The Secretary of State for the Department for Exiting the European Union, Dominic Raab, appeared before the European Scrutiny Committee. I asked him about the Chequers deal and what is the Government's plan B.
Stephen Kinnock: Thank you, Chair. Thank you, Secretary of State and Mr Robbins. We have talked quite a lot about the Chequers deal. The Chair referred to the interview that Mr Barnier gave to the Frankfurter Allgemeinen Zeitung. Secretary of State, you have described that as him grumbling about certain bits of it. I think that was the quote that you gave. I think you also said that it is not the first time that the UK and the EU have disagreed about something in terms of the negotiation. The implication is that you think that Mr Barnier is just sabre-rattling and that this is a negotiation ploy.
I am a member of the Select Committee on Exiting the European Union, and we went to meet Mr Barnier on Monday. I can tell you absolutely unequivocally, without a shadow of a doubt, that Chequers is dead in the water. Mr Barnier made it crystal clear that Chequers is completely unacceptable to the European Union, and he gave two reasons for that. At the heart of the Chequers proposals is the facilitated customs arrangement and the rulebooks. On the FCA, he said clearly that it is unthinkable that the EU would delegate responsibility for collecting tariffs to a third country in the way that Dr Whitford was interrogating earlier. It is not going to happen. On the rulebooks, he made it absolutely clear that 20% to 40% of the value of goods that are traded is in services in the modern economy with integrated supply chains. It would be unthinkable to potentially allow British businesses to have unfair competition if they are signed up to a common rulebook in goods, but not in services. I want to underline that your starting point needs to shift. It needs to become that Chequers is dead in the water. Can you outline what a plan B might be?
Dominic Raab: First of all, I think it is great that the Select Committee went out there. In a negotiation, one side will try to resist certain aspects that they are uncomfortable with. I am not sure why we would take it as read that that means it is, in your words, Mr Kinnock, “dead in the water”. Equally, I think you need to be clear about the extent to which MPs in this House will, quite naturally, be used as a pressure exercise on the Government. We are clear that we have come up with an innovative, ambitious set of proposals, but they involve compromise on our side, so of course we will expect to see some compromise on the EU side.
In relation to the goods/services distinction—I am going to ask Olly to chip in here—I’m pretty sure the EU’s approach in other areas is to follow or accept that distinction. Correct me if I’m wrong.
Oliver Robbins: If I may, Mr Kinnock, I would just like to supplement what the Secretary of State said. We are not accusing Mr Barnier of sabrerattling. We are in a deep conversation with him about the proposals we have put forward, and he is advancing challenges and criticisms of them— you would expect that.
To tackle a couple of the points you mentioned, the issue of the UK taking responsibility for the customs border to some extent on behalf of the European Union is, of course, exactly what the Commission proposed in its protocol to the Withdrawal Agreement in respect of Northern Ireland. The question we are trying to tease out with the Commission is: what is so very different about the arrangement that it put forward in that context, and why is it so impossible in the context that you described? As the Secretary of State mentioned earlier, there are other examples—for instance, in Turkey—where that has been deemed to be both legally and operationally doable. The question is: what reassurance do both parties need that that can work effectively?
The goods and services debate, as the Secretary of State said, is in danger of becoming a bit confused. There are two issues that are raised here—if you don’t mind me continuing for a second. One is that when a good is sold across the border, it often comes these days with a package of services—particularly for complex, high-value goods. How is it possible to regulate the good in such a way that it moves freely if, for instance, the maintenance package or financing package is not regulated in the same way? We have had a good discussion about that with the Commission, and I think it would accept that the answer to that question is in how the EU chooses to regulate services in the future. There is no requirement for services to be regulated at the border. If the lift or the engine comes with a maintenance package, and they want in the future to regulate that maintenance package in a particular way, they will have the autonomy to do that. It will be up to us to decide whether we want to do it in a similar way or a different way.
The more complicated question—which I respect, but think is being overblown, if I may say so—is the extent to which, when the lift is sold across the border, some percentage of its value is in the legal costs, the engineers’ fees and the other services that went into the construction of the thing. Well, that is the case in CETA, the EU-Japan trade deal and every other trade deal that the EU is doing. I am struggling to understand, honestly, why that is such a significant blockage to the proposition that we are putting forward.
