Brexit: Domestic and International — House of Lords, 2016-10-27
Topic: Mixed Topics
John Davies (Labour, Centre-left): My Lords, let me start by paying a tribute to the noble Lord, Lord Gadhia, who I thought delivered a particularly well-conceived and lucid maiden speech. I share his great admiration for Edward Heath and the Conservative Government in the 1970s; I was a political supporter of the Conservative Party and of that Government at that time. Their brave decision to let in the Ugandan east Asians was taken for the highest motives of humanitarianism and a sense of historical obligation for the movements of peoples that had taken place under the British Empire. If the motives were very pure, we have been rewarded many times in sheer economic terms by the extraordinary and quite exceptional enterprise and wealth creation of that community, which has now become such a valued part of our country. I cannot help saying what a sad thing it is that the Conservative Party which made that brave decision back in the 1970s should now be the hotbed of chauvinism and the source of so much agitation about freedom of movement—and indeed should have become so obsessed by its desire to oppose freedom of movement that it appears willing to pay almost any economic price to thwart it I pay tribute to the noble Lord, Lord Leigh, for having given the House the opportunity to discuss this matter, though I am afraid that may be the last compliment I deliver to him in the course of my remarks. I very much agreed with the noble Lord, Lord Tugendhat, about the dangers of wishful thinking in this world. He expressed himself perhaps a little more subtly than I will on the subject. I think that wishful thinking is a very dangerous thing in human affairs and, particularly when one contemplates a large, strategic decision of any kind, great effort should be made to clear one’s mind of wishful thinking. I do not think that the noble Lord has made that attempt. I have not heard for some time a more delusory speech than the one we just heard from the noble Lord, Lord Leigh. He seems to be one of those people who goes around the world and hears what he wants to hear rather than what people are saying. Here is a man who apparently went to the Republican convention, no less, and came away thinking that the Republicans were friends of free trade and very likely to want a free trade agreement with the United Kingdom. I have to tell him that the Republican Party now opposes TTIP, and some of its members even oppose NAFTA. The Republican candidate at the presidential election has said that he opposes NAFTA. So much for the Republican enthusiasm for free trade at present. The noble Lord also mentioned India and China. India and China have indeed developed a very good relationship with this country and invested a lot here; we have done a lot of trade with both those countries—although the Germans have, of course, done far more trade with both. However, the noble Lord does not appear to have noticed that during the campaign those two countries made it very clear that that relationship had been greatly strengthened by the fact that we were members of the European Union, and they wanted us to remain part of the EU. Xi Jinping and Narendra Modi were both explicit on this point. If the noble Lord listened a bit more carefully to what people are telling him, he might not draw such very perverse conclusions from his running around the world and his global travels The noble Lord made another great mistake—indeed, a fundamental mistake: to suppose that there was some trade-off between developing international trade with the whole of the rest of the world outside the EU and our membership of the EU. There is no such trade-off; there is no evidence of that at all. In fact there is a negative trade-off. Our membership of the EU is a very positive asset in terms of our ability to trade with other people. I must tell the noble Lord, because he does not seem to know about this, that the single market was conceived for precisely that reason—so as to provide European economies with the strength of a domestic market comparable to that enjoyed by the United States and Japan, and to give us the longer production runs and economies of scale that enabled us to compete with those countries right around the world That has worked. That is why we have such an extraordinarily complex and sophisticated structure of supply chains throughout the European Union—and that is why it is so dangerous for us to leave the European Union. Immediately there is the threat not only of tariffs but of regulatory changes over time, and people will no longer be able to depend on our presence in one of those supply chains The noble Lord seems to think that we can go around the world signing free trade agreements with all kinds of people very easily. He is totally wrong about that. If we leave the European Union we shall leave, at the same time on the same day, 35 free trade agreements that the EU has with other countries or groups of countries throughout the world, involving about 45 nations in all. What a completely crazy thing to do, if we want to sign FTAs around the world—to walk away from 35 of them before we have even started. Then we will have to start negotiating new foreign trade agreements, and they take an average of five to 10 years. On this occasion things will be even more complicated, because we will not be able to complete one until we have completed another, as people will want to know what concessions we have made to their potential trade rivals. This is an extraordinarily complex area, and the noble Lord really needs to think about it a bit more clearly I leave the House with one final thought. We have two big important economic assets in this country. One is the fact that we have been the most favoured locus for corporate headquarters and manufacturing bases for international investors wanting to access the single market. Clearly, if we leave the European Union that will go overnight. Our second great asset is that we are the financial capital of the European Union. That is under direct threat. If we leave the single market we leave the banking and insurance passports, and that asset too will go by the board. It is pretty extraordinary that the Government of a country are planning to destroy, at a stroke, the two major economic assets that it has. That is a frightening thought and we should contemplate it, and try to clear our minds of any kind of wishful thinking about it, before we do that.