Trade Bill - Second Reading

Part of the debate – in the House of Lords at 3:42 pm on 11th September 2018.

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Photo of Lord Fox Lord Fox Liberal Democrat Lords Spokesperson (Business, Energy and Industrial Strategy) 3:42 pm, 11th September 2018

My Lords, here we are again. Last term, playing to packed houses, we had the long-running debate on the EU (Withdrawal) Bill. Last week, for one night only, we had the Taxation (Cross-border Trade) Bill. Today, we start the third act in this tragedy.

Just now, the Minister set out the latest instalment in a programme of national self-harm. This Bill sits alongside the Government’s plan to take a smooth-running customs system and swap it for the facilitated customs arrangement—an unworkable technological fudge of Heath Robinson complexity. As the Minister has already admitted, leaving the European Union puts at risk 40 trade agreements, accounting for around 12% of our exports. It is, in effect, throwing them into the air without any idea as to how they are going to come down. In around 200 days, at the end of March, something will emerge, but it will not be what we have today. Nobody in this House knows what it will be.

I welcome the Minister to her first Bill. I am optimistic that she understands the challenges that are presented to business. She knows that this badly thought-through legislation will seriously affect the country’s economy. It will grow more slowly. Exports will be tied up much more and investment will slow. She understands the effect this will have on productivity. My hope is that she, alongside other sensible Members on the Benches opposite, will eventually realise that this is a path we should not be going down.

It will not surprise your Lordships when I say that the Liberal Democrats regard the Bill as unnecessary because we should not be leaving the customs union in the first place. By leaving the customs union, the UK is abandoning not only the world’s largest trading bloc but every free trade deal that the EU has negotiated with third countries.

The Liberal Democrats are champions of open markets and free trade, but we believe that the UK can negotiate better deals as a member of the huge EU bloc than it can as an individual country. That is why, all over the world, countries form blocs to negotiate trade agreements: they find it easier than doing it on their own. Being in the EU has not harmed other countries by preventing them from being acquisitive and getting their own deals. Germany has done very well, thank you, in international trade, despite the “huge impediment”, as some people would have it, of being in the European Union.

As we have heard, Clause 2 is premised on the assumption that the UK can effectively copy and paste the terms of the trade deals that the EU has signed with those 40 other countries or groups of countries, so that they can fly, as are, at the end of March. This is just one of the many acts of faith that we have to put up with every day in this place. It just is not going to happen. Although some countries may be prepared to roll the deals over, many others will demand renegotiation and changes because the power arrangement has changed—it has shifted; they are in the driving seat.

Many countries are already stepping forward. Seven, including the USA, have already written to the UK to complain about how it proposes to divide agricultural quotas after Brexit. It is inevitable that they will seek to change the terms. The Government may try to believe that they can roll these deals over, and I look forward to the Minister’s closing speech and her answer to the question of the noble Lord, Lord Davies of Stamford: what do you have in writing, what do you have that is real, other than a nod and a wink that this might be doable?

The Government are also trying to implement these deals by the back door. I know that the Minister talked about transparency, but the use of secondary legislation to implement these negotiated deals is not right. We need to involve Parliament more. The Government plan to comply with a trade deal by changing the law using statutory instruments. This has been improved thanks to the adoption of the Lib Dem amendment to switch to the affirmative procedure, and that is welcome, but it does not go far enough.

Although Parliament will get to ratify deals, it will not be involved or consulted in the process of delivering them—quite unlike what goes on in many other democracies, and certainly different from how things are handled in the European Union today. So much for taking back control: Parliament is ceding control over trade deals.

Future deals will have a significant impact on consumers and businesses. Although the Minister talked about them being rollover, temporary deals, we should remember that they can be extended, so they could carry on for some time. They should not be used by the Government to participate in a race to the bottom in ethics and standards. I want to hear what the Government have to say about that.

Clause 2 must ensure that trade deals cannot be signed and endorsed unless they are consistent with all the UK’s commitments to combat climate change, uphold food standards, promote sustainable development, defend labour laws, create a more equitable international order and defend human rights. These are all important parts of what make us the United Kingdom. To support that, an impact assessment is very important.

I turn briefly to plans for the facilitated customs agreement—I know that the Minister probably does not want to talk about it. It is important because it will be the mechanism by which trade will be delivered with our most important trade partners. This is the third attempt by the Government to come up with a frictionless replacement for a customs union, but that is an impossible dream. I do not think anybody really believes that the FCA will work, or that it is acceptable to the EU 27. However, just in case, and to understand how the Government are thinking on this, can the Minister explain how the following few issues will be dealt with: mutual recognition of standards; licensing arrangements; procurement rules; labelling; origin; IP law; environmental standards and employment legislation? All of these reflect on goods that are moving around in the European Union, some of which will have been facilitated to come into this country through the trade agreements being discussed today. How will goods be traced? How will standards be maintained? Referring back to last week’s debate, how will the tariffs and duties be totted up and shared out across the European Union? This is just the tip of an incredibly complex iceberg which indicates how unworkable this solution is.

Because the Minister knows that the FCA is a non-starter, I am sure that she understands why your Lordships’ House is so worried about the Northern Ireland issue, which was again revealed through Questions today. Brexiteers huff and puff and say that this is an exaggerated issue, but of course it is not. Nothing in this Bill, or its sister Bill debated last week, facilitates a border solution to maintain the Good Friday agreement. As I said last week, this Bill, and last week’s, are the enemies of that agreement.

In winding up, I cannot help but remind the Minister that 29 March is around the corner, yet it is hard to detect a sense of urgency. Indeed I still see tendencies to obfuscate. For example, after this debate there is absolutely no sign of a committee stage. I had expected to return in October and find committees ready and waiting, but no. It is not on the programme so far; is it happening in mid-October, late October, or November? Perhaps the Minister or someone in government can help. Either way, if this Bill is so important, why are we not getting on with it? It seems to me, and others, that the Government are sitting in their own version of David Copperfield and waiting for something to turn up.

The Government cannot, at the moment, help business with what is going to happen and that is the central issue which concerns me as business spokesman for the Liberal Democrats. Decisions and investment have to be made, products developed, and marketing plans put in place. What can you tell those businesses, big and small, north, south, east and west across the United Kingdom? You cannot tell them anything. The people working for those businesses deserve answers. For their sake, if no one else’s, please get on with this. Address the issues, step back, think again and hold on to what we have, because it is more valuable than what is on offer.