I beg to move,
That this House
believes that for the UK to withdraw from the European Economic Area (EEA) it will have to trigger Article 127 of the EEA Agreement;
calls on the Government to provide time for a debate and decision on a substantive motion on the UK’s continued membership of the EEA;
and further calls on the Government to undertake to abide by the outcome of that decision.
I thank the Backbench Business Committee for granting today’s debate, and I thank right hon. and hon. Members on both sides of the House for supporting the application for it. In particular, I thank my hon. Friend Heidi Alexander and Anna Soubry for co-sponsoring the motion.
If the referendum result was indeed a vote to take back control, this House must surely have its say on that critical issue. I rise to commend the motion to the House, because all options both for the transition and for the comprehensive trade and partnership deals must be on the table. I first want to set the debate in context by outlining what the European economic area is and what it is not. I will then explain how EEA membership can square the circle between market access, sovereignty and control. I will also illustrate how EEA membership offers a sensible and workable transition out of the European Union—a bridge, rather than the potentially catastrophic cliff edge of exiting on World Trade Organisation terms.
First, what is the EEA? Simply put, it is an internal market between the EU28 and Norway, Iceland and Liechtenstein. It was set up in 1993 to allow the participation of non-EU states in the single market. However, the EEA internal market excludes single market features such as fisheries and agriculture, and it does not entail membership of the customs union. That means that EEA members are able to negotiate trade deals with third countries, either bilaterally or through the European Free Trade Association. That is how Iceland became the first European country to strike a bilateral trade deal with China in 2011.
It is through EFTA membership, in conjunction with the EEA, that unfettered trade in goods is achieved. EEA-EFTA membership could therefore provide a solid basis on which to sustain frictionless trade between the UK and the Republic of Ireland post-Brexit.
The hon. Gentleman just talked about a “catastrophic cliff edge”. Clearly, it is in the interests of our country that we have a free trade deal, but will he put that in context? Exports in 2016 accounted for 28% of our GDP and EU exports for 12.6%. Last month, the World Bank published a study showing that in the event of no deal and WTO rules, British trade with the EU might fall by 2%. That is 2% of 12.6%, or a quarter of 1% of our overall GDP. Therefore, when he talks about a catastrophic cliff edge, let him put it in context.
I thank the hon. Gentleman for his intervention. May I suggest that he takes a trip to the port of Dover? The Brexit Select Committee, of which I have the honour of being a member, visited it recently and we were told that an additional two minutes of processing time on the 10,000 heavy goods vehicles that go through the port would result in a 13 mile tailback. A WTO Brexit, we were told, would add a lot more than two minutes. We therefore have to look at this debate in the context of the institutional capacity of our country to cope with a WTO Brexit, which is critical.
I agree absolutely with my hon. Friend. On the automotive sector, we know that a WTO-based Brexit would add 10% to the cost of every car we export to the EU. What is more, given the complex, integrated supply chains the automotive industry relies on, there would be tariff and non-tariff barriers on every component that crosses the border. The result would indeed be catastrophic.
I agree that the financial services sector is critical to this debate, because passporting is required. There would be no passporting arrangements in a WTO deal, so the impact would be catastrophic. We must remember that the financial services sector is not just about the City of London; it supports 1 million jobs across the entire United Kingdom—in Edinburgh, Leeds and so on.
Does the hon. Gentleman agree that this is not simply about lorries queuing? For example, it is also about shell fisheries. There would be lobsters sitting for days in tanks that would be unsellable at the other end.
Indeed, during our trip to Dover, we were informed about the impact in terms of rotting food and vegetables on the border. There are practical, tangible impacts that we must bear in mind when it comes to a no-deal Brexit.
The head of the EFTA court, Carl Baudenbacher, has been a vocal advocate of the UK’s joining EFTA permanently or at least as a short-term docking measure —an idea that the president of the European Court of Justice, Koen Lenaerts, similarly advocated over the summer. EEA-EFTA membership is emphatically not the same as membership of the single market or the customs union. The EEA is an internal market that is conjoined with most of the EU’s single market, but it is nevertheless a stand-alone structure with its own legal, regulatory, governance and institutional frameworks.
The EFTA court exists as a sovereign body. It of course takes some of its guidance from the European Court of Justice. Nevertheless, were the UK to have judges on the EFTA court body, it would clearly have extra clout and the ability to exercise its sovereign right to interpret the guidelines that come from the ECJ in such a way that suits the membership of EEA and EFTA.
Is not the critical issue that many courts may choose to follow decisions of those with similar jurisdictions? Our courts have historically done that, but with the decisions of common law courts. The EFTA court, however, is institutionally separate from the ECJ and therefore not subject to its direct jurisdiction—is that not the important distinction?
The hon. Gentleman hits the nail on the head. I would add that EU member states are required to refer rulings to the ECJ, whereas EEA-EFTA states are not required to refer rulings to the EFTA court. This is a vital distinction, because it has significant implications for the functioning of the two markets. The EU single market is predicated on the treaty of the European Union, with its commitment to ever closer union. The EEA, however, is governed by the EEA agreement, article 1 of which states that the aim of the EEA is to:
“promote a continuous and balanced strengthening of trade and economic relations between the Contracting Parties”.
The fundamental differences between the founding mission of the EU and the founding mission of the EEA mean that for the EU the four freedoms are indivisible, whereas for the EEA they are negotiable. This, in turn, means that the EEA membership would allow a post-Brexit Britain to square the circle between market access and sovereignty when it comes to that most thorny of issues, the free movement of labour.
I always enjoy listening to the hon. Gentleman’s arguments and I have the pleasure of serving on the European Scrutiny Committee with him. Is not one difficulty with his argument that, under this model, we would have to follow all the rules—the rules of the single market and, as he says, the rules of freedom of movement—without having a say or an input into how those rules are made? Is there not a risk that that will not fulfil the wish of the British people?
I thank the hon. Gentleman for his intervention, but I am afraid he has misinterpreted how the EEA functions. The EEA joint committee sits with Commission officials, and officials of the European Parliament and the European Council in comitology, which provides the EEA joint committee with the ability to shape EU legislation, regulations and directives. I will come on to this later in my speech, but the idea that the EEA means rule-taker rather than rule-maker is incorrect.
As an EEA member, the UK could unilaterally suspend the free movement of labour by triggering article 112 of the EEA agreement, which allows for an emergency brake on any of the four freedoms on the basis of economic, environmental or societal difficulties. There is legal precedent for this. Upon entering the EEA in 1993, Lichtenstein triggered articles 112 and 113 of the EEA agreement, thus suspending the free movement of labour and ultimately agreeing a protocol that enabled the introduction of a quota-based immigration system.
The manner and form of economic or societal difficulties facing the UK would of course be different, but the fact is that the legal precedent has been set so there is no reason why the UK should not be allowed to follow suit. Having pulled that emergency brake, we would then, as per article 113, enter into deliberations with other contracting parties through the EEA joint committee to negotiate a lasting solution. In the case of Lichtenstein, this took the form of industry-by-industry quotas.
Is the hon. Gentleman really comparing Lichtenstein, a small mountain state in central Europe, which, frankly, could get full up rather quickly, with the United Kingdom, which is a much larger state and in which there is already a significant problem of migration?
It is patently ridiculous to make that sort of comparison. This is not about comparisons, but legal precedent. I would also argue that the United Kingdom has significantly more political and diplomatic clout than such a state, so the logic of the right hon. Gentleman’s argument does not follow.
The hon. Gentleman is making a very strong case—I was basically going to say the same thing—but if we are to draw a comparison with Liechtenstein, surely it is this: if such a tiny country could achieve what it did, we must have a realistic chance of doing the same.
The hon. Gentleman has hit the nail on the head, and I have nothing to add; he is absolutely right.
Liechtenstein is not the only legal precedent. Article 112 safeguard measures were also invoked in 1992 by no fewer than four of the then seven EFTA members—Austria, Iceland, Switzerland and Liechtenstein—which all cited the need to protect real estate, capital and labour markets. To recap: the four freedoms operate in an instrumental, as opposed to a fundamental, manner within the EEA, meaning that EEA membership offers a unique opportunity to combine market access, frictionless trade and reformed free movement of labour.
Will my hon. Friend clarify something? Am I not right in saying that, currently under EU law, some restrictions that could be imposed are not imposed—namely, if someone has not worked for three months, they can be excluded from a country? Thousands of people are thrown out of other countries in the EU, but Britain simply chooses not to do so.
I think my hon. Friend’s point touches on what sort of reforms to the free movement of labour we think we need. Opinion is divided. In terms of the upstream reform, the argument is in favour of a quota-based system; downstream reform would be based on registration, but perhaps that is for another debate. My point is that EEA membership enables a lot more flexibility over both an emergency brake and the use of industry-by-industry quotas.
I turn now to the vexed question of ECJ jurisdiction. Here the position is relatively simple, as EEA-EFTA members are not subject to ECJ jurisdiction. The EEA is administered by the EFTA arbitration court and the EEA joint committee, and disputes are managed by the EFTA surveillance authority. These bodies adjudicate only on matters relating to the EEA internal market and any violations of its principles and have far less clout than the ECJ. Moreover, while EU member states’ courts must refer legal issues to the ECJ, EEA states are not obliged to refer them to the EFTA court.
The EEA model is sometimes criticised because EEA members are cast as rule-takers as opposed to rule-makers, but that criticism does not stand up to scrutiny. EEA members have the right to participate in the drawing up of EU legislation by the EU Commission, and the EEA joint committee determines which EU laws and directives are deemed relevant for the EEA and whether any adaptation is necessary, so EEA membership would in fact provide the UK with a seat at the table when EU regulations and directives are being shaped.
Clearly EEA membership is one step removed from the heart of decision making in Brussels, but the reality of the referendum result is that our influence in Brussels and across the European capitals has, and will inevitably be, diminished. The only valid question now is how to maximise democratic control and influence while minimising economic damage. I contend that an EEA-EFTA-based transition deal would clearly achieve those ends. The stakes are high.
I am listening with great interest to my hon. Friend’s argument. Will he confirm whether I have understood him correctly? Would the way forward he is advocating require the UK to rejoin EFTA? Is that his proposition?
There are a variety of views on this. Carl Baudenbacher, the head of the EFTA arbitration court, has said that he would favour a docking system and an interim arrangement that puts British judges on the EFTA arbitration court in preparation for finalising a deal—in a sense, a bridging into EFTA. I would advocate joining EFTA as part of moving into the EEA.
I will make some progress.
“We remain extremely worried and the clock carries on ticking down”.
As a result, she said, more
“and more firms are triggering their contingency plans to move jobs or change investment plans.”
Reality has finally bitten, even in the minds of some of the most deluded Brexiteers, that it was always a fantasy to think it would be possible to complete the divorce and the final trade deals in parallel. A solid cross-party consensus on the need for a transition deal has, therefore, emerged, as was made clear in the Prime Minister’s Florence speech. All parties in the House also agree that we must leave the EU by walking over a bridge rather than by jumping off a cliff, and the EU has welcomed the fact that the Government have finally started to show some signs that they understand the realpolitik of the negotiations.
