EU: Future Relationship Debate

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Department: Cabinet Office
Wednesday 23rd September 2020

(3 years, 9 months ago)

Grand Committee
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Moved by
Lord True Portrait Lord True
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That the Grand Committee takes note of the United Kingdom’s approach to negotiating the future relationship with the European Union.

Lord True Portrait The Minister of State, Cabinet Office (Lord True) (Con)
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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.

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Lord True Portrait Lord True (Con)
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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.

Motion agreed.