Dominic Raab says in this interview that anyone who claims to be able to “predict with precision exactly what will happen with a WTO Brexit is…not being humble enough about the uncertainty”.
Raab was charged with preparing for a No Deal Brexit during the period of just over four months which he served as Brexit Secretary, stretching from 9 July 2018 until his resignation on 15 November in protest at the Draft Withdrawal Agreement.
He is not surprisingly keener on talking about the opportunities presented by a No Deal Brexit than about the risks which it poses. In his view, it would offer the chance to “put rocket boosters” under the UK economy, and see it “through what will undoubtedly be a difficult moment”, by cutting business taxes and liberalising tariffs.
In this transcription, his answers are given first to some of the difficulties which could be entailed by a WTO Brexit, including its implications for trade in car parts and in food, for investment, and also for the European Arrest Warrant and immigration.
He contends that the UK’s security will be increased once we can stop suspected terrorists from travelling from Brussels to Birmingham.
At the end of the interview, he warns of the danger that MPs will reckon Britain’s negotiating team in Brussels has not even “gone in to bat” for the Malthouse Compromise, and has therefore failed to demand the concessions which it promised only last Tuesday to demand.
That is why Raab believes David Lidington should be omitted from the negotiating team. Raab wants responsibility for any failure of the talks to be seen very clearly to rest with the EU’s refusal to accept Britain’s reasonable requests.
ConHome: “You’ve recently said the path now is very clear – we’ll either get the changes necessary to pass the deal, or we leave on WTO terms. You’ve also said there will be some ‘buffeting’ if we leave on WTO terms.
“Can you enlarge on that? How much difference do you think it will actually make if we leave on WTO terms? If a firm is trading in car parts, what happens to it on 29th March?”
Raab: “Well it depends. If you look at McLaren, which is one example and it’s at the high end, but they’ve reshored some of their supply parts dependence. Others like Aston Martin, I know I’ve talked to them…”
ConHome: “Did you talk to them while you were Brexit Secretary?”
Raab: “No, more recently. And they’ve had fresh investments into the UK quite recently, and they’re still feeling very positive. They’re quite interested to see what we do with the Americans, because the rules of origin will affect them.
“The truth is we’re at an historic moment for the UK, this is a crossroads, I think anyone being able to predict with precision exactly what will happen with a WTO Brexit is I think not being humble enough about the uncertainty.
“But the range for me, I think Roberto Azevedo [director of the WTO] put it rather well, it wouldn’t be the end of the world but it wouldn’t be a walk in the park.
“So what I imagine we’d have is up to six months where we would feel some of that buffeting, where both businesses and to the extent that they’re reliant on government that partnership works out how to navigate through it.
“And I guess everything from the reassurance we’ve had from the Deputy Mayor of Calais that they won’t go slow, they’re nervous about losing that business to Rotterdam, Zeebrugge and those other Dutch and Belgian ports, I think ought to give us some sense of reassurance.
“Matt Hancock has been on the front foot in relation to medicine supply and the assurances around that.”
ConHome: “How, if we leave without a deal, do we replace the various EU regulatory agencies? So if we’re sending, say, medicines to Europe, and we say these medicines are fine, but they won’t take our word for it, what happens?”
Raab: “There’s two different bits of it. Quite a lot of the regulatory bodies have domestic counterparts here in the UK, so when we went through all the technical notices, 106 I think it was, we specified each regulatory body. So for example the Competition and Markets Authority can take over the state aid functions.
“As a third country to the EU, we will obviously need to go, where it is necessary to do business with the EU, to get regulatory approval. But we’d be pretty confident we’ll be in a good place to do that, because at least at the point of exit, our regulatory standards will be the same.
“As long as the EU aren’t trying to punish us, then applying their rules, as they apply to other third countries, should be relatively straightforward.”
ConHome: “We talk about going to WTO terms, but no country in the world actually trades purely on WTO terms. The US, Brazil, China and India all have trade agreements with their closest neighbours.
“And as it stands, the UK doesn’t trade purely on WTO terms with countries outside the EU. With the United States, for example, trade is regulated by over 100 sectoral agreements which go well beyond WTO provisions.
“If all that’s abolished on Day One, what happens?”
Raab: “Well it won’t all be abolished, because one of the things we’re doing is making sure we’ve got the successor agreements with the third countries that have those agreements with the EU.
