome style of EU regulation and revert to a style which we used to apply, and which is still applied in common-law countries such as the United States and Australia. If we do that, he thinks that the United Kingdom will remain the best country in the world in which a life sciences company like his can research, innovate and develop new products.
That inevitably means that we should diverge from EU regulation, as we must no longer allow the precautionary principle to be applied to a disproportionate extent. Its effects are counterproductive and, over time, increase the risks to people’s health and the environment by delaying or preventing the development and use of beneficial new products. Can my noble friend the Minister confirm that the statements often made by government spokesmen that we will retain our high standards in agricultural and environmental matters do not mean that we will maintain EU-style cumbersome rules in doing so?
I was surprised to hear the noble Lord, Lord Liddle, argue that we are more like our European friends than our American cousins—I do in fact have American cousins. Our strength has been, and is, that we understand both well.
We will soon be debating the internal market Bill in your Lordships’ House. I welcome the Government’s agreement to provide a parliamentary lock on the use of powers which are held to conflict with the Irish protocol to the withdrawal agreement. However, there are ambiguities in the withdrawal agreement that need clarification. The EU’s interpretation would also be in breach of the treaty of union between Great Britain and Ireland of 1800. The Irish protocol also sets out the clear principle that Northern Ireland is part of the customs territory of the UK, so goods should be allowed to flow from Great Britain to Northern Ireland without tariffs. Joint agreement with the EU on goods that are at risk of crossing the Irish border is clearly necessary. It was unhelpful of Mr Šefčovič to react so strongly. How can he argue that the proposal has damaged the Belfast or Good Friday agreement? The introduction of border formalities such as the EU wants to see would clearly cause huge damage to the agreement, and it is disingenuous of the EU to fail to recognise that.
Further, does my noble friend the Minister know why the EU did not punish Germany over its dispute over the legality of the European Central Bank’s bond-buying programme? In fact, the EU has been quite silent over this issue, which contrasts with its feigned outrage over the internal market Bill. Everybody knows that we are negotiating to leave the EU and enter into a free trade agreement as a sovereign nation. The Prime Minister has been consistent from the time he signed the withdrawal agreement that we will not have a substantive border in the Irish Sea, so who could be surprised at this? I do not believe that this matter will lead our present and prospective trading partners to consider the UK to be a dishonest and unreliable partner.
Of course, it may have been a mistake to agree to the EU’s insistence that we should negotiate the terms of withdrawal before our future relationship. Does my noble friend not agree that this was also a breach of international law, because Article 50 of the Lisbon treaty clearly states that the terms of withdrawal shall be negotiated against the background of the future relationship? It is now so clear that it was quite wrong not to agree both the terms of withdrawal and our future relationship at the same time. Perhaps we might not have needed to agree to give to the EU the whole of our share of the retained earnings of the European Investment Bank, to mention but one of the several points where we have yielded to unreasonable EU requests.
I look forward to the Minister’s winding-up speech.
My Lords, when he was electioneering back in December last year, the Prime Minister promised that:
“We have an oven ready deal, put it in the microwave as soon as we get back after the election on Friday 12th December and get it done.”
I know that rash promises are sometimes made before elections—indeed, they are sometimes made after elections; the “world-beating” test and trace system comes to mind—but today, we are discussing the UK’s approach to negotiations with the EU. Can the Minister say what the Government’s approach to that oven-ready deal has been? Did it ever exist? The withdrawal agreement was a framework, though not a perfect one, that is now being torn up, but the oven-ready deal that electioneering led people to expect is not in sight. The Government’s preparations for leaving the EU are about as close to oven-ready as the turkey that has just been hatched.