Given that an off-the-shelf transition deal is inevitable, it is clear to me that EEA-EFTA is the only viable option. The EEA and EFTA are well-established and well-understood arrangements that offer the clarity, stability and predictability that the British economy so desperately needs in these turbulent times. Transferring from the EU to the EEA and EFTA would allow us to balance sovereignty and market access. Crucially, such a transition deal would buy us time for negotiate the final comprehensive trade and strategic partnership deal that will shape the terms of the UK’s relationship with the EU for decades to come, while also allowing us to enter into independent trade negotiations with third countries because we would be outside the customs union.
Is my hon. Friend’s point not all the more pertinent and timely in the light of the visit of the United States trade representative, Wilbur Ross? He certainly seems to be implying that a US-UK trade deal would take significantly longer than the 19 or 24 months to which the Government are clearly hoping to secure agreement for a transition deal.
I think that there is unanimity, almost, on the issue of the timing. I would add that the benefit of EFTA is that it is not a customs union but a free trade area, thus enabling us to connect with the vital single EU market but also to strike third-country deals with countries including, potentially, the United States.
Does the hon. Gentleman agree that if the United Kingdom became part of EFTA, that could in many respects turbocharge EFTA and make it a far more appealing organisation in respect of trade deals?
That is an excellent point. I think that the current EFTA members recognise the clout that they would potentially have through the addition of a 60-million-person consumer market to their current market, which is a great deal smaller. As we know, global trade negotiations are all about leverage and clout.
I will make some progress.
It is clear that the issues we are debating today go to the very heart of what the Brexit process is about. This debate is about the future of the people whom we in the House were elected to represent. It is about their jobs, their livelihoods and their communities, and it is about the definition of our national interest and of our country’s place in the world. Yet the Government claim that a separate debate and decision on membership of the EEA are not necessary. Not necessary? How can it possibly be argued that matters of such deep political, economic and constitutional significance should not be the subject of proper deliberation? How can it possibly be argued that the House should be sidelined and neutered, simply because the Government are terrified of proper scrutiny? Is that really what people voted for when they voted to “take back control”?
While the political case for a separate debate and decision on our membership of the EEA is unanswerable, the legal position is hotly contested. The Government argue that on exiting the EU we will automatically exit the EEA, pointing to article 26 of the EEA agreement, which states that EEA members must be EU or EFTA members as well. However, it can equally be contended that the UK is an independent contracting party to the EEA agreement, being one of the founding sovereign state signatories to that agreement, and that exit from the EEA therefore requires the triggering of article 127. I am not alone in that view, which is shared by eminent academics such as Professor George Yarrow and QCs such as Charles Marquand.
It should also be noted that a conclusive decision in this House that UK membership of the EEA is not wholly contingent upon EU membership would greatly strengthen our negotiating hand, as the EU would be unable to force the UK out of the single market. Some will argue that this question should be settled in court, but a case in February of this year was dismissed as premature, as the Government had yet to state their position on the EEA membership, and it was still possible at that time for the triggering of article 127 to be wrapped up with the triggering of article 50.
On this issue, as with so much where the Government and Brexit are concerned, we now find ourselves in a hiatus—drifting, rudderless, floating around in a mist of ambiguity and indecision. It is therefore more important than ever that this House shows some leadership. It is on the Floor of this place, not in the courtroom, that we should be deciding these matters. It is we who are sovereign.
The people have not spoken, nor have they had the opportunity to speak on EEA membership. It is therefore the job of Parliament to speak, and to debate the matter on their behalf. Moreover, the Miller case established legal and political precedent for parliamentary authorisation of withdrawal from any international treaty that confers rights and obligations that have been transferred into UK law. The EEA agreement clearly confers such treaty rights into domestic law, so if we take the conclusions of the Miller case to their logical conclusion, Parliament must have the right to debate and decide.
I am truly proud of the fact that I campaigned passionately for remain, and I will believe until my dying day that the vote to leave the EU was the greatest act of national collective harm in modern political history. However, I am also a democrat, and fully accept and respect the result of the referendum. The question therefore is not whether we must leave the EU, but how we should leave. That, fundamentally, is what this debate is about.
As elected representatives of the people, and as patriots, our moral duty is twofold: we must act to ensure that the Government negotiate a deal that both protects jobs, livelihoods and the national interest, and that respects and enables greater sovereignty and control. Those who are driven by nationalism, separatism, dogma and ideology are not capable of securing such a deal, for their only goal is to burn every bridge they see and return to a bygone age of splendid isolation, and those who are driven by a desire to rerun the referendum are similarly incapable of moving to the centre ground, which is the only place where pragmatic solutions can be found. For we know that compromise is a sign of strength, not weakness. We know that a country can either have frictionless trade or independence, but it cannot have both. We know that “Rule Britannia” rhetoric provides the sugar rush of an easy soundbite, but it does not put bread on the table.
All of which means that we must have a Brexit deal that puts jobs first. We must have a Brexit deal that keeps our economy as close as possible to the 500 million consumers that are right on our doorstep. And we must have a Brexit deal that holds our deeply divided country together, by delivering to the greatest extent possible on the perfectly legitimate need to reform free movement of labour.
A transition deal that is based on EEA and EFTA membership will deliver a Brexit that protects jobs, livelihoods and the national interest. That is why it is vital that this House is given the opportunity to debate, and decide on, whether article 127 of the EEA agreement should be triggered.
I commend this motion to the House.
Order. The time allotted for this debate has been somewhat eroded and many Members wish to speak. Therefore, we must have an immediate time limit on speeches of five minutes.
It is a great pleasure to follow Stephen Kinnock, who has raised some important and interesting constitutional issues.
The motion before the House today asks us to conclude that
“for the UK to withdraw from the European Economic Area (EEA) it will have to trigger Article 127 of the EEA Agreement”.
It is certainly the case that article 127 provides that every contracting party to the agreement may withdraw from it, provided that it gives at least 12 months’ notice in writing to the other contracting parties. The question is whether that formality actually needs to be adopted. The EEA agreement is an arrangement that has been concluded among the member states of the European Union, the European Union itself and three of the four European Free Trade Association states—namely, Iceland, Norway and Liechtenstein. There is no doubt, as the hon. Gentleman has said, that the United Kingdom is a contracting party to that agreement in its own right. Indeed, it has no option but to be so, because article 128 of the EEA agreement provides that every European state must, on applying to become a member of the EU, apply for EEA membership. In other words, Britain’s membership of the EEA is a consequence of its membership of the European Union.
The UK has given notice of its intention to withdraw from the European Union, and by application of the provisions of article 50 that notice will become effective no later than midnight on
There has been a great deal of academic discussion as to whether that is indeed the case, but a view supporting the proposition that Britain will effectively cease to be a member of the EEA on leaving the EU has been given by no less a figure than Professor Baudenbacher, to whom the hon. Gentleman has referred. The professor has said:
“A state can only be an EEA Contracting Party either qua EU membership or qua EFTA membership. That follows from the two pillar structure of the EEA agreement. You are either in the EU pillar or in the EFTA pillar but you cannot be floating around freely.”
The hon. Gentleman has mentioned the desirability of the United Kingdom becoming a member of EFTA. It may or may not be desirable—I personally would oppose it—but it has to be recognised that if we are not a member of either EFTA or of the EU, we cannot be a member of the EEA.
My right hon. Friend is giving a most learned disquisition. Will he tell us what the practical effects would be if it were legally possible to become a member of the EEA? For instance, would it be possible to control our own borders? It seems to me that the reason so many people voted to leave was that they wanted to control their own borders.
My hon. Friend makes an excellent point. The fact is that we would be left with EU-lite. We would still be subject to the four freedoms, including the freedom of movement of persons. That would mean we would not be able to control our own borders, despite the Liechtenstein precedent.
I am following my right hon. Friend’s argument carefully. Does he agree with my earlier point that, in that situation, we would effectively be rule takers without having the opportunity to make the rules or to contribute in the way that we do at the moment?
My hon. Friend is entirely right on that score, too.
The hon. Member for Aberavon mentioned EFTA quite frequently in his speech, but the motion does not suggest that the UK should apply to become a member. Indeed, the implication of the motion is that upon the UK ceasing to be a member of the European Union, it could remain a member of the EEA, as Professor Baudenbacher put it, “floating around freely”. That does not provide the certainty that the British electorate requires and certainly not the certainty that British business requires. I am unsure whether the hon. Gentleman is suggesting that Britain should now be applying for membership of EFTA, but if he is, as a matter of law Britain would do so from a position of having ceased to be a member of the EEA. Therefore, upon becoming a member of EFTA, it would have to make its own decision as to whether it should rejoin the EEA. Again, that is not reflected in the motion.
The fact is that what we see today is a last-gasp attempt from those who regret and bitterly resent the departure of Britain from the European Union. It is an attempt to keep us in a halfway house—a kind of European limbo—and as a matter of law and as a matter of politics, this motion should be rejected by the House today.
I say to Mr Jones that this is not a last-gasp attempt; this is the start of a fight to develop a form of Brexit that does not crucify our economy. The question of whether and how the UK should leave the European Union has dominated British politics for the past two years. The Government are paralysed by the enormity of the task, and the public are left struggling to make sense of what is going on. One minute, we are staying in the single market and customs union for an interim phase; the next minute, we are not. One day, we are we are planning for no deal; the next, we are not. It is a dog’s breakfast. There is no clarity and no strategy. Brexit by adjective is the best we get, with fantasy aspirations of soft Irish borders and frictionless trade. It is meaningless and it is not good enough. I hope that today’s debate might start to change that.
The motion is about the European economic area—in effect, the single market. It is about the process by which we might seek to leave it or stay in it, which is different from our membership of the EU. We are currently members of both the EU and the EEA but—and this is a big but—they are distinct from one another. They are governed by different treaties and, while they overlap, different countries are members of each of them. Norway, Iceland, Lichtenstein are members of the EEA; they are not members of the EU. There is one process for leaving the EU—as governed by article 50 of the Lisbon treaty—and there is another for leaving the EEA: article 127 of the EEA agreement. The motion before us today does not stipulate whether we should be in the EEA, out of it, in it for a few years or for decades; it simply says that Parliament should decide. Parliament should determine whether we trigger article 127 and notify our withdrawal from the EEA, not the Prime Minister sat behind her desk in No. 10. MPs should decide. This House—the public’s elected representatives—should decide. There should be a specific, explicit vote that is binding upon Ministers.
I congratulate my hon. Friend on all her work to bring this matter not just to the Floor of the House, but to the general public discourse. Does she agree that part of the problem with the EEA and EFTA is the Government’s intransigence in looking at the situation? This is an ideologically driven process to take us out of the EEA, out of EFTA and out of the EU and turn us into an island on our own in the Atlantic with no trade deal whatsoever with anyone. [Interruption.]
