Liam Fox
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European Union (Withdrawal) Act
Liam Fox Excerpts(5 years, 4 months ago)
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Barry Gardiner (Brent North) (Lab)
I congratulate not only Members on my side of the House today, but all those who have spoken in this debate, because what we have shown is testament to the passion and the force of argument and rationality that Members can present the House with at times such as this. I also want to pay tribute to you, Mr Speaker, for the fact that you have shown leadership by staying in the Chair for the entire proceedings of this debate.
The person I wish to start by quoting is not one of my own side, but the right hon. Member for East Devon (Sir Hugo Swire). He said:
“No one ever said it was going to be easy.”
Actually, on 20 July last year, the Secretary of State for International Trade informed the country that an agreement with the EU would be
“one of the easiest in human history.”
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
If we are going to have a sensible debate and if we are going to use quotes, they should be accurate and in context. As the hon. Gentleman knows, the point I was making was that the trade element—the part we have not yet negotiated with the European Union—should be simpler than most, because we would begin, unlike in most trade agreements, with regulatory alignment and legal alignment in trade.
Barry Gardiner
I know exactly what the Secretary of State said. In the following sentence, he said this would happen unless
“politics gets in the way.”
Clearly, politics has got in the way, but it is not the only thing. Yesterday, reality got in the way, with the release of the Attorney General’s written advice to Cabinet. The implications of this legal advice are that we could be locked into a position where the EU negotiates a new trade in goods agreement that might be beneficial for the EU but deeply disadvantageous to the UK. This could be a deal where we have no say in the negotiations but where the UK could be obliged to open up our markets, perhaps to the United States of America, without any reciprocal right of access for UK manufacturers into that US market. I know the Secretary of State will have reflected carefully on that outcome. In fact, earlier this year in his Bloomberg speech, he presaged just such a situation. He said:
“As rule takers, without any say in how the rules were made, we would be in a worse position than we are today. It would be a complete sell out of Britain’s national interests and a betrayal of the voters in the referendum.”
But in a few minutes, he will stand at that Dispatch Box and urge hon. Members from across the House to vote for it. I can only admire his flexibility.
So how did this mess come about? The Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), excoriated the Government for their failure to prepare. My hon. Friend the Member for Liverpool, West Derby (Stephen Twigg) focused on the rigidity of the Prime Minister’s red lines. Perhaps the most serious error, though, was, as my hon. Friends the Members for Ynys Môn (Albert Owen) and for Rutherglen and Hamilton West (Ged Killen) said, to try to exclude Parliament from the process. The Government tried to exclude us on the triggering of article 50, on the impact assessments, on the right to a meaningful vote on the deal and on the financial modelling, and of course we argued that Parliament had the right to see the full legal opinion prepared by the Attorney General. Their refusal was a blunder that resulted in an achievement unique in a thousand years of our history: a Government being held to be in contempt of their own Parliament—ironic, given that Brexit was supposed to be about the sovereignty of this Parliament.
It is hardly surprising, then, that now that the Prime Minister has finally brought her deal back to the House of Commons, it is a deal that Members on both sides believe is not in the best interests of the country. She used to say, “No deal is better than a bad deal”; now the motto seems to be, “Any deal is better than no deal.” In fact, the Prime Minister’s deal is not actually a single deal at all: it is a package, in which there is one deal with binding commitments by the UK on the things that the EU demanded that we settled before we leave—money, citizens’ rights and the Irish border—and another proposed deal, which contains only a wish list, with no binding commitments on the EU on all the things that the UK would like in terms of our future political, trading and security relationship. Both are packaged up with the transition period, during which the real final deal is supposed to be negotiated.
People have called it a blind Brexit, because we are unable to see what we will get before we leave the EU on 29 March, by which time we will have lost all further leverage. After President Macron’s comments, is there anyone present in the Chamber who thinks that it is mere coincidence that the final date to extend the transition period and avoid the backstop is exactly the same date as that for the ratification of an agreement on access to our waters and fisheries quota shares?
