Jonathan Djanogly questions the benefits of being able to strike our own free trade deals as in many cases it will be difficult to secure deals as good as we already get with the EU and they can take many years to negotiate.
Mr Djanogly
Let me start by saying that, to my mind, the European Research Group’s amendments are clearly aimed at restricting the Government’s ability to negotiate, if indeed they are compatible with the White Paper at all—a White Paper that I support. Amendment 73 and new clause 36 certainly fall into that category. I think that they have been tabled by those who wish to create such difficulties and red lines that we are forced into a hard Brexit, ostensibly by default but secretly by design. They will not have my support tonight.
I want to address the claims of those who say that we do not want the FCA, or indeed a customs union, because we cannot then strike our own trade deals. I note that the Government maintain that we should be able to separate goods from services, but others caution against that because goods and services are often so intrinsically linked that it is unrealistic. I will wait to see the EU’s position.
However, on the central issue of negotiating our own FTAs, I think that we need to question the benefits that so many seem to be taking for granted. First, we need to appreciate that the Department for International Trade is currently acting like something of a Jekyll and Hyde character—on the one hand the Secretary of State is talking about bravely striding around the world seeking new FTAs with countries such as the US and China, but on the other he is pleading with the EU and about 70 third-party countries to roll over the existing 40 or so FTAs that the EU now has with them. So, with more than one third of the world’s countries, Brexit represents the chance at best to get the same deal as from the EU. From the look of things, we may yet get a worse deal in some cases as those third countries start evaluating the decreased advantage of dealing with 50 million rather than 500 million people.
Secondly, there is little evidence that business sees any advantage in customs differentiation—indeed, quite the opposite. The vast majority see advantages in our customs negotiating position, which emanates from the power of the huge trading bloc that the EU represents, and will wish in any event to stick as closely as possible to whatever trading position the EU takes.
Thirdly, world trade is much more interlinked and complex than most people discuss. For example, some of the existing trade agreements that we want to roll over, such as those with Canada and South Korea, feature most favoured nation clauses. Therefore, if we agree a FTA with the USA that offers better terms than those we agreed with Canada, Canada would need to be offered the same. The advantages of being outside the customs union are thus much reduced in any event, and talk of becoming a colony or vassal state is ridiculous.
Fourthly, we live in a world of trading deals where size matters. Rather than discussing a trade deal with the US, we have become caught up in a trade battle. Again, if we were in a customs union, we would have more cover.
Finally, the process of negotiating new FTAs is a long and arduous business. The average time is seven years; Canada took 15 years. Bargaining is tough and based on potential market clout. That goes back to the possibility of US chlorinated chickens and so forth. We need—
...
Original Draft Speech in Full
Time was limited to 3 minutes in the Chamber
Taxation (Cross Border Trade) Bill – Report – NC12
Let me start by saying that ideally I would support the UK’s participation in a Customs Union of some type with the EU after Brexit. But in the meantime I support the Government’s White Paper approach which I accept as a serious effort to find a deal within the various constraints that exist.
Time to strike a future relationship deal is now running out so it is vital that those of us who want a close ongoing trading relationship with the EU now speak up and that can only now be in support of the Prime Minister’s negotiation initiatives as expressed in the White Paper.
The timing problems here have many causes; the delay of negotiations caused by a lack of a White Paper until now, itself caused by ideologically driven bickering rather than practical thinking within some of the government party and an opposition leadership that has flitted from position to position based on political advantage rather than the national interest.
I also think that collectively Parliament has been setting a rather sad example. The Prime Minister has been well intentioned and personally I have supported her efforts to move the future relationship forward initially with her Customs partnership suggestion and her backstop proposals and now her FCA White Paper approach. I have however been dismayed at the lack of support and undermining of her position shown by some of my colleagues. Briefings against government initiatives like the Customs partnership and the wrecking proposals like insisting on a backstop to the backstop proposals have been a poor way to go, only topped by constant Cabinet resignation threats and dark murmurings of forcing a leadership contest and all of this mainly done through the media rather than the Party machinery.