Others, most notably the noble Lord, Lord Judd, reminded us that the EU is about far more than trade. I accept that we have left the EU; now what we need is a good deal. Trade deals are never easy to negotiate but it is clear that a deal with the EU is what we need most. In 2018, 49% of our trade was with the EU. It is potentially great news that we have concluded a trade deal with Japan, but Japan accounts for just 2% of our trade and we do not yet know the details of that deal. There are questions over quite what we have given up, particularly on state aid. I find it incomprehensible that a Conservative Government should be prepared to risk our future relationship with our major trading partner over the issue of state aid. I would be grateful if the Minister could tell the House what state aid the Government are so desperate to provide that they are prepared to sacrifice such a crucial relationship.
As the noble Lord, Lord Berkeley, pointed out earlier, we learned this week that if we leave without a deal there could be 7,000 trucks piling up outside Dover, causing chaos and delaying deliveries by up to two days. It seems now that there is even to be a border around Kent. Michael Gove said this afternoon in the Commons that there would be a “Kent permit” for all lorries that needed to enter the county and without such a permit they would not be allowed in. Last week we learned that Logistics UK—formerly the Freight Transport Association—was told that the Government’s smart freight system, designed to reduce the risk of cargo delays, would still be in “testing mode” in January. Well, at least it has been traced.
It turns out that life outside the EU is harder to organise than this Government appear to have imagined. Their gung-ho talk is just that—delivery is the problem. Being a member of the EU brought numerous benefits beyond the smoothly flowing travel of goods and people. Take GPS, now such a crucial part of modern life. The Galileo system, of which we were beneficiaries through our EU membership, worked efficiently but the Government did not want any part of Galileo. We would go it alone. Earlier this year, this gung-ho Government spent £900 million on buying 45% of OneWeb, a bankrupt US tech company, which had attempted to build a constellation of 650 satellites. This was to be the basis for our very own GPS system. Just months later, that project is being abandoned.
Tobias Ellwood, the chairman of the House of Commons Defence Committee, dismissed the scheme as a “vanity project”. It takes vanity on a monstrous scale to blow what adds up to more than £1 billion on feeding it. However, it is not merely the waste of public money that is appalling, it is the risks that a lack of such a system causes. According to Mr Ellwood, if we do not have the back-up of Galileo we are going to have problems. We will be extremely vulnerable from a security point of view. In the continuing negotiations with the EU, will access to Galileo be included?
This afternoon, the president of the CBI, the noble Lord, Lord Bilimoria, spoke eloquently of the need for business to have a deal. He explained that Covid had wrought havoc on our companies. It has eaten into their cash resources, if they had any, and into their material stockpiles. Companies have struggled to get through the last six months, but this week brought the news that restrictions could last another six months. An avalanche of redundancies looms. Is this the time to embark on what even the noble Baroness, Lady Noakes, accepts will be an uncomfortable process?
This afternoon Michael Gove told the Commons that there might be a few bumps in the road. I was delighted to see the noble Lord, Lord Rooker, back in fighting form and even more pleased to have listened to what he had to say. If only our Prime Minister would read that speech in Brussels next month. Extending the transition period is the sensible thing to do, but this gung-ho Government do not do sensible. Michael Gove stated this afternoon that 24% of businesses believe that they are ready for 31 December, and acknowledged that flows across the critical short strait crossings could be reduced by 60% to 80%. Nevertheless, an extension of the transition period will not be contemplated. In a pre-Covid era, it would be mad to press on in such circumstances. As the country struggles to cope with Covid, it is simply incomprehensible.
My Lords, ever since the referendum, my advice to businesses has been “prepare for no deal”. It has always been far more likely than is generally assumed. However, partly because of the controversial internal market Bill, I am inclined to think that the chances of a deal have now risen. I will explain why.
There are two unusual features about the negotiations between Britain and the EU. One makes them simpler than other free trade negotiations; the other makes them harder. They are simpler because we start where most free trade agreements and negotiations end up after years of haggling. We have zero tariffs and we want zero tariffs; it cannot take more than 10 minutes to negotiate. We have identical or equivalent rules and regulations, and we need to agree only a divergence mechanism: what happens when one side or the other changes their rules from the starting point. Such arrangements exist in most free trade deals and are comparatively straightforward to negotiate.
