Taxation (Cross-border Trade) Bill

Yvette Cooper Excerpts

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Mel Stride]

My right hon. and learned Friend raises an important point. The Government are indeed saying that we recognise the importance of ensuring that we have a smooth and frictionless trading situation between ourselves and the European Union once we have left it. Although we will have left the European Union, the Bill will facilitate our ability to have similarities in the way in which we trade. It will then be up to us to decide how we deviate from our starting point. We see the current position, under the European Union code—the customs code and the legislation in the European acquis—as a starting point to which we need to be reasonably aligned, even though we might diverge from it in the years ahead as a result of the negotiations, if that would be to the benefit of our country.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

The Minister has clarified that it is the Government’s intention to continue with the existing customs arrangements, and that the Bill will allow for the possibility of a continued customs union. Can he also confirm that the content of any new customs arrangements or customs union will be decided only through secondary legislation, rather than through primary legislation? Would it not be better to have a proper vote on the Floor of the House on primary legislation on whether we should stay in a customs union?

Taxation (Cross-border Trade) Bill

Yvette Cooper Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

In trying to deal with a problem that is less bad than its supporters think, the proposal in the new clause would throw away a power and a right that is incredibly important—much more important than they think. They are trying to defend a false past and giving up a real future. There we are.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

It is interesting to follow the former Brexit Secretary and to reflect on the speech he has just given. It explained why he resigned from the Government but, in the end, it just clashes with reality—that is the unfortunate detail of the evidence he has put to the House today.

I shall speak in support of new clause 1, but also to my new clause 6 and amendment 9, which relate to conducting an impact assessment on the effect of leaving the common external tariff. I shall also speak against amendment 73 and new clause 36. We have heard why the former Brexit Secretary believes that any kind of customs union would somehow be bad for Britain and why we would be better off without it, and I will first address the fallacies in his argument. He was extraordinarily dismissive of the impact of checks at the border and of delays and additional costs, particularly for manufacturers and just-in-time production.

I make no bones about the fact that I am speaking strongly in support of manufacturing industry in my constituency. I will resist the temptation to go off on a tangent about Haribo and the Starmix I am sometimes allowed to test when I go to visit, but people there do tell me how important it is that they can bring ingredients to and fro smoothly across the border and talk about the impact of such delays.

[Anna Soubry]

Did the right hon. Lady notice that there was no detail about the reality of the America-Canada border, which took 10 years to construct, cost £10 billion, deals with facial recognition and involves 100 companies in the automotive sector of Detroit and nothing more? Does she think that such a model would not provide the frictionless trade that our manufacturing sector needs?

[Yvette Cooper]

I completely agree with the right hon. Lady. The former Brexit Secretary seems to be arguing that because companies trade across borders that involve customs checks, we should rip up our customs-free borders. He is saying that because those trades take place, it is okay somehow to add costs to our trading process. Why on earth would we do that? Why on earth would we add burdens to businesses that do not face them at the moment? Why on earth would we make the process difficult and more costly for them? It is not that we think all trade will stop—of course it will not—but the point is that that trade will become more costly and burdensome, and our businesses and manufacturers will be at a disadvantage compared with their European neighbours and competitors. That is unfair on our manufacturers, which we in this House should be standing up for. I certainly believe in standing up for Yorkshire manufacturing.

The former Brexit Secretary also seemed to be arguing that, because we coped with Operation Stack before, let us have more delays again. Yes, we can cope, but Operation Stack cost businesses coping with those long delays a fortune.

[Mr Marcus Fysh (Yeovil) (Con)]

Will the right hon. Lady give some consideration to supporting our new clause 36, which will become a key piece of legislation if the UK is to operate proper trade defences? She mentioned manufacturing, and I note that many Labour Members have constituencies where workers may depend on the UK’s having good trade defences. Under the facilitated customs arrangement, that would not be possible without new clause 36.

[Yvette Cooper]

Let me just deal with new clause 36. If the Government are saying that they will accept it, I do not understand how that does not rip a hole right through their White Paper. New clause 36 explicitly states that we cannot collect customs and excise duties at the border on behalf of another country unless that country is going to do the same for us, but the White Paper states:

“However, the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

That is the opposite of what is said in new clause 36. Have the Government ripped up their own White Paper in the space of a couple of days? This is a chaotic approach to a matter that is so serious, and it shows a ridiculous wobbling in the face of a small group of people who I do not believe speak for the majority in this country.

[Mr Kenneth Clarke]

That phrase in the White Paper describes a perfectly sensible arrangement. If we adopt the new clause, 27 other countries will face the prospect of searching for new technology and setting up their own bureaucratic arrangements to accommodate the Brexiteers in my party. We urgently need these EU negotiations to start with partners who can rely on us to stick to a consistent line, and it could be very damaging to change the basic position on such an important matter within one week.

[Yvette Cooper]

I think that the right hon. and learned Gentleman is right on two counts. First, I think that this inconsistency and buckling in the face of objections from what I consider to be an unrepresentative group is the wrong approach. Secondly, I think that these customs arrangements are immensely important.

