EU VAT area and pre-commencement requirements

Part of Taxation (Cross-Border Trade) Bill – in the House of Commons at 6:00 pm on 16th July 2018.

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Photo of David Davis David Davis Conservative, Haltemprice and Howden 6:00 pm, 16th July 2018

For the convenience of members of the Gallery, I should start by saying that this is not a resignation statement—that was last week. This week is a return to my normal business, as an ordinary Back Bencher carrying out the scrutiny of business. I thought that it would be rather mundane until I walked into what appears to be this rhetorical firefight that we have had so far in the debate.

Before I come back to that, the Taxation (Cross-border Trade) Bill and its partner, the Trade Bill coming tomorrow, are vital pieces of legislation. In the newspapers at the weekend, I read that some people were so cross with the White Paper that they were proposing to vote against this. Well, I do not think that they can be much more cross than me with the White Paper, but I urge them not to vote against it. These are vital pieces of legislation and they are necessary, whether we have the Government’s White Paper policy, my old White Paper policy, the FTA that some have talked about or indeed even the World Trade Organisation outcome. In every single case, we need these Bills and therefore I will be supporting them.

I want to speak directly to the new clause proposed by my right hon. Friend Anna Soubry. I will do so without impugning anybody’s motives or questioning whether somebody is acting in the national interest or not and I will not be firing off any gibes. I am not quite sure who she was referring to when she talked about having an excessive attachment to public office, but I do not think it was me. The simple truth is that this is a vitally important argument. It is central to the whole question of the economic aspect of Brexit—Brexit is not just economic; it is democratic as well, but it is central to that—and I will put to one side in my arguments the fact that being out of the customs union was in the Conservative party’s manifesto and therefore, in theory at least, one we are committed to.

The arguments go right to the heart of the principal issues. The proponents of the new clauses have a clear belief in the national economic interest, but they clearly believe that being outside the customs union will lead to a precipitate loss of trade, and that the loss of the ability to make trade deals matters less than that potential loss of trade. That is the core of the argument. It is pretty straightforward in that respect.

Let us look at some facts. Back in 1999, the United Kingdom—we are talking about the customs union, so this is about goods—was exporting 60% of its goods to the European Union and 40% to the rest of the world. Since then, that has gone down by approximately 1% per annum, so it is now about 45% to the European Union and the rest to the rest of the world. Pretty much by the end of this decade, it is likely to be 60:40 in favour of the rest of the world, so because it takes away the right to our own commercial policy, the prospect of staying inside the customs union favours the shrinking minority of our trade over the expanding, fast-growing majority of that trade. That is the very simple, fundamental, initial point that we should take on board. It also presumes that being outside the customs union will significantly damage trade because there will be friction at the border.