Why, then, are these negotiations harder than normal free trade agreements? Normal agreements and negotiations are win-win affairs: each side tries to offer concessions that cost it the least but will be of greatest value to the other side. Therefore, a mutually beneficial win-win outcome usually emerges. However, the European Union has an overriding political imperative, which is to discourage other member states from following our example. The EU believes that this means that Britain must be seen to get a bad outcome even if that means that the EU gets a less good result, economically, than was possible.
When one side is more interested in the other side losing than itself gaining, that creates a very unstable negotiating dynamic, which is why no deal has always been a significant possibility and even been used as a threat. However, as we have approached the endgame, it has become clearer to both sides that, although no deal would be a suboptimal outcome, it would not be as painful to the UK as the EU and many in the UK—and, indeed, in this debate—have supposed and that it would be more painful to the EU itself than they or others had initially assumed.
If there is no deal, each side will apply its tariffs to the other. That will cost British exporters to the EU about £5 billion a year. That is half the £10 billion saving from not making a net contribution to the EU any more. Therefore, UK plc will be a net £5 billion better off: small beer, but not negative. By contrast, losing tariff-free entry to the UK market would cost EU exporters £13 billion a year and, of course, the EU will also lose the £10 billion a year that we pay it. Therefore, the EU will be a net £23 billion worse off; again, that is not huge compared with the size of the European economy, but it is more difficult to cope with in these difficult times.
Why do EU exporters stand to lose nearly three times as much from tariffs as British exporters to the EU? It is partly because the EU exports far more to us than we do to it, but the main reason is that the goods that it exports to us are highly protected goods, which it can sell to us only because we are currently prevented by the EU external tariff from buying them more cheaply elsewhere. Therefore, it is the realisation on both sides that no deal, though not the best outcome, is not a disaster for the UK but would be a problem—or a cost—for the EU that has made the latter look to the Northern Ireland protocol for other negotiating levers.
The withdrawal agreement has even more loose ends and internal contradictions than most international agreements. That is not surprising, given that Boris was given only 100 days to renegotiate it, during which Parliament did its best to shackle his negotiating powers, but we signed it and accepted it because it has a mechanism to resolve those internal contradictions: the joint committee, within which both sides are treaty-bound to negotiate in good faith to resolve outstanding problems by the end of the transition period.
However, recently the EU has been pointing out—doubtless as a negotiating lever—that if it simply refuses to reach agreement in the Joint Committee then, arguably, all goods going from Great Britain to Northern Ireland will have to pay the EU tariff, and all goods coming from Northern Ireland to Britain will have to fill in EU export declarations, and if the EU refuses to list the UK as a third country from which it will accept food imports, not only will we be unable to export food to the continent, but it would be illegal, as the EU has threatened, to take a single kilo of butter from Great Britain to Northern Ireland. As far as I am aware, the EU has not seriously denied making those implicit threats.
Those outcomes would be economically damaging to Northern Ireland, flagrantly in conflict with the Belfast agreement and contrary to the Acts of Union with Ireland and Scotland. They would inflame unionist opinion, demonstrate manifest bad faith and breach the clear intention of the withdrawal agreement itself, so the UK Government had no option but to introduce legislation enabling them to override those potential interpretations of the withdrawal agreement, should they emerge.
In doing so, the UK Government adopted the EU’s own approach to international law, clearly set out by the Advocate-General in the European Court of Justice in the Kadi case. He said that
“it would be wrong to conclude that, once the Community is bound by a rule of international law, the Community Courts must bow to that rule with complete acquiescence and apply it unconditionally in the Community legal order. The relationship between international law and the Community legal order is governed by the Community legal order itself, and international law can permeate that legal order only under the conditions set by the constitutional principles of the Community.”