[Mr Fysh]

Will the right hon. Lady give way?

[Yvette Cooper]

No, I will not, because there is a time limit and I want to finish my speech early so that others can contribute.

Members who oppose any form of customs union are underestimating the significance of rules of origin checks which, according to the Government’s own analysis, can burden businesses with additional costs amounting to between 4% and 15%.

[Sir Bernard Jenkin]

Why would any company bother to carry out expensive rules of origin checks if paying the tariff, which might be as little as 2%, would be much cheaper? It is as simple as that.

[Yvette Cooper]

That is really flipped logic. The hon. Gentleman is effectively saying, “They do not have to do the checks because they can all just pay the tariffs.” Why on earth are we going through this whole process in the first place if all we are going to get is a tiny reduction in tariffs that no one will take advantage of in order to get any benefits?

[Mr David Davis]

The logic is actually very simple. Empirical evidence shows that in international trade, companies seek to claim their rebates and do what is necessary to avoid tariffs when a tariff is lower than 3%, not when it is above. What that tells us is that the cost of rules of origin administration is less than 3%. Companies are rational operators. The numbers that the right hon. Lady cited from a supposed Government study were wrong.

[Yvette Cooper]

I would caution the right hon. Gentleman against dismissing the rules of origin checks. There is a huge worry about the burden that they will impose on small businesses in particular. There is a big difference between large and small businesses in this regard. It might be worth large businesses claiming the money back because they can set up systems to do so, but for small businesses the process can be devastating. I am thinking particularly of the huge number of small businesses that have not yet traded outside the EU and for which rules of origin will be a new burden.

Why on earth would we want to add these additional burdens and checks on businesses that have not faced them before? I find myself in a very strange position. I, as a Labour MP, am arguing far more strongly and passionately against these additional burdens on businesses than those on the hard right of the Conservative party, who ought to be arguing against such burdens.

[Wera Hobhouse]

Will the right hon. Lady give way?

[Yvette Cooper]

I will give way once more, but I am conscious of the time.

[Wera Hobhouse]

Surely rules of origin checks are about not only tariffs, but environmental protection, for example. It is not just about the money; it is about where the products have come from, how they were produced and whether they conform with what we believe in.

[Yvette Cooper]

The hon. Lady is right. We need to address the wider issues relating to friction at the border as well.

Let me say something about the Government’s facilitated customs arrangement. I understand what Ministers are trying to do and that they are trying to square a circle. They are trying to pull us out of the common external tariff without paying any of the penalties of being outside it. I think that that is a leap of faith—it is implausible. I think that there are huge questions about whether such an arrangement is deliverable and whether it would be robust enough for the EU ever to sign up for it.

The Government are expecting that there will be sufficiently robust procedures for tariffs to be collected at the border for widgets coming in from the United States or other countries, and therefore no checks—no spot checks; no additional checks—on whether forms are being filled in correctly and accurately, on whether there is fraud and on whether there is an incentive for companies to fill in the forms in respect of one direction but then actually to move the goods in another. That is significant, because the European Commission is currently taking action to recover what it believes is €2 billion of under-claimed customs duties as a result of the UK’s failure to crack down on Chinese clothing importers’ customs fraud. Whatever the rights and wrongs of that, the point is that the European Commission and EU member states do not have confidence in our customs arrangements at the moment—never mind our asking them to join in a huge leap of faith with their agreeing to our future facilitated customs arrangement. The Government are relying on some whizzy wonderful new technology, and while I hope that that will arrive very quickly, there are serious questions about how long that will take and what the consequences will be.

My new clause 6 calls for a proper impact assessment of the consequences of being outside the common external tariff. I still cannot believe that that has not been done. I cannot believe that there has been no serious assessment of the fantasy future trade deals that will somehow make us better off, or of the additional burdens that will result from being outside the common external tariff, which will make us worse off.

Let me now say something about amendment 73, which I think is one of the most destructive measures tabled by some of the hard-right Conservatives in the European Research Group. It would remove from the Bill any provisions that would be needed for a customs union. The hon. Member for North East Somerset (Mr Rees-Mogg), who chairs the ERG, has said that that is okay because there will be a future vote. Why should there be a future vote? Why should we not vote now? I think that we should have a customs union, so let us have that vote now, rather than voting to remove the provisions from the Bill. Why on earth, for the sake of manufacturing, would we ditch those customs provisions? The ERG wants to remove the possibility of a customs union from the Bill.

I am astonished that Ministers want to accept that proposal. It is deeply destructive, and it would actually make it harder for the Government to secure the customs arrangements that we need. It means that if their facilitated customs arrangement does not work, the fall-back position will be no customs deal at all, which would be deeply damaging for our manufacturers.

I hope that our Front Benchers will also vote against this deeply damaging ERG amendment because I do not see how we can tolerate the damage that the hard right of the Conservative party wants to do to our manufacturing industry. We need to be the party that will stand up for manufacturing industry and ensure that our manufacturers can get the best possible deal as part of the Brexit process. We owe it to them to do that.

[Several hon. Members rose—]