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Leaving the EU: Customs Arrangements — [Mr Gary Streeter in the Chair]

Part of Backbench Business – in Westminster Hall at 2:30 pm on 10th July 2018.

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Photo of Stephen Hammond Stephen Hammond Conservative, Wimbledon 2:30 pm, 10th July 2018

I beg to move,

That this House
has considered customs arrangements after the UK leaves the EU.

It is a pleasure to see you in the Chair this afternoon, Mr Streeter. I am particularly grateful to have been selected to lead this debate. I led a debate on the European Free Trade Association and the European economic area in February, which I believe has brought that argument and some of the arguments around it to the fore. I see this debate as very much part of an evolving evaluation of the necessary arrangements that our country will need to put in place to secure free trade with the European Union and the rest of the world post March 2019.

This debate on customs arrangements follows and builds on what I was saying in February, because in my view, EEA-EFTA takes us some way towards achieving the aim of frictionless trade with the European Union post-Brexit, but without the satisfactory customs arrangements there will still be barriers to prevent our achieving that. That has been demonstrated to anyone who has spoken to the Norwegians and the Swedes, the Americans and the Canadians, and the Swiss. Anyone who suggests that those borders operate frictionlessly at the moment would be under a misapprehension.

I recognise, as I said to one or two colleagues as I wandered in, that today’s debate takes place in a vacuum. On Friday, the Government announced their ambition, which I welcome, for an EU-UK free trade area for goods, with a common rulebook and a labour mobility framework. The vacuum on the other side is that we are yet to see the much-awaited White Paper. I hope the Minister will confirm, despite all the rumours that have been swilling around this morning, that the White Paper will be published on Thursday.

I want to concentrate on those customs arrangements. Much of the debate about our post-Brexit customs arrangements has been about style over substance. Whether it is “the” or “a” customs union, max fac, new customs partnership or a facilitated customs arrangement, frankly, I do not care what it is called. As far as I am concerned, it can be called anything you like. The test must be whether the customs arrangements that we put in place protect jobs and businesses, avoid a hard border in Ireland, allow for frictionless trade and reflect the realities of the ports of our country. That is why I have always supported the Prime Minister’s customs plan as stated in the Lancaster House speech, in which, I remind colleagues, she said:

“Whether that means we must reach a completely new customs agreement, become an associate member of the Customs Union in some way, or remain a signatory to some elements of it, I hold no preconceived position. I have an open mind on how we do it. It is not the means that matter, but the ends.”

That is clearly true. It is not the means that matter, but the end.

The risks facing businesses, if we do not get this right, are clear. First, and overwhelmingly, in terms of customs, there is “rules of origin” risk and the requirements that places on trade. Those are most significant for exporters, if we do not come up with a satisfactory solution. The rules of origin requirements prove the country of origin for a product and they are essential for qualifying for lower tariffs. They are established to ensure that a finished good, and anything going into it from the supply chain, comes from the area that it is stated to have come from. Only then will it qualify to move across the border, and qualify for the tariff regime that is established for it. They are also needed to ensure that tariffs are not avoided by shipping goods through a country with a lower tariff, which could undermine the tariff regime.

When it comes to exporting food, proving origin can be quite simple: it is either grown in a country or it is not; but when it comes to the export of cars, for example, it is extraordinarily complex. The composition of each nut and bolt needs to be assessed, to ensure that enough of the car’s origin allows it to qualify for the lower tariffs. That affects not only the car industry, but pretty much any industry with a complex supply chain.