Last summer, we grafted a massive public plebiscite on to our system of representative parliamentary democracy. I will not repeat my views on how the referendum was conducted—suffice to say I do not think it was our country’s finest hour. There was only one question on the ballot paper:
“Should the United Kingdom remain a member of the European Union or leave the European Union?”
Where were the words “European economic area”? Where were the words “single market”? Now some people say, “Well, everyone knew it meant we’d be leaving the single market,” but that is pure assertion. That is an interpretation of the result. Some people may have voted believing that, but others did not. Many more would not have had any idea where to start if you asked them to explain the difference. I do not say that to patronise; it is a matter of fact. If you asked my mum to explain it, she would run a mile. Taking us out of the single market is a political choice. Prioritising controls on immigration over safeguarding jobs and investment is a political choice. Making a massive issue of the European Court of Justice, even though most people would be hard pressed to tell you what it does, is a political choice. Those choices will determine the future of our country for many years to come, and it is the basic responsibility of each and every Member of this House—irrespective of party—to reflect long and hard on whether the form of Brexit being pursued by this Government is the right one.
Will my hon. Friend confirm that the 2015 Conservative manifesto said both that if they won, the people would have a referendum on Brexit, and that we would stay in the single market? People voting for Brexit therefore assumed that we would stay in the single market.
My hon. Friend is completely right. In fact, the precise form of words used in the 2015 Conservative manifesto was that they would protect
“British interests in the single market”.
We must get a vote on whether we continue to be a member of the single market. We have to determine whether Ministers notify other countries of our intention to leave the EEA. We cannot cobble something together by claiming that provisions within the European Union (Withdrawal) Bill somehow authorise Ministers to do that, but that is precisely what the Government are trying to do. They are trying to pull a fast one. I am convinced that the repeal of the European Economic Area Act 1993 contained in the EU withdrawal Bill will be used by Ministers, alongside the powers they want to give themselves in clause 8, to claim parliamentary authorisation for setting the ball rolling on our departure from the EEA. How many of our colleagues understand that?
Why do the Government want to avoid open and transparent debate? Why will we only have two hours at most in Committee to discuss the issue? The answer is obvious. The Government want to avoid an explicit vote on whether the UK should leave the EEA and leave the single market. They are worried that there might be a parliamentary majority for a so-called “soft Brexit”—one where we put jobs first and worry about immigration second. They are right to be worried but they are wrong to circumvent Parliament in this way. That is why I tabled new clause 22, which would give Parliament an explicit vote on our departure from the EEA, and why I support this motion today. As people who are elected to make decisions on the behalf of our country, we have a responsibility to consider thoroughly and transparently the option of staying in the EEA. We have a responsibility to hold on to the car keys to prevent this Government from driving us off the cliff. That is what this motion is about today, and that is why I support it.
For a free trade agreement to be possible after Brexit, the interim period must involve no membership of the EEA, the customs union or EFTA, because that would remove the freedom we need to negotiate with third countries. That includes any period in the EEA, being party to the EEA agreement, like EFTA states, or a bilateral Swiss-style agreement. The EEA essentially means membership of the single market and commitment to the four freedoms—free movement of goods, services, capital and workers. Three EFTA states—Norway, Iceland and Liechtenstein—signed the EEA agreement in 1994, but the EEA agreement would mean insufficient freedom for us to be a credible partner in trade negotiations with others. The agreement means taking on the single market acquis, but having no vote on legislation.
Through the EFTA Surveillance Authority, regulation is being harmonised, with EFTA itself stating that
“the EFTA Surveillance Authority and the EFTA court…
respectively mirror the surveillance functions of the European Commission and the Competences of the Court of Justice of the European Union”.
The EEA therefore does involve the harmonisation of laws in significant areas of the environment, social policy and so on, in those countries’ domestic economies. It involves the application of ECJ case law by the EFTA court, and I completely disagree with the assertion of Stephen Kinnock that it does not. The EEA also includes the free movement of persons. In other words, the European Court of Justice effectively prevails, and our influence over the EEA would be infinitely and hopelessly inadequate.
Let us consider the experience of Norway for a moment. The Norwegian Government commissioned a study of the EEA’s impact, and it found that Norway implements
“approximately three quarters of substantive EU law and policy”.
That makes a mockery of much of what the hon. Gentleman said. Furthermore, the cost of the EEA to Norway has increased tenfold since 1992, and nearly 12,000 EU directives and regulations have been implemented through the EEA agreement and have changed Norwegian society in a significant number of areas. We are told that, on the EU legal database, 17,000 regulations have come to us since we entered the European Union, yet Norway, which is in the EEA, has acquired nearly 12,000 EU directives and regulations.
The Norwegian Government have consistently made it clear that their position is to stay in but, in practice, the trend of attitudes in Norway is increasingly moving against that position. I was at a conference only last week at which a young Norwegian leader of the people’s movement made it clear that more than 70% of young people in Norway want to get out of the EEA and do not want to join the EU. That is the position, and the bottom line—I do not need to speak any longer on this—is that there is absolutely no case whatsoever for our joining the EEA. Joining is completely contradictory to the mandate that we received in the referendum, which is perfectly clear. It is impossible.
Don’t worry about the right hon. bit.
I put these words to my hon. Friend:
“the great advantage of the EFTA model is that it is completely independent of the EU yet follows the decisions of the European Court of Justice for the most part, although not always—that is important. I am glad that my hon. Friend Vicky Ford noticed that, because not many people have.”—[Official Report,
Vol. 626, c. 1059.]
I just wondered, because those are his very words, as recorded in Hansard.
Indeed, and I entirely accept that that is what the position was at that point in time. The argument has moved on, and the reality is that the mandate from the British people is clear. This House passed the European Union (Notification of Withdrawal) Act 2017 by 499 to 110, or thereabouts, and furthermore the Second Reading of the repeal Bill was passed by a majority, and therefore we will repeal the European Communities Act 1972—that is the will of the House, and that is what I stand on. The reality is that the proposal to put us into the EEA is effectively contrary to the mandate from the British people.
The short answer is that we have a mandate. It has been made absolutely clear, and the European Union (Notification of Withdrawal) Act has been passed by this House. The repeal Bill has yet to be passed, but the decision on Second Reading has made the House’s position absolutely clear to the British people. We are repealing the European Communities Act and withdrawing from the European Union. That is the position, that is the mandate and that is what I stand on.
I congratulate my hon. Friend Stephen Kinnock on securing this excellent debate. I preface my remarks by saying that I will use the terms “EEA” and “single market” interchangeably, although I appreciate there are slight differences, because we are basically talking about the single market.
I will first talk about the mandate, which Sir William Cash mentioned, then I will comment on the difference between access to and membership of the single market, and then I will talk about social justice.
On the will of the people and the mandate, I remind the hon. Gentleman that, when his Prime Minister went before the electorate in June, she did so on a manifesto that advocated taking us out of the EEA and the customs union and, essentially, pursuing what has been referred to as a “hard Brexit.” She did not get a mandate to withdraw us from the European Union in that way because she lost her majority in this House. The hon. Gentleman talks about mandate, but just look at the general election result. Of course, a lot of people who campaigned on his side of the argument in the 2016 referendum, including the Foreign Secretary, were very clear that our leaving the European Union did not necessitate our leaving the single market. We will hear no more lectures about what the mandate is or is not, because what I know from the election result is that the Prime Minister lost her majority on a manifesto that advocated taking us out of the EEA.
Secondly, there is no doubt that the primary reason for staying in the single market through the EEA is that, frankly, it is the principal way that we can retain the economic benefits of our membership of the European Union while being outside. Some suggest that we could do that through a free trade agreement, like the agreement the EU has negotiated with Canada, but that would take years to negotiate and, of course, it would essentially cover goods, whereas 80% of the British economy is made up of—
As my hon. Friend says, 80% of the British economy is made up of services. That is why staying in the EEA offers such benefits, and we do not just want access; we want to be a member of this thing because access is inferior to membership.
Above all, in my remaining time I make it clear to our movement as a whole that the single market, through the EEA, is about much more than a market; it is an engine for promoting social justice. For people who believe in social democracy, promoting social justice is the primary reason for wanting to support the motion of my hon. Friend the Member for Aberavon. The EEA helps to make us part of a framework of rules that essentially protects the British people from unfettered capitalism and the excesses of globalisation, which in many respects were what drove the Brexit vote in the first place. We benefit from the rights we get at work, the protections we get as consumers and the protection offered to our natural environment through being part of the single market.
There are three principal reasons why people on my side of the political spectrum argue against the EEA. First, they say that it would act as an impediment to having a social democratic manifesto that advocates public ownership. Well, look at Spain, the Netherlands and Austria, which have publicly owned rail, energy and water, et cetera. They say that we would not be able to stop zero-hours contracts, for example, but Luxembourg and Belgium, which are part of the single market, already have. Of course, Germany has regional banks and a national investment bank, which we would advocate in a social democratic manifesto. The EEA is no impediment to that.
Secondly, they say that being in the EEA would act as an impediment to achieving our goals because we could not control immigration, or control it better than we currently do. My hon. Friend has already outlined how we could do that, and the TUC has done the same.
Finally, they say that we cannot stay in the EEA because it offends national sovereignty. I would argue that one of the biggest threats to national sovereignty is the power of multinational companies that operate across borders. Frankly, the best way of countering that power is to operate across borders with others.
I just ask people to look at the actions of EU institutions in the past couple of years. They should look at the €13 billion that Apple has been ordered to pay the Irish Government because it wishes to avoid tax, at the fine Google has sustained and at what Amazon has just been forced to repay, and then ask themselves: are those the actions of some capitalist club? No, they are not, which is why so many Conservative Members have advocated leaving and why we should advocate at least staying in the EEA.
First, I congratulate Stephen Kinnock on securing this important and much needed debate. It is important because it is very relevant to our relationship with the EU. We see a lot of discussion going on in the media about the remain and leave debate, and the vote we had. In my view, that is over: the referendum decided that we should leave the EU, and that should now be a given—we have just to get on and accept it.
However, the referendum did not decide our future relationship between the UK and the EU. That is for the Government and Parliament to determine. It is our responsibility to achieve the best possible arrangement for the UK in our relationships with the EU. When we are doing that, we must recognise the views of both the 52% and the 48% from the referendum. It is important that we get the arrangement right and that it balances the different views in the best possible way, acknowledging that that will be difficult and we will have to compromise—that is a very important word.
I accept that there are two clear and different views: the “WTO view” and the “hardly any change at all” view. All of us would agree that in a perfect world there would be a perfect free trade agreement, but we need to have a reality check. At the moment there is a huge amount of uncertainty, which affects Parliament, Government activity, individuals and, most importantly, industry and commerce, where it is leading to decisions about investment not being taken or being postponed. To some extent, damage is already happening and it will continue to happen. For example, in my constituency a tyre factory was going to go ahead prior to the vote, but this has now been postponed and may never happen, so we are seeing the loss of £155 million of investment.