My hon. Friend the Member for City of Chester (Christian Matheson) pointed out that, although the Government say that the technology to avoid a hard border does not currently exist, in a staggering act of faith, they believe that it will be possible to achieve that by December 2020, when the transition period comes to an end. If the future relationship is not agreed by that date, the UK is faced with a stark choice: pay billions of pounds to extend the transition, or enter into the trade purgatory of the backstop arrangement.
Forty years of harmonisation of standards and regulations has resulted in UK companies being deeply embedded in complex supply chains. In the past few months, I have visited factories in all sectors. I have been to the ceramics factories about which my hon. Friend the Member for Stoke-on-Trent Central (Gareth Snell) spoke so powerfully when he told the House about the unions that he met and their fight. They are stressing that we must not have no deal, while not exactly being enamoured of the one that is on offer.
Barry Gardiner
The automotive sector—[Interruption.] The hon. Lady will understand that the purpose of summing up at the end of the day is to respond to all the comments, including hers, that have been made during the debate. That is what I will try to do.
I visited the automotive sector with my hon. Friend the Member for Crewe and Nantwich (Laura Smith). I spoke to the management, the unions and the workers. Their sector represents £18 billion-worth of exports to the EU. It has benefited enormously from our EU membership, and particularly from the customs union, which has allowed companies to streamline their supply chains and employ just-in-time systems.
I am not a pessimist about the future of our country. I do not say that the UK will be poorer if we accept the Prime Minister’s deal. But I do say, with the support of both the Treasury and the Bank of England, that it will be much poorer than we otherwise would be, by approximately 4% of GDP. My hon. Friend the Member for Sheffield South East (Mr Betts) spoke with clarity and passion about the differential impact that this would have on the poorest people and on the forgotten regions of our country, which need infrastructure investment.
Let us examine the potential upside: the new free trade agreement that the Secretary of State is so keen for us to do, particularly with our single largest bilateral trading partner, the United States. We have a trade surplus with the USA—a trade surplus that President Trump is determined to overturn. Last week, he suggested that a deal may now no longer be possible because of the way in which this deal proposes to align with the EU. President Trump made it clear that any trade agreement would involve aligning with American regulations and standards. Yes, of course, that means chlorine washed chicken, but it also means the US “Defect Levels Handbook”, which specifies the level of mice droppings or rat hairs that are permitted in our food—for example, 11 rodent hairs per 50 grams of cinnamon and 20 maggots per 100 grams of drained mushrooms. If anyone in this Chamber doubts it, they can read the handbook for themselves or they can see what is proposed by reading “Plan A+” launched by the original Brexit Secretary and by the hon. Member for North East Somerset (Mr Rees- Mogg) just recently. It proposes to remove parity-pay for posted workers; end limits on the hours that people can be asked to work; end the precautionary principle; say yes to pesticide residues and yes to hormone-disrupting chemicals in genetically modified organisms. Such regulatory divergence from the EU would substantially impact our ability to trade with our biggest, closest market. It would increase the risk profile—
Dr Fox
I am grateful to the hon. Gentleman for giving way. Is he aware that because of trade asymmetries—that is the way in which trade flows are measured transatlantically —the United Kingdom believes that we have a trade surplus with the United States, but the way that the US measures trade means that the US already believes that it does have a trade surplus with the UK. That rather undermines his case.
Barry Gardiner
Not at all. The Secretary of State will have read what President Trump has said recently. He knows that the President, as a protectionist, wants to put America first, not the UK.
That regulatory divergence from the EU would substantially impact our ability to trade with our biggest and closest market. The Minister for Trade Policy recognised the same. He noted that, “If we come out of alignment with EU regulations in this area, then there is a penalty to be paid in terms of frictionless trade with Europe.” That comes from the Secretary of State’s own team.