Stephen Kinnock: The point Mr Barnier made was that there seems to be a fundamental misunderstanding on the British side of the way the single market and the customs union work. They are an “ecosystem”— that is the word he used. They are fundamentally and intrinsically linked. You cannot start to unpick regulatory alignment in the single market from the measures and the acquis communautaire, in terms of the customs union. There seems to be a fundamental difference of opinion about how the single market and the customs union actually work.
We have got 42 days until the October summit. I don’t know when you last had a conversation with Mr Barnier, but I spoke with him on Monday, and he made it absolutely clear that this isn’t going to work. Do you not think it would be responsible Government to have a plan B in mind, assuming that we take Mr Barnier at his word that this is dead in the water?
Dominic Raab: I think you’re being drawn in too much to the pressure exercise that I described earlier.
Stephen Kinnock: I’m just reading you a verbatim report of what he said.
Dominic Raab: In fairness, I had three meetings with him in August alone—the last one for over half a day—and I am going back out this week. I do understand at first hand what the EU’s position is. Equally, he has made some very positive noises and remarks—most recently, on 27 August—about wanting to offer Britain a partnership such as there has never been with any other third country. That was interesting, because it reflected a sense that we will do something innovative. The EU can be innovative in the way that Olly described—CETA is an example. I have made a point of stepping up the amount of time and the regularity with which I engage with him, precisely for the reasons you mentioned.
But the EU is not either one individual or the Commission. To use your words, it is the ecosystem as a whole. From the Irish Taoiseach to the Latvian Foreign Minister, from the Danish Finance Minister to the Polish Foreign Minister, we have had lots of positive feedback. But you are right to say two things. First, we are challenging some of—if I can put it like this, the dry, legal dogma that goes with some aspects of the EU in some quarters. Secondly, beneath all of this—in a way you have faithfully conveyed—there is a slight nervousness that the UK might rather do well and establish a competitive advantage on the EU. That ought to give people in this Committee Room and the wider public a sense of confidence, but of course that is something that the EU needs to be very mindful of. We are seeking to strive for an outcome which is good for them and good for us. We are not going to tie our hands from thriving when we leave the EU.
Stephen Kinnock: On the next stage of that conversation, Barnier was asked, “Given that Chequers is dead in the water, it seems that you are saying to us that it will be some kind of CETA-based deal,” and he agreed with that.
Dominic Raab: Can I just check, you said “dead in the water”. Are those your words or his?
Stephen Kinnock: It was all in French, so I can’t give the exact French translation.
Dominic Raab: So these are your words.
Stephen Kinnock: It will all be published. It was a public session, so I would be very happy to share—
Dominic Raab: I would be very happy to ask him whether he used the words “dead in the water”. I just want to be clear whether it is your characterisation or whether you are saying that he said it.
Stephen Kinnock: He said, “Les propositions sont mortes”.
Dominic Raab: Okay.
Stephen Kinnock: Something like that. “In the water” was an Anglicism. But the key point is that he then said, “We refer back to the models of the relationship that we think can work, based on the British red lines.” If Chequers is not going to work from the EU’s point of view and we go back to the red lines, then that leaves us with a CETA-based deal. But of course, it’s CETA plus the backstop, as you have rightly pointed out, and CETA plus the backstop is not acceptable to the British Government. So where does that leave us, based again on the fact that the clock is ticking? We have 42 days until the October summit, but in reality there will be a preparatory process, which will kick in at least three weeks before that. I do not know what your estimate is of what you need to have on track for the October summit—I estimate it at about 25 days. What are we going to do if you are not able to sell Chequers to the EU and CETA plus a backstop doesn’t work for the British Government? What is the plan B?
Dominic Raab: We’ve been very clear. First of all, we are not going to roll over just because there is some traction static on what we think is not just a good deal for the UK, but a good deal for the EU. Equally, we have also made clear that if we don’t see the ambition, the pragmatism and the energy that we are genuinely trying to bring to this negotiation, to bridge the gap with our EU partners, it is right to say that we will need to be prepared for the no-deal scenario. That is why we have been patiently doing the work we have on the legislative front, the institutional front and the technical notices. But we are overridingly committed to the positive deal. We think our proposals set out a good framework. I don’t accept the characterisation that you have put on it, Mr Kinnock. But of course, I am not surprised that in this negotiation there will be some pushback from Michel Barnier or other quarters of the Commission.