UK-EU Customs Union

Lord Wallace of Saltaire Excerpts

Thursday 29th January 2026 Lords Chamber

[Lord Wallace of Saltaire (LD)]

My Lords, we have been hearing different versions of economic and political reality in this debate. I want to focus in my short speech on two issues that lie behind negotiating a customs union: the question of sovereignty and an EU reset; and the foreign policy, security and defence aspects of again moving closer to the EU and its member states. Right-wing media again leapt up to cry, “You’re threatening British sovereignty” as soon as resetting our relationship with the EU was proposed, but the idea that the UK could somehow maintain absolute sovereignty in an integrated international economy with instant communications was always a myth.

I recall Geoffrey Howe, when he was Foreign Secretary 45 years ago, talking about sharing sovereignty with our European partners. He did not spell out explicitly that the alternative was yielding sovereignty to the United States, adopting US regulations and following its international political lead. We are now seeing that alternative spelled out brutally in threats from President Trump against our attempts to tax and regulate US tech corporations that dominate our social media, and to maintain higher standards of food production than US exporters want. I think it is clear, in an underlying way, that the alternative the noble Lord, Lord Offord, and others want to present is a Britain that would become like the Republican vision of the United States, with a small state, gross levels of inequality and a very damaged society.

As other noble Lords have said, particularly the noble Lord, Lord Davies of Brixton, we now face a much more hostile global environment, in which even middle-level powers such as the UK find it hard to stand up alone to pressure from China or the USA. The collective weight of European democracies, exercised through the EU, is, however, capable of maintaining autonomy. We need to contribute to that collective weight to protect our preferred patterns of market and product regulation and our environmental and social protections. We are a social democracy, and we do not wish to become an American-style very unsocial democracy. We need to co-operate on security and defence, pooling our efforts to resist the imperial ambitions and subversive activities of Russia and China and now, sadly, also of the United States.

Britain played a leading part in developing the EU’s co-operation in foreign policy. I recall Jim Callaghan, when Foreign Secretary, returning from an early meeting of what was then called European Political Co-operation and enthusing about how useful it was in promoting British interests. Five years later, Lord Carrington’s London report set out proposals to institutionalise regular consultations on international threats and initiatives. When the Berlin Wall came down, I recall the Metropolitan Police asking Chatham House, where I then worked, to organise a seminar on how to build closer police co-operation with our European neighbours. When Europol was then established, it had a substantial number of UK staff and a British Secretary-General. Similarly, when the European Defence Agency was set up, it had a further number of impressive British staff concerned to promote both shared and UK interests.

Brexit threw all this away, with Brexiteers arguing that America was the only ally we needed, that the Indo-Pacific was the future and that European co-operation contributed little to Britain’s security. We have now learned how wrong they were, and our Labour Government are hesitantly beginning the long, hard path back to what we have lost. The Government are still too timid on this, as on other policy areas, and they need to explain to the British public how much our international context has changed for the worse, how much more important our security and defence have become, and how our natural partners in defending and promoting our national interests are our neighbours across the channel.