Even assuming that new trade deals are possible without these complications, what would these new agreements contribute to our GDP? The Bank of England has quantified any benefit at less than half a per cent—just 0.2% of GDP growth. The Government’s own assessment says that a no-deal Brexit would result in a reduction of 9.3% of GDP. Most MPs are clear: a no-deal Brexit cannot be allowed to happen. None the less, the Prime Minister is presenting her agreement as a binary choice between her deal and no deal. She urges MPs to vote for a deal that they firmly believe is not in the country’s best interest by threatening that if they do not, the consequences of no deal would be even worse. That is not an argument; it is blackmail. Most importantly, it is a false choice.
Earlier today, my right hon. Friend the shadow Chancellor set out an agreement that respects the key reasons why many people voted to leave—namely money, borders and law—and also ensures that we continue to have frictionless trade that protects our manufacturing industry’s just-in-time supply chains and the integrity of the United Kingdom.
We are at a critical point in our history and business needs certainty and stability. Our children need an optimistic future. Our country is deeply divided. I started by quoting the Secretary of State and remarking how flexible he has been in acquiescing to this deal. I conclude my remarks, exhorting him to be yet more flexible still and to recall his own words, which were quoted in The Mail on Sunday on 16 September 2012. He said:
“I believe the best way forward is for Britain to renegotiate a new relationship with the European Union—one based on an economic partnership involving a customs union and a single market in goods and services.”
The Secretary of State may not like it, but it sounds an awful lot like Labour party policy to me.
The Secretary of State for International Trade and President of the Board of Trade (Dr Liam Fox)
Well, that got a tumultuous welcome from the Labour Benches.
I thank right hon. and hon. Members on both sides of the House for their valuable and insightful contributions to the debate, delivered with passion but without the rancour referred to in the elegant and wise contribution of my hon. Friend the Member for Hazel Grove (Mr Wragg). I wish that more Members could have heard his wisdom on that subject.
Before I respond directly to some of the points raised in the debate, I think the House should take a moment to consider, at this pivotal moment of our nation’s history, the inherent strengths of the UK economy that we have been discussing today. As my hon. Friend the Member for Basildon and Billericay (Mr Baron) mentioned in his contribution, at the time of the referendum we were told that the simple act of voting to leave the European Union—not leaving the European Union itself, but voting to leave—would cause such an economic shock that we would lose half a million jobs, our investors would desert us and we would require an emergency Budget to deal with the ensuing fiscal imbalance. So it is worth just considering what has actually happened in our economy in that time.
We have added 700,000 to the economy, with more people finding work than at any time in the past 40 years. That is no accident. It is the result of good Conservative economic management—something that would be completely cast asunder were the Labour party, in its current hard-left form, ever to take office in this country.
Dr Fox
If I may, I will come to the hon. Lady’s contributions a little later.
This upward trajectory in employment shows no signs of slowing. Indeed, the OBR has calculated that we can add another 800,000 jobs without creating inflationary pressure, because there is still slack in the economy to do so. Throughout this debate, Labour has talked as though, post referendum, our economy is on its knees. Well, let me tell the Opposition that 2017 saw total UK exports rise by 10.9% compared with 2016, at a time when global trade grew by about 3.4%. British companies sold almost £50 billion-worth of mechanical machinery, £41 billion-worth of motor vehicles, £16 billion- worth of aircraft and £14 billion-worth of medical equipment. Since the referendum, we have increased our share of our GDP that we export from 28.3% to 30.5%, which is a very large increase by international comparisons—so much for Britain not making anything anymore. This is all before we even consider our world-leading services sector, which accounts for around 80% of UK economic output.
Stewart Hosie
The increase in exports is recognised. The nature of the exports is recognised. Why on earth do we want to put all that at risk by ending the ability to access those many countries with which the EU has an FTA that we are part of?
Dr Fox
If the hon. Gentleman is serious about automatically wanting to roll over all the agreements that the European Union has, I hope that he will vote for the Government’s motion next Tuesday, because that is exactly what would happen if we had a withdrawal agreement and a movement into the implementation period. All those agreements would automatically be safeguarded. He might want to think about that before he casts his vote.
