European Free Trade Association — [Mike Gapes in the Chair]

Part of the debate – in Westminster Hall at 9:30 am on 7th February 2018.

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Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon 9:30 am, 7th February 2018

I beg to move,

That this House
has considered the European Free Trade Association.

It is a great pleasure to serve under your chairmanship, Mr Gapes, and to see so many colleagues from across the House here so early on a Wednesday morning, when there are so many Select Committees and other things going on.

We all know that this country voted to leave the European Union, and we accept that result. However, what that referendum did not say was how we should leave the European Union. That is what today’s debate is about. One of the great myths of that referendum was that this country also voted to leave the single market and the customs union. It did not. Leaving the European Union was the only option on the ballot paper. How we leave the European Union is the most difficult challenge facing this country, and it is up to us, the Parliament of this country, to decide how we do it.

I think both sides of the House agree that we need an exit and a deal that allow us to trade freely with our former partners and to sign new free trade agreements, and that provide a level of economic certainty to businesses and economic and security certainty to our citizens. I want to discuss an option I think should have wide appeal across the whole House—indeed, it was consistently supported by Brexiteers prior to and during the referendum debate.

There are a number of misconceptions about the European Free Trade Association that need to be addressed. Those misconceptions, I say frankly to those on my Front Bench, were repeated by one Minister last week. It was not the Minister who is answering the debate, but the level of miscomprehension in evidence was concerning.

Crucially, EFTA membership gives the opportunity to have, but does not automatically entail, membership of the single market. It does not envisage political integration. It is economically motivated. EFTA does not issue legislation or establish a customs union, and decisions are made by unanimity.

If we examine EFTA, there are three distinct benefits to the UK as we leave the European Union. It brings significant free trade benefits. On joining EFTA, we would automatically become part of the free trade area between the current EFTA four—Norway, Switzerland, Liechtenstein and Iceland—which covers trade in most goods and services and eliminates tariff barriers. In addition, we would be able to benefit from the free trade agreements they have already signed with third countries. We should not underestimate that; EFTA has 27 free trade agreements covering 38 countries and 900 million customers.

In text and context, many of those agreements are more modern than some of the deals the EU is signing with third countries now. Some of the analysis, certainly around services, would suggest that some of the free trade agreements being signed by EFTA and some of its existing free trade agreements are a much better fit for the UK economy than some of the EU’s, and are more comprehensive. For example, EFTA has a free trade agreement with Singapore and Hong Kong—two incredibly important markets for the United Kingdom, and areas without a completed EU deal.