I cannot see that we are doing anything different from what the EU would, very sensibly, do if there were a conflict between international law and its internal legal order. I invite the noble Baroness, Lady Ludford, as the last remainer of note due to speak in this debate, to be as critical of the EU doctrine as I have no doubt she will be of the Government’s behaviour. However, because we have effectively called the EU’s bluff, there is every reason to suppose that it will in practice resume negotiating sensibly and help us to resolve those issues, and there will be an agreement at the end of the day.
My understanding is that the noble Baroness, Lady Ludford, is not participating in the debate this afternoon, so I now call the Minister to reply.
My Lords, as expected, this has been a robust debate; I think that is the word often used in your Lordships’ House, which is why it is such a splendid House. I am grateful to all noble Lords for their insightful and at times impassioned contributions.
I am fond of the game of cricket: I used to play it and I love watching it. One of the pleasing conventions of the game is that the umpire always gives the batsman the benefit of the doubt. Actually, that never seemed to happen much when there was an lbw shout against me—but that is the convention. I have tended to notice in some debates in your Lordships’ House, when EU matters and negotiations are discussed and when your Lordships are the umpire, the EU is always the batsman and the poor old British Government the bowler who never gets the benefit of any doubt. The EU is always entirely innocent, honourable and above board, and the UK Government always guilty as charged. It is not always that easy, although I think that the umpires would have differed today. The EU obviously would not accept my noble friend Lady Noakes as an umpire in this age of neutrality, and I suspect that the UK Government would not welcome the noble Lord, Lord Hain.
The noble Lord, Lord Hain, in a typically brilliant and well-argued speech, with which I profoundly disagreed, was really the trombone or perhaps even the tuba of the arguments of doom and gloom and futurology that we heard in the course of the debate. But the rest of the brass section and the woodwind were quite well developed in the debate. Richard Wagner or Richard Strauss would have been well pleased with the blasts of doubt that were piped out.
As many have said, we are where we are. As I said at the beginning, the mandate has not been given by some sort of sinister, unelected figures, whoever they might be—as was said by the noble Lord, Lord Judd. We are actually marching to a mandate given by the electors, the British people, more than once. That is what the British Government conceive as their duty—to accomplish what the British people have asked for—and that is what we will do, we hope with engagement and agreement with the European Union but, if that is not forthcoming, without it.
The noble Lord, Lord Rooker, made a delightful speech, as ever, with an imagined speech. I think that the chances of my right honourable friend Mr Johnson picking that one up are about as likely as a previous Prime Minister picking up the draft speech that I sent into No. 10 on this subject a few years ago. The reality is that there is no chance of the Government extending the transition period—and I must say that to the noble Lord, Lord Rooker, and the noble Baroness, Lady Wheatcroft. That is the law of the land.
A number of questions were asked, and I shall try to answer them in the time available. I am not going to talk out all the original time, noble Lords will be pleased to hear.
The noble Earl, Lord Kinnoull, in a typically balanced speech—and I do not want to give the impression that there were none; there were a large number of very balanced and thoughtful speeches—reminded us of the importance of the work of your Lordships’ European Committee and its balanced and thoughtful contributions to our debates. I thank him and all members of the Select Committee for that and for the kind things that he said personally, which I gladly reciprocate.
The noble Earl mentioned the recitals. The position is that we remain fully committed to implementing the withdrawal agreement and the Northern Ireland protocol, and I shall come back to that in a moment. We have taken many practical steps on that. On the dispute mechanism, it does exist. The noble Earl asked why we would now legislate. The answer is that this is our last chance to introduce legislation, rightly or wrongly—and we will have great opportunities in your Lordships’ House to debate it in the weeks ahead—which would become law become law before 1 January. It is our last chance to put in place a safety net in case issues are not resolved, as we hope they are, in the joint committee.