Maggie Throup
Does my right hon. Friend agree that this deal will bring certainty for businesses by unlocking the investment that they are sitting on and that this is what we need for our future prosperity?
Dr Fox
As the Chancellor said in his introductory speech this afternoon, it is widely acknowledged that when there is an agreement, there is potential for a dividend because investment that might be being held back because of uncertainty around Brexit could come forward. That is probably particularly true of domestic investment, rather than foreign direct investment, which I will come on to.
Dr Fox
I heard the hon. Gentleman—calm down. Clearly, the vote to leave the European Union has not had the catastrophic effect on our economy that was predicted—quite the reverse—and it is worth making a point about the difference here between forecasts and scenarios. Throughout today’s debate, I have constantly heard scenarios portrayed as forecasts, but it is worth pointing out that, in a forecast, all variables in an equation are considered, and their combined effect is looked at and becomes a forecast. A scenario is the isolation of a single factor and the assumption that if nothing else changes, that is what may happen. Clearly, in the real world that is not what happens. It is not realistic to expect that there would be no potential shift, if necessary, in Government fiscal policy, or in the Bank of England’s monetary policy, or changes to what the Government will be able to do on tariffs. We have to be realistic and try to understand what those things are. To try to confuse forecasts and scenarios, intentionally or otherwise, is not helpful to the debate.
Albert Owen
The right hon. Gentleman is right to tell the House that George Osborne got it completely wrong with the panic measures and emergency Budget that he was going to introduce, as he did on eliminating the deficit. The Secretary of State is laying out different scenarios. What forecast would he like to give the House for how he sees the state of the economy within x amount of time after leaving the European Union?
Dr Fox
Again, that is exactly the same pattern. We want a continuation of good economic management for the United Kingdom that continues to provide jobs and prosperity in our country and record investment in its infrastructure. I can forecast that if the Labour party was ever to take office with its crazy spending plans, the financial and economic consequences for the prosperity of this country would truly be catastrophic.
Nigel Huddleston
I appreciate the positive and optimistic picture that the Secretary of State paints of the UK economy and our potential. Does that not demonstrate that it is always better to have a Conservative Secretary of State for International Trade flying round the world and talking Britain up, rather than a Labour one talking Britain down?
Dr Fox
Talking Britain down is what people do when they cannot bear the fact that the truth tells us that our economy is doing well, that exports are at record levels, that inward investment into the United Kingdom is at record levels and that unemployment is at a record low level and employment at a record high level. Labour Members hate all those facts because they go against their basic narrative that Britain is failing and somehow needs to be rescued by an utterly inept Labour party.
Sarah Jones
I am slightly confused about the notion that the economy has been managed well by the Government when we have nearly the slowest growing economy in the industrialised world. We have no investment, and our debt-to-GDP ratio is pretty stagnant. We are a failing economy with low wages, and we do not have the growth of other industrialised nations that are way ahead of us. The Government are not managing the economy well.
Dr Fox
Once we get out of the realms of fairy tales and consider reality, we see that the unemployment rate in the United Kingdom is 4.1%—almost exactly half the level in the eurozone, which is 8.1%. Our exports are growing faster than in most other countries in Europe, with the exception of Germany, and investment in our infrastructure is at record levels.
Barry Gardiner
As, indeed, I twice welcomed the Secretary of State. Will he confirm whether he has seen Her Majesty’s Revenue and Customs statistics on regional trade in goods for the third quarter that were published this morning? They show that all regions of the United Kingdom are importing more than they are exporting, and we therefore have a large balance of trade deficit.
Dr Fox
I hate to bring this to the hon. Gentleman’s attention—it will no doubt come as a shock—but we have had a trade deficit since the 1980s. In fact, one of the few times when we have not was in February this year, when the UK became a net exporter for the first time in some time. The hon. Gentleman will no doubt be overlooking those facts because they do not suit his narrative.
