[3rd Allotted Day]

Part of Business of the House – in the House of Commons at 1:46 pm on 6th December 2018.

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Photo of David Davis David Davis Conservative, Haltemprice and Howden 1:46 pm, 6th December 2018

I am afraid not, on this occasion. I hope that the right hon. Gentleman will forgive me. I have just almost been given instructions.

Let me now say a little about delays at Calais. The first thing to say is that the French do not intend them to happen. I know that, in our chauvinist way, we expect the French to misbehave, but that is not their intention. The prefect of the Calais region, the representative of Calais and the head of French customs have all said in terms that they will do everything in their power—through lower inspection rates, light-touch phytosanitary inspections and the rest—to ensure that the trade between Calais and Dover will work. If there is a hiccup—we have had them before, with driver strikes and so on—we shall be able to divert 20% to 40% of the trade to other ports. That is a good example of the wild assertions that are simply not right.

I am very sorry that the Chancellor is not here, because I wanted him to hear what I had to say about the projections to which the hon. Member for Dundee East referred and on which I think he relied rather too much. It was not “The Rees-Mogg Times”, or some other organisation on one side of the debate, that criticised the Bank of England. It was a Nobel prizewinner, Paul Krugman—hardly a Brexiteer—who castigated the Bank, as did Andrew Sentance, a former member of the Monetary Policy Committee, who, again, is not a Brexiteer. Those were simply disgraceful polemical projections. They were not forecasts in any way, and I think that the Bank will come to regret them, if it has not done so already. So that is the practical element.

There is another issue to bear in mind. The WTO option is a walk-away; that is the problem—it is a walk-away. It is an outcome that we do not want, but we need it to have a proper negotiation; that is a hard fact that we have to face. We all think that we will suffer most from a WTO outcome, but that is simply not the case. There is an asymmetric arrangement here. We have a floating pound, to cite the German chief economist of Deutsche Bank, and the movement of the pound is what has protected us so far in the past two years, and it will protect us again. We have unilateral capability that nobody else in Europe will have: the ability to change our taxes and regulations to make sure we get the FDI—foreign direct investment—that the hon. Member for Dundee East talked about.

Finally, of course, we have the upside of the other free trade agreements, and that is another reason why I am sorry that the Chancellor is not present, because one of the big differences between him and me is that he does not believe free trade agreements deliver a large economic bang for their buck. The past 30 years of world history, however, show that there are billions of people in the world who might just take a different view on that.

The second option I want to talk to briefly is the Norway option. I looked at that option very carefully; indeed, I got castigated from my own side for paying it too much attention, but I thought that it was very important to ensure every single possible option was explored well, and I was approached by, and talked at great length to, my hon. Friend Nick Boles.

Norway plus appears to its protagonists to have three virtues. First, they say that it is the easiest option to negotiate; it involves the smallest movement and therefore is the simplest negotiation. Secondly, they say it meets the conditions of the referendum. Thirdly, they say it is the softest of soft Brexits. All those are possibly good arguments, except that they are not true. The negotiation would not be simple; we cannot simply stay in the EEA, as that does not work. Jean-Claude Piris, ex-head of the EU legal service, said in terms that we will have to renegotiate every single clause of the EEA arrangement. It will require unanimity from 30 different members, and they will exact a price. One of the advantages of Norway, we would think, is that we could control our own fisheries policy, but would we get that with a vote from Denmark, from France and from Spain? No, we would not. That is one of the problems: the negotiation hurdles are very big. It is reported that Michel Barnier said this was a possible outcome, but only in conjunction with customs union membership. With the two together, we are locked in; we are basically in a worse position than the Government’s proposal. We are basically locked into the single market—no say and no control, but in every other respect, including the free movement of people and paying money, we will be locked in. Norway does not find it satisfactory politically, and, frankly, a country like ours certainly should not. So that does not work. Finally, it is said that this option delivers on the result of the referendum. No, it does not. Free movement, money, independent trade policy, jurisdiction of the supranational courts, rule taker—on all those criteria, we fail under Norway.

So what is left? The last option is the free trade agreement. I have long thought this was the best option. This is the one that has been called Canada plus, plus, plus and super-Canada and a variety of other names, and somewhere buried in the middle of my old Department of DExEU there is a pile of papers laying out how this can be done in detail, including some legal text. The concept is simple, and that is important in this context, because we will have very limited time in the last few months to negotiate this. I made the point a couple of years ago when making this argument that these are the three months that matter: the EU always takes the negotiation down to the wire—to the last day, the last hour, the last minute, the last second, and sometimes it stops the clock to allow the negotiations to conclude. And that is what is going to happen here; I suspect we are going to go deep into time on this.

Why was this option attractive? It was attractive because we could build it from precedents. Canada is an EU-negotiated precedent, and we could add to it—this is the plus, plus, plus bit—all the bits that are not good about the Canada option. There is no decent mutual recognition agreement; we can lift that out of South Korea or the Australian deal. There are no decent phytosanitary arrangements; we can lift that out of New Zealand. So we can go back to the EU and say, “Here we have a proposal constructed entirely of your own precedents. It can’t undermine the single market, because you negotiated it. It can’t undermine the four principles, because you negotiated it.” That is the attraction of the Canada plus, plus, plus option—it is based on that template. It is all based on precedents previously negotiated by the Commission. So it is perfectly possible for us to create a draft legal text on the basis of where we are now and put that back to the EU and say, “The £39 billion rides on this. You have to agree the substantive elements before we sign off and then you have to agree the detailed elements by the end of 2019.” There is plenty of time to do that on the basis of existing boilerplate text. That is what we should be doing. We should stop grovelling to Europe and start grasping our future.