Two key decisions have been made. The first is that we are leaving the EU in March 2019. Secondly, there is a general acceptance that there has to be a transitional arrangement until 2021. I have watched the debate so far, and my conclusions are simple. We are leaving, as that was the decision of the people in the referendum. We all accept that there is a need for a transition, and we must also recognise the huge amount of uncertainty and the need to minimise it as soon as possible. We should look for the most practical, sensible and easy option to deal with that uncertainty—one that is easy to understand and well established. We do not need to invent the wheel once more. That solution is simply that we base our future on rejoining EFTA, thereby retaining membership of the EEA.
The advantages of such an approach have already been set out: we would leave the EU, as set out in the referendum; we would be out of the ECJ; agricultural and fisheries policies would be returned to us; we would have our own trade agreement opportunities; and, most importantly, we are talking about something that is established and understood by all concerned, and is a compromise.
When my hon. Friend’s constituents voted to leave the EU, did they really vote to ensure that our borders remained open for ever more through European immigration? That would be the consequence of his proposal that we stay in the EEA.
I am going on to talk about that very issue. I fully accept that my constituency voted to leave, and I totally respect that. I also understand that many of the reasons revolved around immigration.
By rejoining EFTA, we would eliminate a huge amount of the uncertainty almost immediately and we could very well turbo-charge EFTA in the future; a country of 65 million people would be coming in to support and help improve the prospects of additional agreements with other countries. But we have to acknowledge that there are certain compromises involved in our rejoining EFTA: free movement would continue—although, as the hon. Member for Aberavon has pointed out, there is article 112. We must also remember that we will need some sort of free movement if we are to make sure that we have people coming into this country with the right skills to support our industries.
Does my hon. Friend agree that it is clear that if David Cameron had been able to secure a form of emergency brake, it is more likely than not that the UK would have voted to remain? If EFTA does allow for third-party trade deals plus the introduction of an emergency brake, while ousting the jurisdiction of the ECJ, it should merit the closest consideration.
Hindsight is always a wonderful thing, but I very much sympathise with the point my hon. Friend puts forward.
Continued EFTA membership does mean access to the single market. Some people have commented that we would be a rule-taker. While we are going through the transition, that is likely to be true, but one can make the argument that we are already a rule-taker, because under the EU a lot of the decisions are made via a majority and we are sometimes in a minority and still have to accept those decisions. There would also undoubtedly be a requirement for us to continue to make a payment into the EU.
I accept that at present this approach is not perfect, but it is a compromise that we could have now. It would still allow us time to go for further negotiations to modify things such as immigration, access to the single market and the rules that we have to accept, and to have a debate about the amount of money we contribute to the EU. Today, politics would appear to have drifted to the political wings. The voice of the centre is struggling to be heard. It is as though the centre is no longer seen as appealing or as a place to be. However, I remind this House that life is not black and white; it is shades of grey. Compromise is required and certainty is urgently needed.
By rejoining EFTA, we would, to some extent, end the uncertainty now; business would be able to plan for the future more confidently. Negotiations would be able to continue with all parties, understanding the transition and the nature of the institutions, and in the long run we would hope to achieve a bespoke UK-EU agreement through the auspices of EFTA. I may be a centrist willing to be pragmatic and to compromise, but I firmly believe that such an approach is in the best interests of the people I represent and of the future of the United Kingdom.
It is a pleasure to follow John Stevenson, who made a number of interesting points, two of which I wish to follow up. He rightly noted that the outcome of the referendum did not determine the future basis of the UK’s relationship with the EU and that it was this House’s responsibility to do that in the months ahead of March 2019, when we leave the EU. He also rightly noted the huge amount of uncertainty at the moment, which is stalling many investment decisions and, understandably, worrying the business community up and down the UK. That has been underlined in graphic detail over the course of the CBI conference today and recently—notably by the Governor of the Bank of England just last week, when he highlighted the significant impact that Brexit is having our economic growth in the UK, at a time when, in his view, the British economy should be doing much better than it is.
I have to be straight with the House: I come to this debate having made it clear in the general election that I wanted Britain to maintain full access to the single market and having always thought that Britain was stronger through co-operating with our allies through the European Union and, in particular, its single market element. I have to accept that even though my constituency voted strongly in favour of remain, that relationship looks like it is going to change in the future, but it seems to me that continued membership of the EEA represents an opportunity—certainly in a transition phase, but potentially in the longer term as well—for the concerns of those who voted to leave and those of us who voted to remain to be squared.
It is striking that, notwithstanding all the concerns we heard from Sir William Cash, Norway has consistently sought to stay in the European economic area, with the benefits of not only full access to the single market but control of agriculture and fisheries. Surely that is the beauty of the EEA at this time, as we look at the case for a longer-term transition deal than the Government are currently considering. It is part of an internal market with the single market. It replicates it, albeit with the two exceptions that I have outlined and that other Members have acknowledged, yet it comes without membership of a common defence, security and foreign policy, which concerned a number of those who voted to leave. Crucially, it allows member states to negotiate their own trade deals.
As a former trade Minister who watched and took part in many a long discussion about trade deals, I struggle with the idea that we could do quickly a comprehensive trade deal with, say, the United States, or even with India or Australia. Given the short timescale for a transition deal that appears to be envisaged by Ministers, and certainly by the EU, it is fanciful to think we will be able to sort out comprehensive trade agreements within that time. The EEA therefore surely represents a sensible transition arrangement. It is also worth considering for the longer term.
In the seconds I have remaining, I turn to the issue of whether or not we voted to leave the European economic area. I say gently to the hon. Member for Stone that I do not think we did. Notwithstanding the points that others have already made about a mandate, there was no reference to our leaving the EEA in the pamphlet that the Government published to explain the context of the referendum vote. I therefore think there should be a specific vote in the House on whether we should leave the EEA.
It is a great pleasure to speak in this extremely timely debate. I congratulate Stephen Kinnock, who put his case very well.
I wish to focus on the free movement of people, because it is the issue that hangs over this debate. Currently, this country will not consider the EEA because, as my hon. Friend Sir Edward Leigh said, those who voted to leave fear that uncontrolled migration from the EU would continue. In my view, we underestimate the amount of control we could exert and the sorts of levers we could have in relation to tiny little Lichtenstein.
We must ask ourselves four questions about the immigration that will follow our leaving the EU. First, would we still allow unskilled migration into this country? This is critical. It is completely unrealistic to imagine that Britain could go from being almost totally dependent on unskilled migration to suddenly having none at all. The Government accept that. Care homes and many parts of industry would struggle severely and there would have to be a significant transition.
The whole point of this exercise is that we want to have a system by which we let into this country people who will contribute to this country, so of course we are not going to go from full-scale migration from the EU to no migration. That is an absurd reduction of our argument.
I put that point as a question because the official leave campaign line was that it would end unskilled migration to this country. That is not realistic.
My second question is controversial, but it is incredibly important. It is currently illegal for an unskilled migrant to enter this country from outside the EU. We legally discriminate because we are members of the EU. We allow unskilled migration only from within the EU; we do not allow access through tier 3 visas, which would allow unskilled migration from outside the EU. The latest figures from Migration Watch show that net migration from outside the EU was 50,000 more than from inside it.
If we go for this so-called global Brexit and open up unskilled migration through an equalised immigration system, we will simply have, at best, a reduction in EU migration and a significant rise in non-EU migration. If the country voted on immigration terms, it did not vote for that. That is why I say we should not underestimate the level of control the country would have over migration through being in some form of the EEA or EFTA.
The hon. Gentleman is making an excellent speech. Does he agree that the fact that the UK currently controls immigration from countries that account for 90% of the world’s population did not feature at all in the referendum campaign has led to a lot of misunderstanding about how this country’s immigration system works?
The hon. Lady is entirely right. We currently restrict unskilled migration to a population of 750 million; if we no longer discriminate and have an equalised system, we will open ourselves up to a population of 7.5 billion. Of course, yes, we will bring in controls, visas and so on, but how on earth will the man from the ministry be able to work out, when he gives his quota to various sectors, how many he allows from Europe and how many from outside? One need only look at the proposals for the seasonal agricultural workers scheme: all the pressure is not for workers to come from the UK; they are asking for a scheme that allows workers to come from Russia and Ukraine. Yes, we should look into how we encourage British workers and what we do with the education system, but the point is that the necessary change cannot happen overnight.
My third question is: do we want a system in which we are ourselves subject to visa controls when we go to France, Germany or Italy? That would be a massive disadvantage, and it leads me to my fourth question. I do not think that the country would expect visas to be applied to people from wealthier western European countries. The perception would be that the issue is with immigration from those countries with a significantly different economy from ours, from which the volume has therefore been greatest. It must be said that those countries, particularly Poland, are seeing levels of growth return to previous levels. These things are fluid.
If we look at those four questions, we can conclude that a variation on free movement would not be unpalatable to the British people, because they would not want visas to be applied to themselves and probably would not want to open up to unskilled migration from outside the EU. When we factor all that in, the sort of situation they have in Lichtenstein—a tiny atom of a country compared with ours—would recommend itself.
Like Opposition Members, my hon. Friends the Members for Cheltenham (Alex Chalk) and for Carlisle (John Stevenson) made the point that EFTA offers many potentially attractive elements. I, of course, support the Government in trying to seek the ideal, which is a comprehensive trade agreement that covers services, bespoke to us and negotiated in good time. We all want that. I argue strongly for a transition deal, because we know that it will be asking a lot to get to that agreement particularly quickly. Should we at least consider EFTA for the transition period? Contrary to what I believe my hon. Friend Sir William Cash said, I understand that EFRA members can negotiate their own third-party trade deals, alongside their being signatories to those already in place for the collective EFTA countries. As my hon. Friend the Member for Carlisle said, we would boost that group, giving it a much greater global presence. We would not be in the common agricultural policy or the fisheries policy. We would have far more freedom, but we cannot have total freedom—it does not work like that. We would have the security of being members of the group and we would give businesses the security of knowing the structure they would go into.
We must not underestimate the issue of immigration. It may be difficult for some to comprehend, but there will be many voters out there who, if they wake up and see that on leaving the EU we simply have a seesaw of an immigration system, from EU at one end to non-EU at the other, will feel betrayed. They are expecting immigration to fall in totality. The truth is that if we want to control immigration in the long run, we need not just the legal powers but the workforce. We need to have the people in this country, and I am afraid that that will mean further welfare reforms and consideration of how the apprenticeship scheme works—all kinds of things. But it cannot happen quickly, so we need to look at the transition. In my opinion, it would sensible to at least look at a transition within EFTA.
It is a real pleasure to follow James Cartlidge. He has made an excellent speech, and I want to hear more from him in the future.