Sir Oliver Heald
I pay tribute to the work done by my right hon. Friend in talking to our trading partners around the world in contemplation of having new trade agreements once we are into the implementation period. Does he agree that one of the strengths of the deal that the Prime Minister has negotiated is that we can go into the implementation period, negotiate, ratify and sign the trade deals, ready to go? If we do not take this deal and just fall out of the EU, we will not get that chance, so it is very important that we do take it.
Dr Fox
My right hon. and learned Friend is right. It is certainly true that the draft political declaration was not as favourable to an independent trade policy as the final declaration is, given the changes that the United Kingdom insisted on in that negotiation. I was much heartened by those changes, not least because the declaration talks of building on and improving customs co-operation, not just building on it, and it cross-references the other elements of that to include protection of our independent trade policy.
Mr Simon Clarke
On the subject of forecasts and scenarios, may I refer my right hon. Friend to Open Europe’s excellent report, published this week? It is clear that the gains from artificial intelligence over the next 10 to 15 years will more than outweigh any conceivable loss from any scenario surrounding our exit.
Dr Fox
Indeed—my hon. Friend is right to say that that was correct in all scenarios. The doom and gloom pushed in some quarters is not consistent with the reality of Britain’s economic performance.
Now is the time to raise our sights and acknowledge that there is a world beyond Europe and there will be a time beyond Brexit. The referendum settled the question of our departure from the European Union. This House voted overwhelmingly to hold that referendum. The British people voted on the understanding that we would enact the result.
In 2016, we did not have a consultation with the British public; we were given an instruction to negotiate this country’s withdrawal from the European Union. That point was made in powerful speeches by my right hon. and learned Friend the Member for North East Hertfordshire (Sir Oliver Heald) and my hon. Friends the Members for Tonbridge and Malling (Tom Tugendhat), for West Worcestershire (Harriett Baldwin), for Berwick-upon-Tweed (Anne-Marie Trevelyan) and for Stafford (Jeremy Lefroy), among others. They all come from different parts of the political debate—a clear indication that we have to find a compromise that makes this workable. The withdrawal agreement achieves just that. Most importantly, it enacts the democratic will of the British people.
I remind the House that this is the only deal on the table. It has been painstakingly negotiated by both sides and of course we do not have every single thing that we wanted—but then again, neither did the EU. That is the nature of international agreements. The deal is a compromise, as was pointed out by my right hon. Friend the Member for Mid Sussex (Sir Nicholas Soames) in an outstanding, personal and passionate speech, the likes of which we would love to hear more of in this House. That message was echoed by my hon. Friend the Member for Eddisbury (Antoinette Sandbach) and my right hon. Friend the Member for Ashford (Damian Green).
Do I think the agreement is perfect? No, I do not. Did I think it would be? No, I did not. But does it do enough to get us out of the European Union? Yes, it does. For those who want another referendum, let us be very clear: the one thing that will not be on offer in any further referendum, just as it was not in the last one, is the status quo. The status quo has never been on offer; this is a dynamic progression in the European Union. The EU is committed, as it has been since the treaty of Rome, to ever closer union. We wish our European friends well in that endeavour, but it is not the right course for Britain. We must be free from the one-way ratchet of federalism, as my hon. Friend the Member for South Dorset (Richard Drax) said in his powerful intervention.
Ian Paisley
It was Samuel Johnson who observed that nothing so concentrates the mind like a hanging. As the gallows are being built next Tuesday for this withdrawal agreement, can the Secretary of State confirm whether any discussions are taking place about putting this motion off or about altering it in any way, or are the Government fixed on walking towards those gallows?
Dr Fox
The Government will continue to make the case for what they believe is a balanced and reasonable agreement. But of course the Government will want to talk to Members and want to look to ways to give reassurance to the House wherever we are able to do that.
