My Lords, it seems appropriate for me to speak to Amendment 47, in my name and that of the noble Baroness, Lady Smith of Newnham, for the simple reason that government Amendment 47A seeks to remove Clause 8 from the Bill and the purpose of Amendment 47 is to amend Clause 8 by adding the words as printed on the Marshalled List.
I tabled this amendment for Report because, in my view, my noble friend the Minister’s response in Committee lacked clarity. Since then, of course, we have had a vote on an amendment requesting that the Government negotiate a customs arrangement, which was agreed in this House by a substantial majority. Of course, when that amendment goes to the other place it could be rejected, so I would just like to raise a number of issues on Report which will be helpful at Third Reading or in any future altercation between here and the other place if the amendment seeking a customs union does not find favour there.
On 21 February, my noble friend Lord Callanan explained that, in his view,
“the regulations of the EEA will continue during the implementation period. For the period after the implementation period we will seek to negotiate an ongoing relationship with the other three member states of the EEA”,
and that this approach would mean that,
“we seek the continued application of the EEA agreement for the time-limited implementation period to ensure continuity in crucial elements of our trading and non-trading relationship with those three EEA states”.
The lack of clarity came, I believe, when the Minister went on to say:
“Participation in the EEA agreement beyond the implementation period would not work for the UK. It would not deliver on the British people’s desire to have more direct control over decisions that affect their daily lives and it would mean accepting free movement of people … We will instead seek to put in place new arrangements to maintain our relationships with those three countries: Norway, Iceland and Liechtenstein”.—[Official Report, 21/2/18; col. 180.]
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He concluded that he hoped he had made the Government’s position clear—but I regret to say that he has not. We had a debate in Committee, which I believe has not been resolved, on the legal position as to whether or not we automatically leave the EEA, or whether a separate treaty is required to give effect to the UK leaving. My preferred position is clearly that we either remain within a customs union or have a new customs arrangement going forward. But I place on record now, and I seek a view on it from the Minister, my suggestion that remaining in the EEA would resolve the Northern Irish-Irish border situation. It is a matter of fact that most food and drink products crossing the EU’s external borders are subject to sanitary and veterinary certification and inspection regulations. These regulations require checks at the point of entry, which cannot be fixed by technology.
Why is this important? The reason is simply that our largest manufacturing industry is indeed the food and drink industry. More than two-thirds of UK trade in food and drink is currently with the EU 27, and it is worth £28.8 billion a year to the UK economy. It employs 400,000 people in all four corners of the UK, and it is an essential part of the farm-to-fork supply chain, which amounts to £112 billion. Why is the EEA potentially important here? It is because, while it would not allow a customs union, it would give access to a single market and fulfil a major ask of the food and drinks industry, as so eloquently expressed by the Food and Drink Federation: to have a continuing supply of workers, large numbers of whom work in the agricultural and fruit and vegetable industries at this time.
I also wish to place on record the difficulty with perishable foods, which may be stuck at borders if physical checks are in place, in the event of having no access to a customs arrangement. Delays at borders would completely thwart the principle of speedy access and just-in-time delivery to the market. So, in the event of a failure to reach customs arrangements, I request and urge my noble friend the Minister to keep our future membership of the EEA, or an application to EFTA, under review.
I also have a question, if I may. It is a source of great concern to the food and drink manufacturing sector, as so vocally expressed by the Food and Drink Federation, as to what the consequences would be of leaving a customs union and not being in an arrangement such as the EEA, EFTA or a specific free-trade area. I will place on record its concern over the sheer volume
of negotiations that must be concluded to maintain the UK’s existing trading arrangements. For example, EU free trade agreements with third countries account currently for more than 10% of our exports and are worth £2 billion. It is concerned about the interregnum between leaving on 29 March next year, then having the implementation period and falling off a potential cliff in December 2020. So I ask the Minister in the strongest possible terms: when will the Government be in a position to table their own proposals as regards rules of origin, so that any potential negotiations are structured more favourably around a UK proposal, rather than using the European Union’s standard text?
I am told that the ideal arrangement is not that of the Canadian so-called EFTA-CETA arrangement, because that is defective for a number of reasons, which I am not prepared to rehearse here. But where Canada was successful was in coming forward with its own text, particularly as regards rules of origin, on which to negotiate.
Three items remain to be looked at in the event that we do not fall within a customs arrangement: one is rules of origin, ideally on the basis of a government text; another is the free movement of workers, particularly in the agricultural, fruit and vegetable-growing sector; a third is a realisation that if there are animal and food movements on the Irish border, for the reasons I rehearsed earlier, there will have to be physical checks. In these circumstances—