I begin by taking on the claim that was made by some on the Government Benches that, somehow, a decision was taken in June 2016 to leave the European economic area. If that is the case, I have to ask why, in their submission in December 2016, the Government’s lawyers said:
“No decision has been taken either to serve or not to serve a notice under article 127 of the agreement. Consequently, there is no decision which is amenable to judicial review.”
No decision was taken because that decision has to be taken by the Government; it was not automatic. Therefore, this Parliament must have the final say about that matter.
I am not an advocate in any strong way of the proposal of my hon. Friend Stephen Kinnock. I am an unreconstructed remainer. I remain so, and I will fight to stay in the European Union. We have not left yet, but if—if—we leave, I will fight to get the best possible deal for our country.
There are problems with EFTA and the EEA: the arrangements do not cover agriculture or fisheries. Potentially, that is a massive problem for Northern Ireland, and it needs to be taken into consideration. As we have heard, the arrangements do not cover the financial sector and they do not deal with many problematic issues that we will have to confront if we leave the customs union. We need to have an EEA-plus arrangement rather than just an EEA one, as that will need other agreements alongside it. It may take time to negotiate those, and in the meantime, let us not go on a Gadarene rush over the cliff.
I am amused by the hon. Gentleman’s proposal to have an EEA-plus. Presumably, he can now tell us what will be the difference between being a member of the EU and being a member of the EEA-plus?
EEA-plus would relate to issues such as having an agreement on a common foreign and security policy, and an agreement on those matters that do not affect some of the EFTA or EEA countries because the UK is not Liechtenstein, Norway, or Iceland. We must have the closest possible relationships with our EU neighbours and partners on many issues to do with policing, security and defence. Having said that, the essence, which is the economic relationship, is fundamental, and a transition is better than a disaster. The disastrous crashing out of the single market with no deal, or a very costly bad deal, is not in our interests. As Michel Barnier, the EU’s negotiator, has said:
“We don’t have time to invent a new model.”
Why reinvent something when it is already there and when it can be taken up and built on to establish the security and the certainty that our businesses need in this transition period?
Interestingly, there is support for that view in an article by Wolfgang Münchau in the Financial Times today. He said:
“Once the reality of a limited trade deal sinks in, we are left with only two logical strategies: either join the EEA, or go for a minimalist agreement and focus on making that work.”
That seems to be the choice, and there are some on the Government Benches who, for ideological reasons, want a minimalist agreement. That is because they are not Brexiteers, but wrexiteers and they are prepared to bring down our economy and slash our public sector and our national health service. It will cost our public services billions if our economic growth is reduced and our economy is reduced. We will then suffer the consequences. We will also suffer the consequences of unpicked fruit and difficulties in the agricultural sector. All the major financial services companies, banks and American banks are already planning to move their headquarters from London to Dublin and their personnel from London to Frankfurt and Paris. Those things are happening even now before the decision is finally taken. Let us stop this insanity, act now and, at least, stay in the EEA.
It is a great pleasure to follow Mike Gapes. I congratulate Stephen Kinnock on securing this debate. I was pleased to support him, when, along with Heidi Alexander, we went to the Backbench Business Committee to seek this debate. We are grateful that, finally, we have a debate on one of the most important matters that faces this Parliament, and indeed faced the previous Parliament.
I am in an interesting position in that, when I stood again in Broxtowe on
May I quote—these are not my words—from a speech? The task of hon. and right hon. Members is to guess the date.
“The task of government is two-fold: —to negotiate in Brussels so as to get the possible results for Britain; —and then to make you the business community aware of the opportunities, so that you can make the most of them. It’s your job, the job of business, to gear yourselves up to take the opportunities which a single market of nearly 320 million people will offer…what a prospect that is.”
Can Members guess the year? It is 1988. What about the place? It is Lancaster House. From whom did those wise words come? It was none other than the right hon. former Member and Prime Minister, Margaret Thatcher. She was one of the strongest proponents of the single market. Why? Because she knew of the huge and wondrous benefits that it would bring to the economy and therefore to the people of this country. I am old enough to remember when this country was rightly described as “the sick man of Europe”, and we were. When we joined the European Union, embraced the single market and led it by the fine words and actions of Margaret Thatcher, we then rose to become the fifth largest economy in the world. Our membership of the single market and the customs union and our understanding of the positive benefits of immigration have made our country the great economy that it almost is today.
Does my right hon. Friend acknowledge that, as time progressed, the right hon. Lady to whom she has referred also said that she thought that we had made a mistake in joining the single market and repudiated it, because she felt that she had been misled?
I must accept my hon. Friend’s words, as I am not aware of that quote. If he were to ask me what Margaret Thatcher would have said about the bureaucracy of the European Union and the fact that we should not join the euro, I am sure that we would all be in agreement, but goodness me, by making our decision in June 2016, have we not thrown away the baby with the bathwater?
I agree with all those who have spoken before me, particularly my hon. Friend James Cartlidge, who made a powerful speech about the benefits of the single market and the realities of Brexit. He also made many important points about immigration. We do control immigration in this country. We control it with this thing called the market, because people only come here to work. Now, there is a very easy way for us to control immigration; we can trash the economy and then people will not come here because there will be no jobs. The idea that there is a small army of people who are out of work, sitting at home and begging to be working in the fields of—dare I say?—Lincolnshire or in one of the great food-processing factories in my constituency is a complete and total myth.
We have the highest rate of employment since the ’70s; there is almost full employment in huge parts of the country. Where do we find the highest employment rates? They are in the areas with the highest rates of migrant workers. And where do we find the lowest levels of immigration? In the areas with the highest rates of unemployment. Let us nail that one because, as my hon. Friend the Member for South Suffolk rightly said, that was another con played on the British people. They will see that all the EU regulations about which my hon. Friend Sir William Cash complains are about to be taken into British law, that they will not get their £350 million for the NHS and that immigration will not go down.
People are fed up with Brexit. I think they want us to get on with it. Well, there is a model. It is sitting on the shelf and it will do the job: it is the EEA and it might also be EFTA. It will solve the problem and stop the negotiations so that we can get on, get out, get a deal and give certainty to British businesses. Then this Government can get on with the domestic agenda, as we need them to do.
It is a great pleasure to follow Anna Soubry. She mentioned Margaret Thatcher, who I recall quoting Attlee saying that referendums were the instruments of “dictators and demagogues” because Hitler used them to assume supreme power, militarise, invade and commit atrocities. Of course, the EU referendum—an advisory referendum—was full of misinformation, and every day people are saying, “This isn’t what I voted for.”
We are here to talk about market economics. If the UK leaves the single market—the most developed free market in the world—the EEA and the EU, which has 66 bilateral trade agreements, it will be the greatest withdrawal from free trade in UK history. The reality is that we are not turning towards free trade; we are turning away from free trade and proper trade for the good of our economy.
Hon. Members have talked about the need to restrict migration, but they should know that the EU has enormous powers in its rules to restrict migration. For instance, people are thrown out of other EU countries when they have stayed for three months without getting a job, and there is no automatic right to benefits. What is more, EU migrants contribute to the economy 35% more in tax than they consume in public services. Migration is good. If we can salvage some of the benefits by staying in the EEA, all well and good; it is second best to staying in the EU.
People say that we can turn away and have our own trade relations with, for instance, the United States, but as we have already seen in the case of Bombardier, the United States will not think twice about imposing tariffs. We have heard Donald Trump saying that foreign countries are taking his jobs, making his products and stealing his companies, so we know that we would be hammered. By being in the EEA, we could trade with the US through the single market. We will not get the same terms as the EU has with the US. The firms which have their headquarters here will move into the European zone to trade, because there is no prospect of having any sort of deal with the US in the next five or six years.
We have seen the benefits of migration. If we turn our backs on the EU and the EEA, as people are suggesting, higher-value individuals—people in finance, lawyers, and doctors from our NHS—will continue to move out. All the studies show that the retention will be among the so-called lower-value people. If we swapped the people from Britain who migrate to retire in Spain for Polish workers, for instance, we would be swapping people who take money out of the NHS for those who make a contribution. It makes no economic sense.
My view is that this place should ultimately have a vote on the exit package, and that that vote should be at least three months before exit day. Before that, the people should be given a vote—a final say—on the exit package. The simple reality is that we continue to hurtle towards this cliff edge, and people say, “Tell you what, we’ll give you some rubber shoes to jump over the end”, but an economic and social nightmare is emerging. A few fundamentalists think we should carry on, but the people should have the final say because they are simply not getting what they thought they would get. The ideas about migration were completely misconceived: we may have to turn our back on the EU and open up our trading borders to India, but India is demanding more visas; China does not want us to penetrate that market; and the US will demand much higher terms. We are heading for a major economic downturn.
Being part of the EEA is the last opportunity to save ourselves from some of these problems. If we ultimately decide to leave the warm house and our friends, and to live in the garden, it is better to live in the shed than in the open air. I will leave it there.
Well, I am not sure that it is ever very wise to live in a shed, but we will leave that to one side.
Stephen Kinnock gave a characteristically intelligent speech, raising some important questions. Speaking personally, my main motivation for supporting the leave campaign was parliamentary democracy: I wanted to reassert the control of Parliament over our affairs. I have always been influenced by the debate, starting in 1992 with many great speeches from both sides of the House, which questioned our entry into an entirely new treaty set-up, whereby our own laws were no longer sovereign.
The hon. Gentleman is right to raise his question and I would also like to question the Minister. It is my belief and hope that we are committed to having full parliamentary approval of this process. As I understand it, the Government are attempting to make a deal, which will then be put to the House of Commons before we actually leave the EU at the end of March 2019. The House of Commons can then presumably approve or reject that deal. But we are now in the article 50 process, which is irreversible. Therefore, as I understand it, if the deal was rejected, it would not happen and we would exit without a deal. I put that point to the Minister; I am sure that he can resolve these matters easily.
Now, of course, it would be possible for Members of Parliament—particularly the Opposition, if they could garner a majority—to engineer a vote on whether we stay in the EEA. Of course, for that to happen, we would want to have some idea of the policy of Her Majesty’s Opposition, but that is currently somewhat unclear. We do know that they are committed to leaving the EU, but they have been quite careful—I quite understand, as they are in opposition and their job is to cause as much trouble as possible for the Government—and remarkably unclear about their official position with regard to accepting staying in the single market. The reason for this is that the six most leave-voting constituencies were Labour constituencies and the six most remain-voting constituencies were Labour constituencies. To be fair to the Labour party, it has to face both ways and that is what it is doing.
The hon. Gentleman initially said that he voted the way he did because he wanted parliamentary control. Why, then, is he so reluctant to allow this House to make a decision about whether we should leave the EU or leave the EEA?
Actually, I said precisely the opposite, if the hon. Gentleman had been listening. I have made it absolutely clear that I am a committed parliamentarian, and I am absolutely committed to a vote.
