My Lords, I thank the members of the committee for producing such a thorough report in short order. It is right that the Government of this country should determine our strategy for the negotiations, and it is right that Parliament should scrutinise that strategy. I also congratulate the noble Lord, Lord Kerr, on an outstanding speech. I find myself, as I all too often have on this issue, stuck between those who seem to believe that dismantling our economic and security relationship with most of our nearest neighbours is nothing to worry about at all, and those who blame the gap between the two parties solely on the British Government and attribute no blame to the other side of the argument.
I shall look at the three key conclusions in chapter 2 of the report. The first is that changes in the structure, and the way the Government have set out the Command Paper, make it difficult to trace changes in government policy. I do not agree with that conclusion. Indeed, I would argue that the committee’s excellent report proves that it is eminently possible to see where those changes have taken place.
Paragraph 20 says:
“The headings … rather than following the PD”— the political declaration—
“appear to be based on those used in … Free Trade Agreements”.
As the Government are seeking to negotiate a free trade agreement, I do not think one can criticise them for that.
The second conclusion is that truncating the timetable will make it harder to reach an agreement. It is certainly true that the decision not to extend the transition period —taken for reasons I well understand—makes it all but impossible to negotiate the entire future relationship. The Canada-EU deal is nearly 2,000 pages long, and the future relationship is far more than an FTA. It is possible that, unlike the withdrawal agreement, it may need ratification by all the national parliaments, as well as by the European Parliament. The EU’s mandate is clear:
“The Commission should aim to achieve as much as possible during the short timeframe of the transition … and should be ready to continue negotiations on any remaining issues after the end of the transition.”
If we prioritise the key issues, it is certainly possible to negotiate a deal and reach an agreement by the end of the year.
The third and central conclusion is that both sides have moved away from the political declaration, making it harder to reach agreement. I very much agree with that, and I shall now consider the two sides in turn. First, with our Government, there are four areas in which it is undeniable that the UK’s position has changed since the political declaration. As the noble Lord, Lord Hannay, said about the level playing field provisions, the political declaration is clear that the future relationship must include robust commitments to ensure a level playing field. That is in paragraph 77.
It is also implicit that the UK is not Canada. As paragraph 77 also says, these commitments need to be robust,
“Given the Union and the United Kingdom’s geographic proximity and economic interdependence”.
I assure the noble Baroness, Lady Falkner, and the noble Lord, Lord Hamilton, that this is not some sudden change in the EU’s position. I sat with the former Prime Minister in every interaction she had with EU member states, individually and through the EU institutions, from the 2017 election onwards. This was always and consistently the European Union’s position, and it is in the political declaration that this Government signed up to in the autumn.
The political declaration is also clear that the parties should uphold the common standards applicable in the Union and the UK at the end of the transition period in a whole range of areas—I will not detain the House by reading them out. It is also clear that the agreement should include appropriate mechanisms to ensure effective implementation domestically, enforcement and dispute settlement. That is what the political declaration that this Government signed up to says.
Now the Government are saying that they no longer accept the argument that the UK’s geographic proximity and economic independence necessitate more robust level playing field permissions. The Command Paper, and the Written Statement to Parliament that preceded it, state:
“The Government will not agree to measures in these areas which go beyond those typically included in a comprehensive free trade agreement.”—[Official Report, Commons, 3/2/2020; col. 3WS.]
As a result, it appears that they are rejecting not just dynamic alignment but any enforceable, non-regression clause. I can give noble Lords one example from the UK Command Paper. It says:
“The Agreement should include reciprocal commitments not to weaken or reduce the level of protection afforded by labour laws and standards … and … these provisions should not be subject to the Agreement’s dispute resolution mechanism”.
In essence, we are asking the EU to trust us to keep our word that we do not intend to cut standards. It feels unlikely that that will work at a time when, as the noble Lord, Lord Kerr, said, we are denying that the withdrawal agreement that we signed up to means that there will be checks when goods move from Great Britain to Northern Ireland. I was going to rehearse in some detail what is in the withdrawal agreement, but the noble Lord, Lord Kerr, did so quite brilliantly; I will just make a simple point for those who remain unconvinced. If there are no checks when goods move from Great Britain to Northern Ireland, and no checks when goods move from Northern Ireland to Ireland, goods will move from Great Britain into the European Union without any checks. If the Prime Minister had succeeded in negotiating that, people like me would be cheering him to the rafters. That is what Theresa was trying to negotiate and achieve; she was struggling to maintain the continuous free trade in goods. It is clear that the withdrawal agreement does not provide for that.
The second area where the Government’s position has shifted is in relation to the ECHR. The political declaration says:
“The future relationship should incorporate the United Kingdom’s continued commitment to respect the framework of the European Convention on Human Rights”.
That is what this Government agreed to in the autumn. Now, the Command Paper says:
“The agreement should not specify how the UK or the EU Member States should protect and enforce human rights”.
That decision has critical implications for the likely level of security co-operation that we will be able to enjoy after the end of this year.
