In this contribution in the House of Lords debate over the European Union Withdrawal Bill, Lord Bilimoria highlights key issues with Britain’s exit from the EU. The most serious of issues being Britain’s exit from the EU’s single market and customs union. Lord Bilimoria begins by pledging his support of amendment 206 of the EU withdrawal bill stating: “…the withdrawal agreement must provide the United Kingdom’s continued participation in a customs union with the EU”. .

Lord Bilimoria outlines a multitude of negative impacts that Brexit would result in if a deal is not made over the customs union. Namely the loss of 70% of current trade either through or with the EU. Lord Bilimoria uses evidence from many areas of trade to support his claims, the Farmers Union, CBI and the Irish Business and Employment Confederation, all of which support his claim that Britain must remain in the customs union. He makes it clear that without the Customs Union Britain will be wounded significantly. Asking his fellow Lords to remain realistic throughout, Lord Bilimoria uses his Business background, as well as his contacts in India with the high commissioner to paint a vivid picture of how essential the customs union is to Britain.


21st February 2018, 

Lord Bilimoria:

My Lords, I am supporting and have added my name to Amendment 206 in the name of the noble Baroness, Lady McGregor-Smith. It is also supported by the noble Baroness, Lady O’Loan, and the noble Lord, Lord Alli. The amendment is simple but necessary and goes to the heart of Parliament’s consideration of the UK’s withdrawal from the EU. It says:

“It is a negotiating objective of the Government to ensure that the withdrawal agreement provides for the United Kingdom’s continued participation in a customs union with the EU”.

In today’s economy, business is integrated worldwide, transactions are global, goods and services cross national borders every minute of the day, our greatest customers are our nearest markets, and we know that half our trade is with the other 27 countries of the EU. A lot has been made of Canada having signed a free trade agreement with the EU, CETA, which took eight years. However, the comparisons made with our situation do not apply, because what people do not understand is that the EU makes up less than 10% of Canada’s trade. Who is Canada’s biggest trading partner by far? The United States, which is next door.

It is not just the finished goods that are sold to these markets; the components and ingredients of goods, food and of course drink can flow through as imports and exports. I was speaking in Dublin a week before last for the Irish Food Board, Bord Bia. There the example was given of Bailey’s Irish Cream, which is made in Ireland, sent across the open border into Northern Ireland and packaged there, brought back into Ireland and exported from there around the world. In this European marketplace, we have stopped referring to these exchanges as “imports and exports” because the transmission of goods is so frictionless and continuous that we now just talk about “arrivals and dispatches”. This really matters to business—I speak as someone who has been in business for a long time and started my own business—and to the people employed by these businesses, and it is the customs union that makes it a reality.

I think we take a lot of that for granted today, but this choice, this virtually instant array of products, was not always available to customers and entrepreneurs. We have to remind ourselves that this degree of tariff-free, seamless trade has arisen not by accident but by careful design and the sharing of decision-making on trade policy. We dismiss these benefits of a customs union with the EU at our peril.

I invite noble Lords to picture for a moment the 2.5 million lorries passing through Dover each year and how our ports will cope if, in a year’s time, the continuous throughput of traffic is no longer. A programme on Radio 4 today illustrated this on both sides. If goods need inspecting at ports for exit and entry, revenue collecting, labels and licences checking, sanitary conditions measuring, quota weighing and duties paying, all this can take a long time and clog up the arteries of our economy. If these delays and blockages occur, not only will we need to contend with frustrated truck drivers and motorway congestion, companies with a just-in-time business model—we heard examples from the noble Lord, Lord Wigley—will need completely to rethink their practices, and their investors and customers will pay the price.

The EU has obtained more than 50 trade deals with countries across the world. This represents approaching 20% of our trade and will lapse in 2019 on our exit from the European Union. We need to remain party to those existing FTAs, and this amendment is the best way to ensure that. At the moment, 50% of our trade exists with the European Union. If you add approaching 20% of our trade through the European Union, we have a total of almost 70% with and through the European Union at the moment. We as a country are thinking of throwing that away to go after the 30%. Within the 30% is the United States of America, at 18%.

I am a great fan of the Commonwealth. We have CHOGM coming up here in April. I would love this country to do more trade with the Commonwealth and have been speaking about that during the 11 years that I have been a Member of this House. But let us get real. The Commonwealth makes up less than 10% of Britain’s trade; 70% is with and through the European Union. We can drive a better deal for Britain by applying the strength of the whole of Europe, rivalling any other world power.

So often, we hear this talk of going global and that we are going to do trade deals with countries such as India. India would love to do a free trade deal with the UK, but the reality is that India has only nine bilateral free trade agreements with any countries in the world, not one of them a western country. If you speak to the Indian high commissioner over here, he says that India is very happy to do a free trade deal but, as the noble Lord, Lord Davies, said earlier, it is not just about goods and tariffs; it is about movement of people. The commissioner says: “What about international students? What about our IT workers coming here? What about the fact that the Chinese get two-year multiple-entry visas for business and tourists at £85 and we Indians have to pay £350? What about that? Then let’s talk about free trade deals”.

David Davis mentioned dystopian. To me, the Brexiteers are living in a utopian world. We can drive a much better deal for Britain by applying the strength of the whole of Europe, rivalling any other world power. There is no either/or choice between trading with the European Union and trading with the rest of the world; we need to do both successfully, just as the Germans manage to do within the customs union.

I have heard from the horse’s mouth where India is concerned. It is very clear: an EU-India free trade agreement is far more important to India than a UK-India free trade agreement. It is simple: 500 million people or 65 million people; there is no comparison. Let us get real.