Of course, the Government respect the rule of law. We have discussed this on several occasions in the House, and we will discuss it again on the Bill. In response to a number of noble Lords who spoke, understandably, on this subject, I repeat that we are fully committed to implementing the withdrawal agreement and Northern Ireland protocol. That is seen in the many practical steps that the Government have put in place to put those agreements into physical being. It is absolutely not the case in any circumstances that this Government would wish to undermine the Belfast agreement. Indeed, with regard to motivation, as I discussed when I answered the question in the House, the Government are very mindful that the Northern Ireland settlement, which we all wish profoundly to preserve, has an east-west dimension as well as a north-south one. It behoves the European Union to recognise that. It is just in these very tightly defined potential circumstances that Parliament is considering—and the House of Commons approved in Committee—the possibility of giving the powers that might disapply the EU law concept of direct effect.
I do not want to pursue that at the greatest length today, not because I demur from the question—I anticipate many hours of discussion on it—but the protocol had to solve very complicated issues and certain elements were left for ongoing discussion, as all noble Lords know, after the UK left the EU. They were drafted in a broad-brush way, and what is before us now is a safety net that ensures that Ministers can always deliver on the obligations to secure unfettered access to the rest of the UK for Northern Ireland. These are necessary steps in case agreement cannot be reached in the joint committee, but our objective is to reach agreement through the joint committee. We do not accept that, if people keep level and sensible heads, there is any reason why this need risk, as was put by someone in the debate, blowing up the talks altogether.
I was asked about citizens’ rights by the noble Baroness, Lady Hayter, who made what I thought was a very well-argued opening speech, although again I did not agree with all of it. She asked a number of questions that I will endeavour to answer. UK citizens’ rights are of course of profound importance. I believe that we have done well in the United Kingdom in seeking to confer rights on the European citizens living in this country, and we are working constructively and continually with the EU member states on the implementation of rights in member state countries, as well as providing advice to UK nationals via our “living in” guides, which are on GOV.UK. However, we continue to call on EU member states to provide equal certainty to UK nationals. We want faster implementation, longer application windows and clear communication.
I was asked about Erasmus. The noble Baroness, Lady D’Souza, is right that we are considering participating on a time-limited basis, provided that it is in line with UK interests and we can agree on a fair financial contribution. Her Majesty’s Government are considering a wide range of options on student exchange, including, if needed, a domestic alternative.
On Galileo, however, I must repeat what I have said to the House before: the UK and the EU discussed the Galileo programme during the withdrawal agreement negotiation but the EU’s offer on Galileo did not meet the UK’s defence and industrial requirements.
The noble Baroness, Lady Hayter, and many other Peers, including the noble Lords, Lord Wallace of Saltaire and Lord Kerr, who made an interesting and balanced speech, asked about state aid. As I set out in the opening speech, there is a problem with state aid. The EU is asking to see the design of our state aid regime, which in any typical free trade agreement would not be within the scope of negotiations. As I said in my opening remarks, the EU state and aid rules are unique and were developed specifically for the single market. We are being clear that we are not going to become a high-subsidy regime at the end of the transition period but also, as an independent nation, we are not going to allow the EU a say over a UK domestic regime. As I have explained before, we will make clear our approach to subsidy policy at the end of the transition period in due course but we will do so on our timetable, not the EU’s. After the transition period the UK will have its own regime of subsidy control and will not be subject to the EU state aid regime. Again, as I said in my opening remarks, there are other well-established ways to regulate subsidies. The World Trade Organization rules are an internationally recognised common standard and many major economies do not regulate subsidies beyond those rules. I agree with the noble Lord, Lord Kerr, in welcoming the fact that the EU has rowed back from some of its demands in this area.
As I set out before, all we would need to agree is a mechanism to resolve any disputes with the EU, as is the case between countries which trade under a free trade agreement on WTO terms. For our future arrangements, we have proposed appropriate dispute settlement procedures, including arbitration where it is precedented. We have heard the EU’s concerns about a complex, Switzerland-style set of agreements, and we are ready to consider simpler structures, provided satisfactory terms can be found for dispute settlement and governance. The UK’s offer to the EU on subsidy control goes further than WTO rules, and we continue our negotiations on that matter.