Is it not true that this House is here to debate, and is it not proper that, as we debate, we come to new conclusions and new ways of looking at things? It is perfectly legitimate for people to start thinking about different outcomes from the ones they were thinking about at the beginning, because more things are coming to light.
I am grateful to the hon. Gentleman for giving way. Given what he said in response to my hon. Friend Mike Gapes about supporting a vote on whether we leave the European economic area, would he be willing to sign my new clause 22 to the European Union (Withdrawal) Bill, which would put that into statute?
I am grateful to the hon. Lady for making that kind offer, but my problem is that, in these terms, I am a Government loyalist, and I want to help the Government to get this Bill through. That is most important, because if we do not get the Bill through, we will be in a kind of limbo—I apologise for using the expression “a kind of limbo”. All that the Bill does is transfer all the EU laws into our law. I am anxious that we get a generous free trade deal. I am also anxious that we pass all the EU laws into our law, particularly because I do not want us to create a bargain-basement economy—I want us to preserve workers’ rights and to be a gold-class economy. All that the Bill does is transfer all those protections for workers, and many other useful things, into our law, so I will be supporting the Government—
May I refer my hon. Friend to the remark he made about the Labour party looking at this issue both ways? The Labour party did, in fact, vote against the principle of the Bill, which includes the repeal of the European Communities Act 1972, by virtue of which all the legislation and the jurisdiction of the Court of Justice come into effect.
Of course I note that point, but I must now proceed to the end of my remarks.
I have said what I want to say about parliamentary procedure, and I now want to say a bit—
I am extremely grateful. May I be clear about the wise words from my hon. Friend? Setting aside the withdrawal Bill—he makes a good point about the Bill, and I think we all agree on it—if there were some other mechanism by which it was guaranteed that this place had a say on our membership of the EEA, is he saying we should have a vote? We could take it away from the withdrawal Bill and put it somewhere else, but is he saying that this place should make that decision?
In fairness, I think it will be virtually impossible to avoid such a vote. If the Opposition—once their position becomes clear, and it is not—want to have a vote, I am not sure it would be possible for the Government to avoid such a vote. However, I go back to my very first remarks: as I understand it, we will be voting on the deal, and if the Government are defeated, we will go back to article 50 and exit without a deal.
In the very last minute I have, may I say a bit about the EEA, because people have to be entirely honest about it, and particularly about the Norwegian experience? The whole point of Norway’s membership of the EEA was that it was supposed to be a waiting room for the EU; it was actually to prepare Norway for EU membership. That is why Norway has adopted the overwhelming majority of EU laws in the intervening years.
I understand why some people here who voted remain in the referendum want to stay in the EEA, but I urge them to be honest about it—let us have an honest debate. Once we stay in the EEA, we basically sign up to the four freedoms, to losing parliamentary control over many of our own laws and to unrestricted immigration from the EU. People may think that that is a good idea, but they have to at least be honest about it. If both sides of this debate are honest with each other, we will perhaps get a fair conclusion.
Sir Edward Leigh has been courteous and thoughtful, but I just remind him that he won his seat in 2015 on the basis of a commitment to keep the benefits of the single market for the UK.
I warmly welcome this debate, and I congratulate my hon. Friend Stephen Kinnock on the motion he has proposed. A German Foreign Office official told me earlier this year, “If you want the benefits of the single market, you have to obey the rules of the single market.” Ever since the referendum, Ministers have been telling us that we will have the benefits of the single market but that we will no longer have to obey the rules. Unfortunately, that will not be the outcome of these negotiations. If, by some extraordinary fluke, the Secretary of State for Exiting the European Union was able to persuade Michel Barnier to agree to such an outcome, it would immediately be voted down by other European Parliaments—certainly by the Bundestag—and by the European Parliament as well.
I think that that recognition is starting to dawn on Ministers. At the start of this process, they told us we would get barrier-free access to the single market, but I notice they do not use that phrase any longer; they now say we will have access with a minimum of friction—whatever that turns out to be. We are not, sadly, going to get the barrier-free access they said at the start that we would get, but we need barrier-free access. If we are to leave the European Union, we need to find a way, in conformity with the rules, to maintain the economic benefits—the very large economic benefits—for the UK of our membership of the single market, so my hon. Friend is on to something extremely important.
Membership of the European economic area comprises an EU pillar and an EFTA pillar. With the UK exiting the European Union, membership of EFTA is, as we have heard from the hon. Members for Carlisle (John Stevenson) and for South Suffolk (James Cartlidge) and from my hon. Friend, certainly something we should consider, and it may well prove to be the right way forward. However, there are some disadvantages to EFTA membership, and my hon. Friend Mike Gapes touched on them. In particular, because EFTA countries are not in the customs union, the grave problem at the land border with the Republic of Ireland would not be resolved by joining EFTA. The Government are telling us two things about that: first, that we will not be in the customs union; and secondly, that there will be no infrastructure at that border. Sadly, those two assertions are contradictory; they will not both be true, and one of them will have to not be true. We have a serious problem at that border, and joining EFTA would not deal with it.
I was interested by a proposal made in a paper presented recently to the Confederation of Norwegian Enterprise by Sebastian Remøy, who used to be an official in the EEA co-ordination unit in the EFTA Secretariat, suggesting that, alongside the EU pillar and the EFTA pillar in the EEA, there should be a third pillar—a UK pillar—which would allow greater flexibility and overcome the disadvantage of EFTA membership. It might also deal with some of the difficulties that Norway might raise about the UK joining EFTA and unbalancing the current structure and modestly sized secretariat. I just put that idea on the record—I do not know whether it is the right one, but it needs to be looked at, alongside membership of EFTA, as a way forward.
In the referendum, leave campaigners dismissed serious concerns about the economic consequences by describing them as “Project Fear”, but as we have heard in the debate, those fears are starting to be realised. The letter from business organisations said they needed certainty about the transition by the end of this calendar year, but they are not going to get that.
We certainly need some hard-headed economic realism as we face the decisions ahead—the hon. Lady is absolutely right.
We are not going to get certainty by the end of the year. The Secretary of State said to the Select Committee that we would have details of the transition by the end of March 2018 and that he hoped that for the sake of three months businesses would hold off implementing their back-up plans until then. But for much of the financial services sector, an announcement of plans by politicians in the absence of legal certainty is completely useless. They have to—the regulator requires them to—put in place their back-up plans if there is no legal certainty about the transition by the end of March next year. We are going to start to lose significant numbers of jobs. I mentioned the figure of 75,000 that is an estimate of the number of jobs that the financial services sector will lose from a hard Brexit. It looks as though—I have seen an estimate—15,000 of those will go if we do not have legal certainty about the transition by the end of March next year. That will impose a grievous economic blow upon us. My hon. Friend the Member for Aberavon is making an extremely important case that the House needs to heed.
Membership of the EEA is, in effect, membership of the single market. It means tariff-free and quota-free trade, the absence of non-tariff barriers, and mutual recognition. I agree with Members on both sides of this House who support the motion and who not only support the need for a proper debate and vote but are calling for the UK to remain in the EEA. We should listen both to those with positions of influence and experience in the UK and those from outside the UK as to why we should remain in the EEA.
In a blog, a Member of this House described very clearly to his constituents the benefits of remaining in the EEA. For effect, I have removed the geographical references. I thought that what he said was excellent:
“The EU gives businesses like the Brewery…access to the world’s largest market…It gives young people across our Country the opportunity to move freely throughout the continent. And if you are an entrepreneur…the EU Single Market allows you to trade freely without having to set up offices and legal structures in each country.
The EU Single Market is important because it means job opportunities for our children and grandchildren. Of course we would survive outside the EU” and the single market
“but the question is would we do as well as we would within it? Would” the large company that bought a local company have gone ahead with the purchase
“and secured the…1,300 jobs have been as interested to make this purchase had it not given the firm access to 28 members of the single market? This is not a theoretical issue:” the local company
“is much stronger, and jobs in that company much more secure than they were now” that the buyer
“has made that commitment. It is vital for the” regional
“Economy to have access to the EU markets, which in turn attract foreign investors, create jobs and prosperity in” the region
“and drive inward investment.
Those advocating that we should leave the EU say we will continue to be able to trade with other European countries and more widely across the world. Yes we will, but on what terms and how long will it take to agree them? This instability is a high price to pay and one which even the most ardent Leave campaigners have admitted would continue for years.
Across” the region
“over 360,000 jobs are linked to the EU. Our manufacturing is reliant upon freedom to export to the EU: a staggering 49% of” the region’s
“manufactured exports go directly to Europe.”
Will the hon. Member who penned that excellent description of the impact of leaving the single market continue to advocate remaining in the single market in his new job—as the Government’s Chief Whip?
My hon. Friend Chuka Umunna clearly described how membership is about more than just economic benefits; it is also about social justice and protection from the excesses of multinational corporations. Beyond the UK, our neighbours are warning us of the terrible impact that leaving the EEA will have on our country. Ireland’s Agriculture Minister is quoted in today’s Evening Standard as saying:
“If the raison d’être for Brexit in the UK was about striding the globe and doing their own trade agreements, a hard Brexit is walking away from a market of 450 million people in Europe. And that is bad for Ireland—it is worse for the United Kingdom.”
“We’re now in the window of decision making.”
Business leaders in my constituency and across the UK are very concerned about a hard Brexit. Every business leader I meet locally—those from large to small businesses in all sectors—ask me to do what I can to stop a hard Brexit. That is why the decision needs to be made in this House, after proper debate, and soon. That is absolutely essential if we want to abide by our commitment to parliamentary democracy. For the sake of the thousands of my constituents who work in the aviation sector, the thousands who work in financial services, and the thousands working in many other sectors who will be impacted by a hard Brexit, and for the sake of the hundreds of businesses whose short-term and long-term future is dependent on the UK remaining in the EEA, it is only right that Parliament has time to debate and vote on a substantive motion on the UK’s continued membership of the European economic area.
It is always a pleasure to speak in these debates. First, I put it on record that I am a Brexiteer and very proud to be a Brexiteer. People in my constituency also voted to leave, and the matter is very clear in my mind. I may be the lone voice on the Opposition Benches in relation to this issue, but I am not a lone voice in the whole of the Chamber. I think very highly of my colleagues and friends on these Benches, and they know that, but we have a difference of opinion on this. I should make that clear right away before I say any more.
The people of Strangford spoke very clearly and their voice said that they wanted to leave. Democracy has spoken and the decision is made: we should support the Government and get on with the job. I say respectfully and very gently to those who are remainers that the matter is over, the decision is made, and people have moved on. In June 2016, they spoke. We in this House have to listen to that mandate, and we cannot ignore that.
The hon. Gentleman will be aware of the famous quote by Keynes, who said:
“When the facts change, I change my mind. What do you do?”
The facts have changed. This is not what people voted for.
Well, the people in my constituency certainly tell me that they did vote for this, and I had the impression that it is what I was voting for as well. Other Members will have a different opinion, and they have expressed that today.