Under this agreement, we will be free to decide for ourselves who comes to the UK, free to decide who fishes in our waters, free to decide how to support our farmers, free to open new markets around the world to the best that Britain produces and free to consider new ideas such as the free ports that my hon. Friend the Member for Cleethorpes (Martin Vickers) outlined today. Above all else, the withdrawal agreement and the political declaration provide what Members on both sides of the House were calling for on behalf of business: stability and certainty; a firm foundation on which to continue to operate across the EU, which remains one of the most important of our export markets.
Vicky Ford
Labour Members seemed to suggest that they wanted to tear up the withdrawal agreement and go and negotiate something different with Brussels. Does my right hon. Friend agree that all trade agreements take time to negotiate, and that this withdrawal agreement gives us the breathing space to finalise that trade agreement and tearing it up is irresponsible?
Dr Fox
One thing that perhaps has not been fully understood in the public domain as a result of the complexities around Brexit is that it does not matter what model we want to have as the future partnership— we have to have a withdrawal agreement if there is to be any continuity. That is part of the article 50 process. We have to have a withdrawal agreement with a view to the future relationship that we will have. That is where the backstop comes in. The Irish Government, in particular, made it very clear that they would not be willing to contemplate a withdrawal agreement unless it had certain guarantees that are embodied in the backstop.
On that subject, it is very clear, and I entirely understand, why many of my colleagues do not like the concept of the backstop as it is constructed. I have to say that I share, as does the Prime Minister, many of those same anxieties. It comes down to a question of trust, and as the Attorney General said in his evidence to the House the other day, it comes down to a balance of risks. Many in the House have made it very clear throughout the day that they would not trust the European Union to release Britain from the backstop. That is a big worry that many of my colleagues share.
But it is equally true to say that, if we cross to the other side of the channel, we find those who take the view—which I understand is very difficult for some in this House to grasp—that this is a great and wily move on the part of the United Kingdom, because if it does not get what it wants in the future economic partnership, it could park itself in the backstop, not making any financial contribution and not having free movement, but having access to the single market. There are those in other countries who say, “Why should our taxpayers pay for the UK to have that privilege?” It would be very difficult for the Commission, which would ask, “What do we tell Norway and Switzerland, which do have to pay for that privilege of access to the single market?” We have to try to understand that this does work in both directions, difficult though that may be for us conceptually.
Richard Drax
My right hon. Friend and I have had many face-to-face talks. This is not a wily move by the United Kingdom. This deal will allow the United Kingdom to leave the EU. The backstop very clearly, and we have heard it from the Attorney General, means that we may not be allowed to leave unilaterally—so stuck in it. It is not a wily move and the compromise down the middle deal has upset everybody. We need the unilateral right to leave this institution, as the people of this country instructed us to do.
Dr Fox
It is certainly true that there has been some movement on this issue. Originally it was envisaged that the backstop had to be permanent. Now the agreement is clear that it is designed to be a temporary measure. We should understand that, if we do not like the whole concept of the backstop here, it is also not liked in continental Europe. That should be the biggest incentive we have to never get there and to reach a trade agreement on a future partnership.
I was struck by the contribution of my hon. Friend the Member for Morecambe and Lunesdale (David Morris), who made a point that is worth reflecting upon. Had David Cameron brought this country back a deal that said, “You can be outside the single market, the customs union, the common fisheries policy and the common agricultural policy, make no contribution and end free movement,” I wonder what the reaction would have been at that point in history. That is the agreement we are talking about today. I know that I, for one, would have been biting his right hand off for an agreement like that.
Jim Shannon
In December 2017, I sought assurance from the Prime Minister and her reply to me was:
“I am very clear that we will not be a member of the single market or the customs union, and we were not proposing that any part of the United Kingdom will be a member of the single market or the customs union separate from the rest of the United Kingdom. The whole of the United Kingdom”—
that is the United Kingdom of Great Britain and Northern Ireland—
“will be out of the internal market and the customs union.”—[Official Report, 11 December 2017; Vol. 633, c. 48.]