Then we have talk that, the moment we leave, we will just roll over these 50-plus free trade agreements that the EU has and do UK free trade deals with those countries straightaway—again, utopian dream land. Already, countries such as South Korea have said, “Hang on! We have to renegotiate that. We did a free trade deal with the EU on the basis of 500 million people and the world’s biggest free market. You want us to treat you in the same way with 65 million people? Forget it. Let’s renegotiate”.

Lord Patten:

Does the noble Lord recall that we made very good progress in the European Union in trying to negotiate a free trade agreement with India? It was actually slowed down—indeed, blocked—by the United Kingdom.

Lord Bilimoria:

Well, we have worked for a long time to do a free trade deal with India, and it is in the offing. The Canadian one took eight years. Let us again be absolutely realistic about this.

The majority in the Commons are for staying in the customs union because of the fear of the extra costs. We know about the BuzzFeed leaked reports that found that Britain would be financially worse of outside the EU under any model or any of the scenarios. Hilary Benn, the chair of the parliamentary Brexit committee, has said that the government’s decision to make leaving the customs union its policy without first assessing the impact of doing so is, in his words, “extraordinary”.

The CBI, which represents 190,000 businesses which employ 7 million people, has said very clearly that customs union membership would,

“resolve the question of how to keep an open border between Ireland and the UK”, which as noble Lords have heard is so important for maintaining the peace. We should not jeopardise the Good Friday agreement for anything. We have to get our priorities right as a country.

Chuka Umunna, the former shadow Business Secretary, said that it was inevitable that it was “inevitable” that Labour would pledge itself to remaining in the customs union “in some form”. He said:

“It is the only way we have of ensuring that we can protect one of our greatest legacies, the Good Friday agreement”.

And lo and behold, what happened just now? The UK will have to have a customs union with the EU after leaving the bloc—Jeremy Corbyn has said that just now. Asked how Labour’s position differed to that of the Government, Corbyn said:

“We have to have access to European markets, we have to have a customs union that makes sure we can continue that trade, particularly between Northern Ireland and the Republic of Ireland. That is key to it”.

Emily Thornberry, the shadow Foreign Secretary, has said that it,

“seemed inevitable the UK would have to stay in some sort of customs union after Brexit”.

She said:

“we cannot see a way forward when it comes to Northern Ireland or to tariff-free trade across Europe without us being in some form of customs union that probably looks very much like the customs union that there is at the moment, and that’s our position on that”.

It is an important task for the UK to try to rebuild all these other deals. David Davis said that it would be possible for the UK to negotiate trade deals,

“massively larger than the EU”.

Where is the reality in this? Has he learned mathematics or arithmetic at school? I have just gone through the sums with noble Lords—but he says they will be massively larger than the EU.

Of course, on the sequencing on the negotiations, a US trade representative has said that,

“informal discussions won’t be possible until decisions have been made about the UK and EU relationship. Even then, many countries will want to be clear about the UK’s membership of the WTO before they open negotiations”.

The no-deal scenario and falling back on the WTO would be the nightmare scenario—the worst of all options.

Finally, before I conclude, there is the number of business groups that are backing staying in the customs union. There is Carolyn Fairbairn of the CBI, whom I mentioned earlier. For the TUC, Frances O’Grady said:

“Working people’s jobs, rights and livelihoods depend on maintaining our trade with Europe. Staying within the customs union is really important to achieving this”.

The National Farmers’ Union’s policy is that,

“the best outcome … would be that the UK remains part of the European customs union”.

The Farmers Union of Wales, as noble Lords will remember, voted to leave overall, but its president, Glyn Roberts, has said that,

“the only sensible outcome is to ensure we are still members of the common market and customs union on the day we leave the EU”.

The chief executive of the Irish Business and Employers Confederation said:

“The UK plan to leave the customs union is at odds with the economic interest of both the UK and EU … The UK remaining in a customs union would partially offset the negative impact of Brexit on jobs and the economy in the UK, Ireland and the wider EU. It would also go some way to resolving the challenges posed by the trade border with Northern Ireland”.

And 70% of Scottish businesses want to remain in the customs union and single market, according to a survey.

Finally—I am an alumnus of the Harvard Business School—the Harvard Kennedy School carried out a survey of small and medium-sized enterprises that concluded:

“Almost all businesses we interviewed expressed a preference for remaining in the Single Market and the Customs Union”.

I conclude that our involvement in the customs union is a decision that this Parliament has to make, especially as it was not referred to in the referendum ballot paper. In fact, a lot of people when they voted to leave did not realise that they would have to leave the customs union and the single market. As someone who has built a business from scratch, Cobra Beer, it is a challenge to start a business, and that challenge continues as you try to grow, thrive and build. British businesses do not need more barriers, more bureaucracy or more expensive administration at the borders for goods—and there is a way to avoid that. This Bill provides a crucial opportunity for Parliament to express its preference for continued participation in a customs union with the EU.

I commend this amendment to the House and conclude by saying that it is not just about staying in the customs union but also the single market. I took part in a debate in the Cambridge Union on 8 February and one of my opponents was Jacob Rees-Mogg. Do not ask me the result—do not ask him the result either. It was closed by one of my contemporaries from Cambridge who concluded by asking, “Why is Lord Bilimoria so negative about Brexit? Why doesn’t he realise that we as a country are the best of the best in so many fields? Look at that—we should be proud. We can go global”. I then concluded for the opposition by saying, “Helena Morrissey rightly pointed out that Britain is the best of the best—at aerospace, automobiles, beer, architecture, accounting, lawyers, creative industry, museums, film and music. We are the best in the world. Isn’t it amazing that we have done that in spite of being in the European Union for 44 years?” What we need to do is continue to remain in the European Union.

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