Numerous businesses in my constituency have a great European market, including Willowbrook Foods, Lakeland Dairies and Mash Direct. They are major agri-food employers in my area. I seek to do all I can to help them and will continue to do so. I sought an assurance from the Prime Minister and from a former DEFRA Minister that those jobs in the agri-food sector would be okay, and they gave me that assurance.
In relation to those businesses, the message that I am getting—I wonder if it is coming across to others—is that the “Project Fear” agenda that is being put forward by those who are still not wedded to the idea that we leave the EU, or the idea of not getting whatever sort of deal they want, is sending out the wrong message to industry and creating fear within industry. There is inconsistency in terms of sending out a positive message.
I thank my hon. Friend and colleague for his comments. We hear that today from Members who have a different opinion in relation to remain and inject fear into the whole debate. I am very positive about leaving the EU and leaving the EEA. When we are out and away, we are going to be better off. Let us have a positive outlook and we will be successful.
Do I believe that the best economic benefits are to be found as a non-EU member of the EEA? The bottom line is that EEA membership involves a range of obligations, including free movement of people, financial contributions to the EU, and accepting EU rules with no direct say over them. In short, we get the immigration issues, the tariffs and the charges, but very few benefits. Some Members have referred to the comprehensive trade deal, which I believe we can negotiate—I hope so. I have great confidence in the ministerial team and in what we are trying to achieve.
May I ask the hon. Gentleman what will happen to his opinions and his positive outlook if we cannot get the positive trade deals that he is hoping for?
I am a “glass half full” person. I look on the bright side of life, because that is what we should do. Some people have a “glass half empty” outlook, and they look at everything negatively, but I do not look at things in that way. I am positive about what we are doing, the way forward and the ability of our ministerial team to achieve what we want. We have to agree to differ about how some things will come together, and that is part of life.
I thank the hon. Gentleman, who is my friend, for giving way. Is he not extremely worried—even though he is a great optimist, as we have heard—about the real possibility of not getting a deal, especially in relation to customs? Northern Ireland needs a proper deal on customs, and there is every chance that we will not get it. That eventuality would be a really serious problem for Northern Ireland.
I thank the right hon. Lady—she is also my friend—for her intervention. I think we share the same wish to get a successful deal, although, with great respect, I do not share her fears about it. I am keen to get a deal.
In the short time I have left, I want to share some figures that I have been provided with, which call into question the matter of EEA membership on financial grounds alone. About 43% of UK exports in goods and services went to other EU countries—£240 billion out of £550 billion total exports. That share has generally been declining, since exports to other countries have increased at a faster rate. The EU’s share of the world economy has declined, too. In particular, the developing world has grown faster than the developed world. We have to be mindful of the opportunities in other parts of the world and expect to do better out of them. About 54% of our imports into the UK came from other countries in the EU in 2016. The world will continue to need our goods, and we will continue to need to buy goods from the rest of the world. It seems to me that to remain a member of the EEA would not be in our nation’s best financial interests.
I am sorry, but I cannot. I am nearly at the end of my speech and I have given way a few times.
In order to get something out of the EEA, we have had to put a lot more in, and we are finished with being the poor relation in the European family. We are going to be strong and positive, and we are going to do good. Let us make that our mindset. I am thankful to the ministerial team, who are attempting to work with people who do not want to work with us—who would prefer to huff in a corner than to achieve a relationship that benefits all involved. Such attitudes from Europe have brought our people to decide to leave, and every statement that is made after our negotiations with the EU further underlines and reaffirms the people’s decision to leave Europe.
We recently had some issues to do with Bombardier, but Airbus has stepped in and we have extra contracts for the C series plane. I believe that we have many things to look forward to. We need to let the EU know that we have learned a lot from our membership of it. We have learned that we must put our economy first and take care of our own, because no one in the EU appears to be doing that. My opinion is that continued membership of the EEA is not beneficial, and that our withdrawal from Europe encompasses withdrawal from the EEA. That must take place, and I look to Ministers to deliver it.
I thank Stephen Kinnock for securing the debate. He knows that I do not agree with absolutely everything that he said in his speech, but he has provided Parliament with a valuable service, and we should be grateful to him and to the other Members who secured the debate. I believe that we should stay in the customs union and the single market, although I know that the hon. Gentleman and I do not entirely agree on that. None of us has all the answers in this debate, least of all the Government. In fact, it would be nice if the Government had the odd answer, but they do not. It is almost inevitable, in a Parliament of minorities, that we will have to compromise, and so today’s debate has been useful.
The hon. Member for Aberavon made particularly good points about the ambiguity and indecision at the heart of Government. Jim Shannon said, quite rightly, that he voted to leave, and we respect his decision to do so. But a consistent thread throughout the debate has been the fact that we do not know what leaving the European Union will mean. Not only was yesterday Guy Fawkes day—someone else who was perhaps a little bit disappointed in this place—but it marked 500 days since the EU referendum. In those 500 days, we have received very few answers indeed.
The Minister has had longer than 500 days to think about what leaving the European Union means, because he, like many of his colleagues, was a member of Vote Leave and campaigned to leave. Some Conservative Members have spent decades planning to leave the European Union. One would have thought that having spent not just 500 days, but decades planning to leave the European Union, they might have the odd answer about what doing so would mean. Alas, no. As our contribution to the debate, the Scottish National party have put forward a compromise—drawing, on a cross-party basis, on expertise from those who know the European Union best—which is that we should remain part of the single market and the customs union.
In Scotland, we know the importance of the single market. The Fraser of Allander Institute, which was not scared to publish its report about the impact of leaving the European Union, estimates that leaving the single market could cost Scotland alone 80,000 jobs and £30 billion, never mind the impact on our friends and partners elsewhere in the United Kingdom. In view of that known impact, it is little wonder that the Government are terrified about releasing their impact assessments.
Is the hon. Gentleman such an enthusiast for remaining in the European single market that he is totally committed to remaining in the United Kingdom single market?
This is the astonishing thing. All of a sudden, Members have invented this idea of remaining part of the United Kingdom single market. The European Union is a club for independent sovereign states in a way that the UK is not. The thing that the hon. Gentleman has missed, throughout our membership of the EU, is that the UK remains sovereign and independent in a way that Scotland is not. Trying to compare the UK single market with the European single market is pretty desperate stuff, and Members do not have to believe in independence to recognise that.
I want to highlight the importance of freedom of movement, which is another area on which I may disagree with the hon. Member for Aberavon. Freedom of movement is something from which I have personally benefited as a UK citizen, and I want young people to have the same opportunities as I had. Freedom of movement makes our country a richer place to live, and all parts of the United Kingdom benefit from it. It enriches us financially and, critically, as a society, making this country a more diverse and tolerant place to live. Seasonal workers are especially important to our industries, and freedom of movement particularly benefits us at certain times of year. It is also important to our universities and other industries.
I would like to put on record the fact that I am astonished by what I am hearing about the European Court of Justice. The European Union has been a success for many reasons, one of which is that the European Court of Justice sits at its heart and arbitrates on behalf of 28 member states. Something else that has been missed is the fact that we will need an arbiter in whatever comes about after we leave.
We also face the danger of no deal—something that has been openly touted, quite irresponsibly, by Conservative Members. We noted from the press that there was a Halloween presentation to the UK Cabinet on no deal. That is a spooky thing for us all, given its impact. As I did on
A no deal scenario will hit hard the big cities in Scotland and, I am sure, elsewhere in the UK, with Aberdeen being particularly badly hit.
Five hundred days ago, my constituents voted overwhelmingly to remain in the European Union. They did so because they understand the benefits to our agriculture and tourism sectors, which are buoyed in large part by EU nationals. We have heard a lot about the EEA this afternoon, but does my hon. Friend agree that continued membership of the European Union for Scotland is absolutely essential?
As usual, my hon. Friend makes an excellent point. That is why people from every single local authority area in Scotland—every single one—voted to remain part of the European Union. Voters in Scotland were able to see through the arguments, or rather the lack of arguments and lack of detail, from Vote Leave, which was grossly irresponsible, just as they are able to see through the Tories in election after election.
We must preserve the single market. However, it has to be said that anything is better than the mess in which we find ourselves at the moment—and it is a mess. The Minister, who I hope will address this, has a great deal of responsibility. He has committed his political life to taking us out of the European Union, so why is he afraid of publishing the impact assessments? Why did he campaign on a blank piece of paper when he was part of Vote Leave, an act of gross irresponsibility that he has carried over into government? He should reflect on that, and I hope we will at long last have answers, because 500 days is a long time to wait.
Chuka Umunna made an excellent point. Government Members like to talk about mandates, but he talked about the general election as when a hard Tory Brexit was utterly rejected. The mandate of the people says that this is a Parliament of minorities, which means that we must all pull together. There must be compromise, and we need to see some movement from the Government.
It is a pleasure to wind up this debate, and I commend my hon. Friend Stephen Kinnock and his co-sponsors, my hon. Friend Heidi Alexander and Anna Soubry, for securing it. Each of them made forceful and thought-provoking contributions, and I thank the many other Members who have made excellent speeches.
The Opposition have consistently called for the maximum parliamentary transparency and accountability compatible with conducting the Brexit negotiations, and for Parliament to have more of a grip on the process. That is why we welcome the fact that this debate is taking place, and support the efforts of hon. Members from both sides of the House who have sought to secure greater clarity and certainty about what steps, if any, would be required for the UK to withdraw from the European economic area as a matter of international law. As always in these Brexit debates, we have covered a wide range of issues, but the motion refers specifically to continued membership of the EEA and to whether article 127 of the EEA agreement needs to be formally triggered. It is on that that I want to focus my remarks.
As several hon. Members have said, the EEA is an arrangement that enables three non-EU countries—Iceland, Liechtenstein and Norway—to participate in the EU internal market and allows the 28 EU member states to benefit, as Britain undoubtedly has, from preferential access to their markets as part of that agreement. Formally, the contracting parties to the EEA agreement are the 31 individual counties, although the EU itself was also added as a contracting party in 2004, because the EEA has a mixed agreement. As such, like other EU member states, the UK is a signatory to the agreement.
Article 127 of that agreement, which is the focus of the motion, sets out a basic rule for withdrawing from it. The article requires a contracting party wishing to leave the EEA to provide 12 months’ notification of withdrawal to the other contracting parties to give them time to modify the agreement. Taken at face value, article 127 suggests that the UK will have to give formal notification of withdrawal from the agreement to the other 30 contracting parties if it intends to leave the EEA. As several Members have suggested, the implication is that unless such formal notification is given, the UK will remain a contracting party to the agreement and a participant in the EEA after it has exited the EU.