A number of noble Lords have touched on the third area: the architecture of the agreement. The political declaration says:
The Command Paper says that the comprehensive FTA
“should be supplemented by a range of other … agreements … All these agreements should have their own appropriate and precedented governance arrangements”.
My noble friends Lady Noakes and Lord Trenchard were allergic to the idea of an association agreement. I gently point out that countries as diverse as Israel and South Africa have association agreements with the European Union. Having an association agreement with the European Union does not mean that we have not regained our sovereignty. There are other arguments that the Government may wish to advance for why they want a separate suite of agreements, but let us not mislead ourselves that an association agreement is somehow inconsistent with the decision of the British people.
The fourth area critically relates to dispute resolution. The political declaration says:
“The Parties indicate that should a dispute raise a question of interpretation of provisions or concepts of Union law … the arbitration panel should refer the question to the Court of Justice of the European Union … as the sole arbiter of Union law, for a binding ruling as regards the interpretation of Union law”.
We agreed that, but now the Command Paper says:
“The arrangements will reflect the regulatory and judicial autonomy of the UK and accordingly there will be no role for the Court of Justice … in the dispute resolution mechanism.”
During this debate, the justification that we have been given for these changes is that the Government won a huge mandate in the general election. That is true and obviously, since I am on these Benches, I welcome it. But that is not a justification for changing the position in relation to the political declaration. The message that we Conservatives took to the doorsteps in that general election was that we had an oven-ready Brexit deal: we were going to get Brexit done; the deal was done. So, that is not a justification for now changing the nature of the deal.
I turn now to the European Union. Too often in this debate, we look at our own Government and are critical if we think their position is not right. The European Union has also shifted its position in some areas—not as significantly as the British Government, as the committee’s report recognised, but, none the less, there are changes. I shall run through those in my remaining time. On the level playing field, the European Union is now saying:
“The envisaged partnership should ensure the application of Union State aid rules to and in the United Kingdom”.
This is not just dynamic alignment but the actual application of the EU’s rules in this country after the end of the transition period. It is quite understandable that the British Government are resisting that request. It also says that
“the envisaged agreement should uphold common high standards, and corresponding high standards over time with Union standards as a reference point” in these areas. That is a clear implication, at least, of dynamic alignment.
On the ECHR, the EU has hardened its position. Its mandate now says that
“the envisaged partnership should...provide for automatic suspension if the United Kingdom were to abrogate domestic law giving effect to the ECHR, thus making it impossible for individuals to invoke the rights … before the United Kingdom’s courts.”
That is not something that was in the political declaration.
Thirdly, and crucially, the EU’s mandate refers to the date by which agreement needs to be reached on fishing. However, it does not reference two other crucial dates in the political declaration: the dates for completing assessment of equivalence on financial services and data protection. It is no accident that those dates have been left out of the EU’s mandate.
On architecture, the EU’s changes are nothing like as drastic as the British Government’s but, as the committee rightly spotted, the comprehensive air transport agreement is missing from the EU mandate and has now been rolled into an issue to be considered as part of the economic partnership.
Finally, although this is not a change from the political declaration, there is the issue of fishing. The wording on fishing in the political declaration was carefully chosen to mask the fact that the two parties were a long way apart. The EU has now stated very clearly its position that
“the provisions on fisheries should uphold existing reciprocal access conditions, quota shares and the traditional activity of the Union fleet.”
I cannot begin to count the number of occasions when I sat next to the former Prime Minister in a room with Michel Barnier, and he told us that, given the decision of the British people, things had to change. In every area, we could not expect the same relationship that we had before—that is, it turns out, apart from fishing, where nothing must change at all. This is an area where the EU’s position is clearly not reasonable.
I leave the House with two final thoughts. There has rightly been concern in this debate about whether a deal will be achieved. I gently put it to the House that, given the level of the Government’s ambition for the economic relationship, either outcome will mean an end to frictionless trade between the UK and the EU. It will mean customs controls, regulatory checks and less access for service providers. The Government’s own analysis shows that these non-tariff barriers are an order of magnitude more important than the imposition of tariffs. In other words, given the kind of deal we are now seeking as a country, and for which the Prime Minister has a clear mandate from the general election result, there is not a huge economic difference between the deal the Government are seeking and no deal.
The biggest single difference is in the security field where, during this transition period, we are maintaining the security co-operation that we had as members of the union. If we could resolve this issue in relation to the ECHR, the two parties are not that far apart with respect to maintaining as many of the capabilities as possible. Therefore, I ask the Government to think carefully about how they proceed in that area in particular.
A final thought: my noble friend Lady Noakes accused the Government I had the honour to serve of servile acquiescence in the negotiations. I gently point out to the House that the deal that this Government now seek should prove easier to negotiate with the EU than the deal that the previous Government sought. The deal this Government seek is very close to what the EU wanted to offer UK if it was not prepared to stay in the single market and the customs union. Far from servile acquiescence, the previous Government were trying to create a unique model between a standard FTA and a single market and customs union.
For all the concerns that many will have about the change in our relationship—it is coming, whether we get a deal or not, on