It is understandable why, when I see the legal agreement, which says something completely different, I greatly mistrust what I am told by those in government at this moment in time.
Dr Fox
The Government have the best interests of the whole Union at heart, which is why, for example, when we negotiate trade agreements, they are for the whole United Kingdom and not partial. The question was raised yesterday at the International Trade Committee whether the Government would implement during the backstop any trade agreement with the rest of the United Kingdom but not Northern Ireland. That would be very difficult to justify, exactly on the terms that the hon. Gentleman mentioned.
One of the most interesting speeches of the day was that of the shadow Chancellor, the right hon. Member for Hayes and Harlington (John McDonnell). In reply to the hon. Member for North Antrim (Ian Paisley), he said that the backstop would not be needed under Labour’s plans because there would be a customs union. That is patently untrue. The regulatory gradient that would exist would not remove the need for a border and would address neither the anxieties of the Irish Government nor those of us in the United Kingdom who believe in the integrity of the Union.
The right hon. Gentleman said that Labour would negotiate a “comprehensive customs union”, with a say in future trade agreements. Let me tell him what nonsense that is. Under EU law, the EU has exclusive competence over its common commercial policy, which includes trade agreements under article 207. The EU treaties set out clear provisions for concluding EU FTAs that provide a role for EU member states and the European Parliament. Those treaty provisions do not permit a non-EU member state—even one in a customs union with the EU—to play a decision-making role in concluding EU trade agreements. That was nonsense. It was another piece of ill-conceived Labour fantasy.
What we have heard today from those on the Labour Front Bench is an ill-researched, ill-understood, unrealistic and incredible policy. As we all know, Labour—to the great irritation of their socialist allies across Europe—are simply playing politics with this issue, at a time of great national decision making. They are out of their depth and not up to task.
Jim McMahon
On the backstop issue—the Secretary of State seems to have skirted it when challenged on it a number of times—the letter from the Attorney General, which has been sent to Members, was very clear that
“the Protocol, including Article 19, does not provide for a mechanism that is likely to enable the UK lawfully to exit the UK wide customs union without a subsequent agreement”,
and that remains the case even if negotiations have broken down. The points that have been made are accurate and the Secretary of State has managed to skirt around that without answering it directly. So answer it directly.
Dr Fox
No, I answered the question. What I was concentrating on was excoriating the Labour party for the policy that it has set out today—a policy that is delusional because it does nothing that it actually claims it does. To the irritation of the European Union, the shadow Chancellor and his team do not even appear to understand the European law that they are praying in aid for their own ridiculous case.
John McDonnell
I say to the right hon. Gentleman: do not judge our ability to negotiate on the basis of the incompetence his party has shown for two years.
Dr Fox
Perhaps the right hon. Gentleman can tell the House—I will give him the opportunity—under which articles of a European treaty does the EU allow a non-member to have a say? Under which treaty? [Interruption.] For those Members who cannot lip-read, it appears the shadow Chancellor was saying that he would singlehandedly be able to rewrite EU treaties to be able to accommodate Labour party policy. What a shambles of an approach to a national negotiation.
Let me deal with a couple of other issues that have been raised in the debate.
Dr Fox
If I may, I will continue.
In the Select Committee yesterday, my hon. Friend the Member for Yeovil (Mr Fysh) raised an issue that I would like to address specifically. He was concerned that the backstop rules would bind the UK to EU state aid rules. I understand that he was specifically concerned about the defence sector, which has a major role in his constituency. Having taken advice, I am happy to inform him that, under the backstop, the UK would still have an exemption from state aid rules in respect of defence measures.
One of the themes today that I really feel I have to deal with is the constant refrain from Labour Members about the causes that led people to vote leave. They talked about everything except that people were unhappy with membership of the European Union, and we got the same condescension and the same patronising attitudes. People voted to leave the European Union because, after 40 years of experience of moving from the Common Market into the European Union with greater and greater politicisation and moving away from the concept of an economic union, they did not like it. They did not like someone having legal authority over them. They did not like someone else determining how to spend their money or someone else determining their borders.