It is worth briefly considering the implications of that argument, because there are reasons to believe it would not be the quick fix that many assume it to be. At a minimum, if the UK were able to remain a participant in the EEA after it had exited the EU, simply by means of failing to provide formal notification under article 127, it is likely that formal modification of the EEA agreement would still be required. As I sure the House is aware, it would involve an onerous, time-consuming and uncertain process of treaty change and ratification. That is because some parts of the EEA agreement refer to the contracting parties, which could be any of the EEA states, but other parts refer specifically to EU and/or EFTA states.
The situation could not therefore apply to the UK after Brexit unless it joined EFTA, which, as several hon. Members, including my hon. Friend Mike Gapes and my right hon. Friend Stephen Timms have said, would not resolve crucial issues such as the customs union or the Northern Ireland border, and it would not be a straightforward process. I note the comments of the Norwegian Prime Minister in August that joining EFTA, even for a temporary period, would, in her words, be a “challenging and costly” undertaking.
To illustrate the problem that would be created if we attempted to remain part of the EEA simply by letting this lapse, rather than by providing formal notification, it is worth examining article 36 of the agreement. The article makes it clear that the beneficiaries of the right to the freedom to provide services are EU nationals and EFTA state nationals. Hypothetically, if the UK attempted to remain in the EEA as a third type of contracting party, it would therefore be subject to the rules of the EEA agreement, but its citizens and businesses would not benefit, which I do not think anyone in the House would countenance. The EFTA option is therefore the only viable one in the majority legal opinion, but as several hon. Members have said, that is not as straightforward as some would like to suggest.
However, taking a step back, it is not even clear whether the requirements of article 127 apply to a contracting party that has decided to end its membership of one of the two bodies—the EU and EFTA—that enable a state to be party to the agreement in the first place. It is not clear because it has never been tested. It is true that there is no provision in the EEA agreement requiring a contracting party to leave the EEA if it ceases to be a member of the EU or EFTA, but the wording and spirit of the agreement clearly appears to rest on the assumption that only EU or EFTA states can be party to it.
The Labour party’s position is very clear: we want to seek a deal that retains the benefits of the single market and the customs union. We think we should be a member of the single market for the transitional period. Whether the EEA option is the only viable one for doing so during the transition is a question for another day. The wording of the motion on article 127 and continued membership of the EEA is very specific.
In short, the situation is entirely unclear. In the opinion of the House of Commons Library, the majority legal view is that under the present wording of the EEA agreement, it is impossible to be a party to that agreement without being a member of the EU or EFTA. That view has been put forward by a number of experts, including, most prominently, Professor Baudenbacher, the President of the EFTA court. He has argued that there is no scope within the EEA agreement for a third type of a contracting party that is neither an EU nor an EFTA member. The argument has not yet been tested in court.
As I have said, this legal opinion has not been tested. Interpretations differ, but I would say that the majority legal view supports Professor Baudenbacher’s assertion that there is currently no way to become a third type of contracting party to the agreement.
The argument has not been tested in court, as I have said. As the House will know, in February 2017 the High Court was asked whether the Government required the explicit consent of Parliament to enable them to leave the EEA, but the application was rejected on the grounds that it was premature since the Government had not then made a final decision on their EEA withdrawal mechanism. As things stand, in the absence of greater clarity, the door is clearly open for future legal challenges against the Government on this issue.
Greater clarity is required, and I have no doubt that the Government are aware of that. I assume their position on this matter is under review. That position has certainly evolved over time. In a response in December 2016 to a written question submitted by my hon. Friend Mr Leslie, the Government were clearly interpreting subsection 1 of article 126 of the agreement to mean that the UK is a member of the EEA only in its capacity as an EU member state. As such, we will automatically exit and secede from the agreement when we leave the EU.
However, the Government since appear to have shifted away from that position. According to reports of court proceedings taken from a judicial review application to the divisional court in February, the Government accepted that article 126 did not
“give rise to termination of the EEA Agreement ipso jure [in law]”.
More recently, in responding to a question posed by my hon. Friend the Member for Aberavon on
“we are looking at it just to make sure, for clarity purposes, that we meet its requirements.”—[Official Report,
Vol. 628, c. 285.]
Is the Minister able to tell the House today what progress has been made in that regard? The Government’s latest position appears to be that even if our EU exit does not automatically terminate the EEA agreement in law, any continued signature to the agreement would not equate to functional single market membership.
As my hon. Friend the Member for Lewisham East said in her powerful speech, whatever one’s opinion about whether the UK should be in the EEA, out of it, in it for a few years or in it for decades, it is crucial that we have greater clarity on this matter. I hope that in his summing up, the Minister will shed more light on the Government’s position before we come to the Committee stage of the European Union (Withdrawal) Bill.
I congratulate Stephen Kinnock on securing this debate on the European economic area and matters related to it. It has been an exceptionally vibrant debate, which is reflected in my time running extremely short as I rise to sum up.
The EEA agreement entered into force on
The territorial extent of the EEA has changed over time, with all new countries joining the EU obliged to become signatories to the EEA agreement. A number of countries have joined the EU from EFTA, including Denmark and the UK in 1973, Portugal in 1986, and Austria, Finland and Sweden in 1995. Neither EFTA nor the EEA were designed to facilitate exit from the European Union. Indeed, EFTA and the EEA have been conveyors to EU membership, interrupted by referendums in the two largest remaining EFTA states. I mentioned Switzerland’s rejection of the EEA in 1992; Norway rejected EU membership in 1994.
As we look to the future, we value our relationships with EEA and EFTA states, and we will continue to do so after we leave the European Union. We have made it clear that our offer to the EU on citizens’ rights also applies to the EFTA countries. We are talking with the three EEA-EFTA countries and Switzerland to ensure that there is continuity, recognising the need to promote stability for businesses and individuals from and within those countries.
The motion that we have debated today claims that
“for the UK to withdraw from the European Economic Area…it will have to trigger Article 127 of the EEA Agreement”.
As I said in a written answer on
“the European Economic Area Agreement will no longer operate in respect of the UK” when we leave the EU. Prior to that, the Secretary of State said in response to the hon. Member for Aberavon on
“The United Kingdom is a party to the EEA agreement in its capacity as an EU member state, so on exit day the EEA agreement will cease to operate in respect of the UK.”—[Official Report,
Vol. 628, c. 285.]
Finally, my right hon. Friend the Prime Minister confirmed to the House as early as March that our participation in the EEA is linked to our EU membership.
It is not only the Government who have made that clear. The man who led the European Council’s legal service for 22 years, Jean-Claude Piris, wrote in an article in September that the UK
“will automatically cease to be an EEA member when leaving the EU.”
“Neither the EU, nor its current 28 member States, are members of EFTA. After Brexit, the UK, not being a member of EFTA, and not anymore an EU member, could not be an EEA member”.
The president of the EFTA court, Dr Carl Baudenbacher, who has been quoted a number of times today, has also explained that the UK will lose EEA membership automatically when we leave the EU:
“A State can only be an EEA Contracting Party either qua EU membership or qua EFTA membership.”
On the fundamental premise of today’s motion, there is a clear consensus that the EEA agreement will cease to operate automatically in respect of the UK when we leave the EU.
The second part of the motion calls on the Government
“to provide time for a debate and decision on a substantive motion on the UK’s continued membership of the EEA”.
I welcome the opportunity we have had today to debate the EEA. A further debate is unnecessary. In addition to today’s debate, as has been mentioned, amendments have been tabled to the European Union (Withdrawal) Bill. It remains to be seen whether the House will turn to those in Committee.
As the Government have made clear, when we leave the EU, we will leave the EU’s internal market. We will not seek to become signatories to the EEA agreement. Acceding to the EEA would guarantee a bad outcome for the UK. As hon. Members know, the EEA agreement covers the four freedoms: the free movement of goods, services, persons and capital. We have listened to EU leaders, and we understand and respect their position that the four freedoms of the single market are indivisible and that there can be no cherry-picking. The democratic decision of the people of the UK means that we cannot accept all the obligations of the EU internal market, so things will be different when we leave.
European economic area membership would mean the UK having to adopt at home, automatically and in their entirety, new EU single market rules in order to maintain market access—rules over which we will have little influence and no vote. Such an absence of democratic control would not be viable for the people and businesses of the UK. I share the concerns of my right hon. Friend the Prime Minister that EEA membership would inevitably lead to friction and a damaging reopening of the nature of our relationship in the near future. That would be exceptionally undesirable.
Whether the EEA is right for the EEA-EFTA states is a matter for them; I say only that it would not be right for the UK, which is quite different from the EFTA states. Norway’s population is 5.26 million and Switzerland’s is 8.42 million. There are more than 8.5 million people in Greater London alone. Iceland’s population of 338,000 is comparable to that of the great city of Coventry. Liechtenstein’s population of something over 37,000 is about half the number of electors in the Wycombe constituency.
Those of us who care about the future prosperity of the UK cannot allow our country to be shoehorned into a position of permanent rule-taking, with the inherent considerable risks of major harm to our economy. Our task is to find a new way to work together in partnership with the countries of Europe, recognising that our rights and obligations in relation to the EU have changed. However deep our love for the EEA states, it cannot be said that they are comparable to the UK either in population size or economic structure. I have no hesitation in saying that that the EEA would not be right for us, even if it may be right for them.
The Government will seek a unique and ambitious economic partnership with the EU, based on our rules and regulations being the same at the start and on maintaining our commitment to free trade and high standards, while allowing for us both to make changes where we want to. When we leave the EU, we will no longer be part of the EEA.
This has been an excellent debate and I thank Members from all parts of the House for their contributions, although the Minister’s winding-up speech was deeply disappointing.
We live in a deeply divided country: city versus town, young versus old, graduate versus non-graduate. The referendum did not create those divides, but it certainly gave them voice. An EEA-based Brexit is one that could reunite our divided country: it is a Brexit that provides the basis for avoiding a hard Irish border; it is a Brexit that offers the opportunity for reform of free movement of labour; it is a Brexit that maximises access to the single market; it is a Brexit that removes us from ECJ jurisdiction; it is a Brexit that enables us to strike independent trade deals with third countries; and it is a Brexit that provides the certainty and predictability that our country so desperately needs in these turbulent times.
The clock is ticking and the stakes could not be higher. There is no mandate for leaving the European economic area. It was not on the ballot paper in June 2016 and the result of the
Question put and agreed to.
That this House
believes that for the UK to withdraw from the European Economic Area (EEA) it will have to trigger Article 127 of the EEA Agreement;
calls on the Government to provide time for a debate and decision on a substantive motion on the UK’s continued membership of the EEA;
and further calls on the Government to undertake to abide by the outcome of that decision.
On a point of order, Madam Deputy Speaker. My right hon. Friend Anna Soubry, I think somewhat inadvertently, made a reference to my interest in EFTA and the model of jurisdiction. What I actually said on
I am very, very grateful to the hon. Gentleman for his point of order, and for giving me and the right hon. Member for Broxtowe notice of it. It is not strictly a matter for the Chair, but, as the hon. Gentleman said, he has placed the matter on the record. I think we will leave it there. Everybody is happy, so that is terrific.