And all before seeing the tabling of amendments for debate today that are aimed at restricting the ability of the government to negotiate if indeed they are compatible with the White paper – which is itself debatable. Amendment 73 and NC36 fall into this category and are tabled by people who wish to create such difficulties and red lines that we are forced to a hard Brexit ostensibly by default yet secretly by design. They will not have my support in this.
And now; only three months before we are meant to sign binding withdrawal terms and full heads of terms for the future relationship we haven’t finalised the former or hardly started the latter.
So we must now start negotiations on a customs arrangement with the EU: as to what exactly this involves if say the EU wants to negotiate the FCA, I think we should be open minded. If it ends up being a bit less than a customs union but more than a customs partnership, association or whatever, I don’t mind. So long as its effect is that business does not pay EU tariffs, that its lorries are not delayed at the borders and that they do not get bogged down in unnecessary paperwork. And for those people that would diminish the role of business in the Brexit process, or our national lives or our tax earning capability or as a mechanism for raising the state of our people I would say. They have totally lost the plot. This is not some academic experiment – this is dealing with real lives and our future prosperity and the needs of business are intrinsic to that.
And in my experience, certainly in my constituency, most people – even Leave voters – wish for us to trade closely with the EU even if they don’t want to be ruled by EU laws.
But today I wish to address the claims of those who say that we don’t want the FCA or indeed a customs union because we can’t then strike our own trade deals. I note that the government are maintaining that we should be able to separate goods from services – whilst others caution against this because goods and services are often so intrinsically linked that this would be unrealistic. I wait to see the EU’s position on this.
However on the central issue of negotiating our own FTAs, I think we need to question the benefits that many seem to take for granted.
Firstly we need to appreciate that the Department of Trade is currently acting as a bit of a Jekyll and Mr. Hyde on this issue. On the one hand the Secretary of State is talking about bravely striding around the world seeking new FTAs with countries like the US and China, but on the other hand he is pleading with the EU and about 70 third party countries to roll over the existing 40 or so FTAs that the EU now has with them. So for over one third of the world’s countries Brexit represents the chance at best to get the same deal as the EU. Actually from the look of things we may yet get a worse deal in some cases as the third countries start evaluating the decreased advantage of dealing with 50 million people rather than 500 million.
Secondly: there is very little evidence that business sees any advantage of customs differentiation – in fact quite the opposite. The vast majority see advantages in our customs negotiating position emanating from the power of the huge trading bloc represented by the EU and will wish, in any event to stick as closely as possible, to whatever trading position the EU takes.
Thirdly: world trade is much more interlinked and complex than most people discuss. For instance some of the existing trade agreements that we want to roll over, such as Canada and South Korea, feature Most Favoured Nation clauses. So for instance, if we agree on an FTA with the USA that offers better terms than we have agreed with Canada, then Canada would need to be offered the same deal. So the advantages of being out of the EU Customs Union are much reduced in any event. Talk of becoming a colony or a vassal state in this context therefore is ridiculous because much of what we do, even under WTO rules, is so interdependent and connected in any event.
Fourthly: we live in a world of trading blocs where size really does matter. And rather than discussing a trade deal with the US we have actually become caught-up in a trade battle with them over aluminium and steel imports. Retaliation, that is our defence, is being conducted by the EU and we need to ask – who is going to defend us once we leave the EU. If we are in a customs union with the EU we shall get more cover.
And finally I would point out that having negotiations on new FTAs is a long and arduous business. The average is seven years and Canada took fifteen years. Bargaining is tough and based on potential market clout, which will be reduced after we leave the customs union. And this goes back to the possibility of having to accept US chlorinated chickens and antibiotic saturated beef. But it also needs us to recognise that Australia, New Zealand and India have welcomed the idea of an FTA on the understanding that their first requirement will be more visas. And I wonder how well those that supported leaving the EU on immigration grounds, understand this.
Given the time constraints today, I leave it for others to describe more fully the benefits of being in a customs union. But, I have attempted to show that the contention that not being in a customs union will necessarily benefit Britain or UK trade is false.