EU VAT area and pre-commencement requirements

Part of Taxation (Cross-Border Trade) Bill – in the House of Commons at 8:30 pm on 16th July 2018.

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Photo of Peter Dowd Peter Dowd Shadow Chief Secretary to the Treasury 8:30 pm, 16th July 2018

I read the White Paper on the train home on Thursday, if only out of a sense of morbid curiosity, but following the Prime Minister’s capitulation to the Brexiteers today, that curiosity has turned to a sense of the macabre. To begin with, we had the woman in the bunker with the blacked-out windows saying we were outward facing. Are we? This from the Prime Minister who invented a hostile environment for the Windrush generation and for disabled people claiming their rightful benefits and whose Government have been on the wrong side of the law more times than Arthur Daley.

The Prime Minister went on to state that we had a dynamic and innovative economy. Do we? Our economy is 35% less productive than Germany’s, we invest less and we have the most regionally imbalanced economy in Europe. Growth is sluggish and inflation stubborn. And on it goes—it gets more surreal. She says we live by common values of openness and tolerance for others and the rule of law. Really? The only thing the Conservative party is open to and tolerant of is big fat donations from Russian oligarchs. But here is where it gets really interesting. When she speaks about sticking to our principles, one has to wonder which principles she is referring to—the ones she referred to yesterday and which are enshrined in the White Paper or those she holds this afternoon, which tear the White Paper to shreds. Perhaps the Minister can enlighten us.

The Prime Minister wanted to deliver an ambition to “once and for all” strengthen our communities, our Union, our democracy and our place in the world. I will take those claims one by one: our communities have been ripped apart by austerity; our Union is in danger from Ministers out of touch with the needs of any nation and afraid to move away from their desks in case someone else takes it; our democracy is threatened by swathes of Henry VIII powers; and our place in the world is a laughing stock due to the Prime Minister’s supine sycophancy to Donald Trump, who humiliated her.

The White Paper—what is left of it—came from the pen of a Prime Minister obsessed with silly soundbites. She used to talk about “Labour’s magic money tree” until she wanted a magic money tree of her own with which to bribe the Democratic Unionist party, when that phrase was quickly ditched. What about the infamous “strong and stable” mantra? It turned out to be more like a strong and stable smell of panic during the election and was ditched as well. Finally, it seems that this White Paper has also been ditched.

As for Northern Ireland, I present, Mr Speaker, the buffer zone—a 10-mile-wide area along the entire boundary between Northern Ireland and the Republic. Under the EU’s trading rules, to be operational this buffer would have to be policed on both sides of the 10-mile divide. Did we really spend decades trying to get rid of divides in Northern Ireland only to resurrect them? I think not. As for the facilitated customs arrangement, we are not clear what about it constitutes a partnership, as it would effectively leave UK customs officials working to maintain a customs union that we are no longer a part of.

Regardless of who is responsible for managing the duties, it remains unclear how the FCA would be frictionless. Presumably the final destination of goods would have to be queried as they enter the UK. This would slow down the passage of goods across our borders and prevent intricate supply chains from functioning properly. It would lead to waste, uncertainty and expense for business, to higher prices for consumers and to job losses and production moving abroad, as Anna Soubry pointed out. In that regard, the comments from Sir Edward Leigh were unconscionable.

What about the UK border? Does the Minister expect checks to be in place to ensure that goods that claim the UK as their final destination are not diverted into the EU once they arrive? Presumably we would need customs checks and controls between the EU and the UK to reconcile goods to documents when, for example, UK anti-dumping duties exceed those applicable on import. Can the Minister clarify? Can he tell us how many trusted traders—the Tories using the word “trusted”; that’s a laugh, isn’t it?—are currently registered with the Government’s scheme and how many they believe will be registered by the end of the transition period?

Of course, all this can be avoided if the House chooses to support Labour’s clear and pragmatic solution to the issues of frictionless trade within the EU and preventing a hard border in Northern Ireland. New clause 11 presents Labour’s practical solution to the problems that have confounded the Conservatives. In our new clause, we call on the Government to negotiate a new customs union with the European Union, to be in place when we leave the current customs union at the end of the transition period. That is the only way to ensure that we can have frictionless trade with our largest trading partner, and help to prevent a hard border between Northern Ireland and the Republic. It is what business needs and producers want, and it is what would most benefit the public.

I encourage Members on both sides of the House—even the Chancellor, who is muttering away there—to support our new clause, which will ensure that the Government negotiate a settlement that puts both the British economy and the Good Friday agreement first. What we will not countenance are new clause 36 and amendment 37: we are not having those.

There is no greater evidence of the need for robust trade remedies than the current global climate. We are witnessing the familiarities and the old certainties of free trade being laid waste by a United States President who is committed to imposing protectionist tariffs on the rest of the world: a United States President who rebuffs diplomacy daily in favour of angry tweets late at night, who favours confrontation over co-operation, and who is willing to exchange open markets for the very real threat of trade wars.

This uncertain climate makes it all the more important for the Government to adopt trade remedies—more important than ever. It is no exaggeration to say that without robust trade remedies, the UK faces the spectre of whole sections of our economy being wiped out, destroyed by punitive tariffs and undercut by state-sponsored dumping. The reality is that when countries engage in trade wars or trading one protectionist tariff for another, at risk are the very jobs and industries on which communities across the country rely. As we pointed out on Second Reading and in Committee, the remedies proposed in the Bill remain pitiful, to say the least. They are far weaker than the remedies currently in place at EU level, and will leave the UK worse off than most developed trading nations.

While there is a clear case for assessing the economic impact of trade remedies on key sectors of the economy and exports, the establishment of an undefined public interest test is more worrying. As the Bill stands, the Secretary of State could argue that flooding UK markets with cheap chlorinated chicken from the United States is in the public interest, or that cheap aluminium wheels from China would lower the cost of cars and would therefore also be in the public interest. Our amendment 21 would reverse the burden of proof, strengthening the Trade Remedies Authority and forcing the Secretary of State to produce overwhelming evidence if he decides to ignore state-sponsored dumping and its trade-distorting impact.

The Government are in a state of panic, chaos and capitulation. That is why the Chancellor, at the 11th hour, has chosen to table a flurry of amendments—but it is a bit too little, too late. As for parliamentary oversight, the Bill reflects yet another encroachment on parliamentary sovereignty and parliamentary scrutiny. It seeks to rob the House of Commons of its right to scrutinise the UK’s future trade and customs policy. The International Trade Secretary, not the House, would have the final say over whether the UK adopts trade remedies to protect key industries. While the Government seek to sideline the House, the Opposition’s new clause 13 would empower it.

We have reached a crossroads in the Brexit negotiations. This dysfunctional and divided Government cannot continue to ignore the blindingly obvious fact that a new customs union is the only way in which to ensure frictionless trade and access to the single market. I say this to them: if they cannot get a grip, they must get out.