Brexit: Preparations and Negotiations - Motion to Take Note

Part of the debate – in the House of Lords at 4:41 pm on 23rd July 2018.

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Photo of Lord Mandelson Lord Mandelson Labour 4:41 pm, 23rd July 2018

What a pleasure to follow the noble Lord, Lord Heseltine, with his wounding insight and sagacity. I agree with him that this White Paper will not endure as a basis of our negotiation with the European Union, and I shall come back to that in a moment. It has served, in my view, one very useful and significant purpose already. It has completely buried the idea of a Canada-style bilateral free trade agreement between Britain and the European Union as being anything other than a completely inadequate basis for our future trade. The Government now accept the principle that if we are to safeguard frictionless trade in goods, we need to maintain closer integration. They accept that we have to adhere to EU rules. They accept that we have to respect the role of the ECJ, however much their verbal gymnastics try to disguise all these things.

This simply reflects the economic and commercial reality after 40 years of progressive economic integration. This reality goes to the heart of why the White Paper has sparked such a backlash against it from both sides of the argument. For leavers, who want a clean break, it is nothing short of a capitulation—a sell-out because it leaves us tied to the EU rule book for goods and large numbers of EU programmes without any reciprocal rights to influence or to interpret those rules. On this basis they ask: “What on earth is the point of leaving the European Union?” For remainers, on the other hand, it offers a half-in, half-out concept that concedes influence and sovereignty without getting back the full economic benefit of the single market for both goods and, importantly, services. For them, it is too high a price to pay. So a mixture of “what is the point?” and “what is the price?” now stymies this White Paper.

Worse than that, it does not even provide a viable basis for reaching an agreement with the European Union. It seeks special treatment for the UK in goods, in ways that, in the EU’s view, would contravene fundamental legal principles. In the view of the EU 27, it would offer an undesirable precedent to other countries inside and outside the EU, if it were to be adopted. It does not provide a hard-and-fast level playing field in social, environmental, consumer and competition policies. The EU could not accept the complicated dual tariff system, never tried and almost certainly unworkable—and I speak as a former Trade Commissioner—because it could never be confident that the system would be properly enforced, even if it was willing to accept the principle. Lastly, the White Paper fails completely to set out a credible plan for services. The proposals on financial services would reduce Europe’s regulatory prerogatives, which is certainly not going to be acceptable to it.

And then there is the question of the Irish border. The White Paper repeats Britain’s total commitment to no hard border, yet insists that we will leave Europe’s single market, its customs union and its VAT area, and a customs border between Great Britain and Northern Ireland is also ruled out. Those conditions simply cannot be met simultaneously if we are going to avoid a hard border, and it may well be the rock on which any deal with the EU founders unless, in return for flexibility by the EU—and I can see where it might put that forward—Britain finally decides to stay in the customs union indefinitely. In my view, that is a likely outcome, but may become explicit only during the transition period, if we depart in 2019.

That brings me to the last and main point that I want to reinforce. This White Paper crosses the Rubicon—there is no doubt about that, hence the fury of the Brexiteers. But here is the point. Having left Canada’s model, however difficult the politics will be, the logic of the Government’s position leads towards Norway and remaining in Europe’s economic area, where we would be firmly anchored in a properly established structure with full participation in the single market, with basic rights and protections afforded to us by that structure, from where we could negotiate a more appropriate deal for a country of our size and recent membership of the European Union. But that can be done only—and I think this is slowly dawning on many—from inside, not outside, Europe’s economic area. That is the point that both Front Benches, if I may say so, will need to come to terms with in the coming months. The alternative—crashing out of the European Union with no future trade deal—would leave us completely beholden to how the EU choses to treat our trade. We would be virtually powerless, with minimum WTO rules—applied, by the way, to goods but not to services in the main—coming to our aid, assuming of course that the WTO survives intact President Trump’s tenure in the White House.

This is a fundamental choice that Parliament may be unwilling or unable to make. Perhaps it is a choice that Parliament should not make by itself, because it goes to the heart of the original referendum decision, when this unpalatable choice with which we are faced was neither revealed nor properly debated at the time. No one is advocating a people’s vote on the final deal as a sort of re-run fixture because the first result was disappointing. That is not my view. It is because the whole process surrounding the referendum was flawed, and the handling of Brexit ever since has been totally chaotic. I am not saying that it would be easy or simple to hold another referendum. However, I believe—as John Major argued most persuasively on BBC Television yesterday—that a fresh people’s vote is the only way to give democratic legitimacy to the profound choice that now has to be made: to leave on such sub-optimal terms as we will be presented with, or to remain in the European Union.