On trade more widely, I will have to leave it to my right honourable friend Liz Truss to set out a broad statement on trade, but I say to the noble Viscount, Lord Waverley, that my noble friend Lord Wei made some very strong and important points in this area. Trade deals with other nations are not to be derided. One of the benefits of leaving the EU is to deliver an independent trade policy for the UK that works in the interests of our businesses and our consumers. We want to start negotiating with new trading partners as soon as possible to take the new opportunities they offer, of which my noble friends Lord Wei and Lord Lilley and other noble Lords spoke. Noble Lords will know that the UK Government have announced their aim to secure free trade agreements with countries covering 80% of UK trade within the next three years—including, we hope, with the European Union—and negotiations with priority partners on free trade agreements are currently taking place.
The position of the Government remains that at a time of growing protectionism, free trade agreements provide economic security at home and opportunities abroad. They help improve the resilience of supply chains through diversity and opening new markets for business, bringing investment, better jobs, higher wages and lower prices when we need them most. I agree with what my noble friend Lord Wei said on that.
I was asked about engagement with the devolved Administrations, to which we attach great importance. We are committed to working closely with the devolved Administrations throughout negotiations with the EU to ensure a future relationship that works in the interests of the whole UK. The UK Government have been working closely and having constructive discussions with the devolved Administrations during those negotiations, and I do not agree with some of the remarks that were made on that score. We will continue to engage at both ministerial and official level.
As noble Lords will know, at ministerial level, the Joint Ministerial Committee (EU Negotiations), or JMC(EN) in the jargon, is a forum for the devolved Administrations and the UK Government to engage and discuss the UK’s approach to negotiations with the EU. It is the principal route for Ministers in the devolved Administrations to input collectively into the UK Government’s negotiating approach. This is supported by frequent official and ministerial bilateral engagement. Attended by delegates from the UK Government, the Welsh Government, the Scottish Government and the Northern Ireland Executive, the 25th Joint Ministerial Committee met on 3 September via video conference chaired by the Chancellor of the Duchy of Lancaster. It was a constructive meeting which discussed ongoing negotiations relating to the future UK-EU free trade agreement and the wider relationship, preparedness for the end of the transition period on 31 December, and an update on common frameworks. In answer to the noble Baroness opposite, I underline that we recognise the significant interests of the devolved institutions in our negotiations and we have been clear that they should be fully consulted in preparations.
A number of noble Lords asked about security. There is a good deal of convergence in what the EU and UK are seeking to negotiate in terms of operational capability. We will keep working to bridge the gaps where differences remain.
The EU has listened to the UK on some of the issues most important to us and we welcome that more pragmatic approach. There is, in our judgment, still an agreement to be had, and we will continue to work hard to achieve it, but we must also continue preparing for all possible scenarios at the end of the transition period.
The safety and security of our citizens is the Government’s top priority. We continue to discuss with the European Union an agreement on law enforcement and criminal justice co-operation in criminal matters. The agreement should equip operational partners on both sides with the capabilities that help to protect citizens and bring criminals to justice, promoting the security of all our citizens. The UK will continue to be a global leader and good partner on security and, I hope and pray, one of the safest countries in the world.
I was asked about financial services in negotiations, which is obviously a crucially important area. We are seeking to provide a predictable, transparent and business-friendly environment for firms to undertake cross-border financial services business. An FTA chapter would sit alongside our respective equivalence assessments, which are progressing in parallel to the FTA negotiations. As we have always said, however, co-operation mechanisms should be proportionate to the level of market access agreed. It therefore makes sense to return to co-operation once the FTA negotiations are more advanced. However, it is disappointing that the EU did not wish to engage with our proposal for regulatory co-operation within the framework of the FTA. After all, this was something it had previously agreed with Japan, but we must proceed with the art of the possible. I am pleased to note—and I underline—what my right honourable friend the Chancellor of the Duchy of Lancaster said in the House of Commons earlier, that he is confident of securing a good deal on financial services.