We need to be clear about some of the alternatives being put forward.
Dr Fox
I will not give way again.
My hon. Friend the Member for Gloucester (Richard Graham) was clear that we must beware of some of the siren voices on other alternatives, particularly the EEA/EFTA option. We would pay highly for such an option. We would have to negotiate membership from outside the EU. The EU members as well as the EFTA members would all have to agree such a membership. We would have full regulatory alignment inside the single market and have less freedom on future trade agreements than we have under the agreement being put forward by the Government. We would be hamstrung by rules on our financial services—not even able to set the rules in our own City—and we would have full freedom of movement applied to us. It could not be further from what the public voted for in the referendum.
Dr Fox
I will not give way again.
The Government have made it clear that we want to take a balanced approach to the question of our future trading prospects. We acknowledge the need to maximise our access to the EU market, but without damaging our potential to benefit from the emerging trade opportunities in other parts of the world. I remind the House that the International Monetary Fund has said that 90% of global growth in the next five years, bringing its forecast forward, will occur outside continental Europe.
Ambitious arrangements have been made in the political declaration for services and investment—crucial to this country—arrangements that go well beyond WTO commitments and build on the most ambitious of the EU’s recent FTAs. But we have also been clear that our future relationship with the EU would recognise the development of an independent UK trade policy and not tie our hands when it comes to global opportunities. The 27 nations of the EU constitute some of our largest trading partners. As a whole, some 44% of this country’s exports of goods and services still go to the EU, although that proportion has diminished somewhat over the past decade or so. We have set out an approach that means the UK would be able to set its own trade policy with the rest of the world, including—let me be very clear—setting our own tariffs, implementing our own trade remedies and taking up our own independent seat at the World Trade Organisation. It is at the WTO and like bodies that proper global liberalisation is likely to take place. In an economy that is 80% services-orientated, the liberalisation globally of services will have a far greater impact on the future prosperity of the United Kingdom than anything that is likely to be done on a bilateral agreement in goods, which has largely been liberalised over the past 20 or so years.
Britain is well prepared for a global future. No other country has the same combination of fundamental strengths, which will allow us to thrive in an age where knowledge and expertise are the instigators of success. The inward investment into this country in recent months is testament to that. Not only have we maintained our place in global FDI—we have improved it. According to the UN, in the first six months of 2018, Britain was second only to China and ahead of the United States in terms of inward investment because of the strong economic fundamentals of this country that have been set down since 2010 by the Conservative Government. Our export and investment performance shows that the sceptics have been wrong and that Britain is flourishing. The divisions of the referendum now need to be consigned to the past. It is time to set aside our differences and lead our country to a future of freedom, success and prosperity.
Let us be clear about one thing. There are those who claim, and it has been claimed today, that Parliament can override the result of the referendum because Parliament is sovereign. I say this to them: on this particular issue Parliament subcontracted its sovereignty to the British people when it said, “We cannot or will not make a decision on this particular matter. We want the people to take this decision and issue an instruction to Parliament.” The people of this country made that decision and issued that instruction. If we want to retain the public’s faith in our democratic institutions, it is time for Parliament to live up to our side of the bargain. In politics, we cannot always have the luxury of doing what we want for ourselves, but we always have an abiding duty to do what is right for our country. I commend this motion to the House.
Ordered, That the debate be now adjourned.—(Gareth Johnson.)
Debate to be resumed on Monday 10 December (Order, 4 December).
Richard Graham
On a point of order, Mr Speaker. Earlier, I intervened on the hon. Member for Dundee East (Stewart Hosie) to make a point about the difference in sentencing by courts of EU nationals and those from other countries. I want to make it clear that I intended no disrespect to European nationals, but I made the point clumsily—I illustrated it clumsily. I therefore want to apologise to anyone who took offence. I promise the House that that was absolutely not intended.