I was asked about fisheries. As we have set out many times, and as I said at the start, we will not accept proposals that compromise UK sovereignty over our own fishing waters. We are looking for a relationship based on the EU’s existing bilateral arrangement with Norway. Our position on fish is, we contend, reasonable and straightforward. We want a simple, separate fisheries framework agreement that reflects our rights under law and provides for annual negotiations over access and sharing opportunities based on the scientific principle of zonal attachment. That is squarely in line with existing precedent.
We contend and believe that the scientific principle of zonal attachment better reflects where the fish live; in practice, it means the share of a stock of fish residing within a particular country’s economic zone. That is, as I say, the basis for the EU’s existing fisheries agreement with Norway. However, the EU wants to maintain the current access provisions that it enjoys under the relative stability mechanism, which is based on historical fishing activity from the 1970s, and rejects zonal attachment as a principle on which to base future sharing arrangements. Until the EU is willing to accept reality and to have a science-based discussion about the future, it will be difficult to move forward. In order to make progress, the EU must accept our position as an independent coastal state, and any agreement on quotas must reflect that reality.
I was asked about readiness for the end of the transition period and borders; with the permission of the House, I will be making—or repeating—a Statement on that tomorrow, so I will not go into the full details. I was told that I was “opaque” and “motherhood and apple pie” on this subject. Unfortunately, my dear beloved late mother used to give me a lot of very good Bramley apple pie when I was young, and that is probably why I have grown up being rather chubby and opaque. However, I will try to please the House better on this subject.
We are taking a practical, pragmatic and flexible approach to using some of our regained powers as a sovereign nation, and we are pragmatic in the sense of trying to help all practitioners and users of the borders by deciding to introduce new border controls in three stages up until 1 July 2021. This should help business and industry benefit from extra time to adjust. We published the border operating model in July, announced a new £50 million support package to boost the capacity of the customs intermediary sector, and are committed to building new border facilities in Great Britain for carrying out customs checks.
Additionally—as I said earlier—we have announced an unprecedented £705 million package of investment for border infrastructure, staff and technology to ensure that our border systems are fully operational after the end of the transition period. Of course, we are committed to working closely with businesses as we implement the system; they are at the heart of our approach. However, it is not criticising or blaming business to say that it is critical that businesses across the country should continue with preparations for the end of the transition period. Today does mark a key milestone for citizens and businesses because there are now just 100 days to go until we regain our political and economic independence on 1 January, when the UK will have left the single market and customs union, and there will be change—whether there is a free trade agreement or not. I say again: for our country, this should be a moment of great opportunity as well as significant change. All of us can and should make sure that we are prepared, and I am sure we will return to that tomorrow.
I was asked about social security. We are discussing these matters and had a most useful discussion on social security in the most recent round. We expect to discuss the matters further.
I must conclude in two minutes, so I will wrap up. I could not resist referring to the “oven-ready” charge. I must say that, for the electric oven I know and use, you need two buttons or dials to turn it on to cook the turkey. Unfortunately, in the course of these negotiations, the EU has sometimes not been ready to turn the dial with regard to picking up texts and other issues. Let us hope that that now ends. It is a characteristic of our beloved friends in Europe—and they are our friends—that, sometimes, negotiations are allowed to run long. We cannot let them run on indefinitely—precisely for the reasons of certainty and clarity that others referred to.
The noble Lord, Lord Liddle, asked where we were going. We are going—I hope—towards a future of friendship and co-operation with the nations of Europe and, as my noble friend Lord Shinkwin said, Europe is not only the European Union; it is something wider. We did leave the European Union in January this year, and we want a relationship with it that is based on friendly co-operation between sovereign equals and centred on free trade. We will have a relationship with our European friends inspired by our shared history and values. We want to reach an agreement, but we cannot compromise on the fundamentals of what it means to be an independent country to get that deal.
My Lords, that completes the business before the Grand Committee this afternoon. I remind Members to sanitise their desks and chairs before leaving the Room. The Committee stands adjourned.
Committee adjourned at 6.23 pm.