“And those are going through the process right now. One of the reasons that I suspect the February recess has been cancelled is to have more sitting days, which is the constitutional process to get more of those treaties signed off and continuing.
“And if some aren’t available immediately afterwards, they will be shortly after 29th March. I think the most important thing on that is there’s not one of those third parties who have said they don’t want to continue those arrangements with us bilaterally.”
ConHome: “What do you think the effect of No Deal would be on investment?”
Raab: “Well I think it all depends on the signals that we as a Government, we as a nation send out. If we look like we’re nervous and tiptoeing around this, rather than taking a good long running jump at it with some confidence, then I think of course domestic businesses and international businesses will pick up on that.
“But bear in mind, we’re in a good position here. In 2018 Forbes rated us the best place in the world to do business.”
ConHome: “People are worried about food being able to get through Calais, with animal products being subjected to checks once we’re a third country and not a member of the European Union.
“Do you think the decision to impose those checks will be taken in Brussels, where they might want to make life really difficult for us, or in France, where they might want their farmers to be able to go on selling stuff to us much as they do now?”
Raab: “The stuff that comes via Calais-Dover is just ten per cent of total food supplies to the UK. Having put it in perspective, what do we think France and others will do?
“Well some of it will be up to national authorities, and indeed within a national system, local authorities. Paris may want to take a particularly tough line, but the authorities with the legal power, and you’ve listened to what the deputy mayor has said, you’ve listened to what Xavier Bertrand [President of Hauts-de-France] has said, he’s said of course we want to keep doing the business.”
ConHome: “What happens about the European Arrest Warrant if we fall out without a deal? If there’s an explosion in London and the perpetrators flee to Italy, will it become very difficult to get them back?”
Raab: “It depends on their nationality. But you would have thought, if for example they’re UK nationals, one of the things we’ve done over the last 10 or 15 years is over-rely on extradition arrangements with the EU for the return of our own nationals or for returning foreign nationals to their country.
“You can often use deportation proceedings, and if you look at our relationship with Australia and the US we often do.
“But of course the European Union has extradition arrangements pretty much based on the European Arrest Warrant with other countries like Norway, and so there’s no reason why, whether we get a deal or No Deal, we couldn’t replicate those arrangements.”
ConHome: “And what bearing would No Deal have on our immigration policy?”
Raab: “Well we would immediately have control over our laws and our borders. There are some fairly straightforward things that you can do immediately. So when we have people coming from outside the EU, we apply at test at the border, which is ‘is it conducive to the public good’.
“So if you’re worried about someone, you can refuse them entry. You can’t do that with EU nationals. They have to fulfil a much higher threshold, which is that you can only bar entry if it’s a serious, present and genuine threat to security.
“So that bar can be levelled out immediately, so there’s an immediate security gain to be had in terms of border security.
“And the reason I think it’s quite important is if you look at some of the quite recent terrorist links between Brussels and Birmingham – there was the so-called man with the white hat – I don’t know the intelligence on this, but I have a high level of suspicion that people from those groups were travelling between Brussels and Paris and Birmingham without just being refused entry [to the UK].
“Now that’s quite a good example of some of the cells that we would be able to protect UK citizens against more easily if we apply the global rules that we have for preventative checks at the border, not the EU rules.
“That’s something that can be done straight away. We’ve hardly heard anything about that from the Government.”
Raab reckons the Government has done far too little to stress the opportunities presented by Brexit: “I think the only thing that’s missing at the moment is we’ve done a lot of the risk management.
“What I don’t think we’ve done as a Government and I think the public has picked up on this is we haven’t said, ‘We’re going to do this. We’re leaving on 29th March, preferably with a deal, but if not we will leave on WTO terms.’
“That’s been the Prime Minister’s position all along politically. It’s also been the legislative position. And indeed it’s the position under international law because of the Lisbon Treaty.
“We ought to be on the front foot, for example, with a pro-active strategic approach to what are we going to do for tariffs. Obviously we’ll want to protect the particularly vulnerable and sensitive industries like farming here.
“But there’s a huge opportunity there to liberalise in a sensitive way which would be good for the consumer, not just preventing bad things from happening but actually grasping the opportunities.”
ConHome: “How quickly could we liberalise?”
Raab: “Well, when I looked at this in September, we had a three or four hour No Deal Cabinet session, at which the point was made very clearly and my proposals were passed unanimously by the Cabinet, that we needed to have a clear strategy for dealing with tariff liberalisation.
“And that’s one of the ways, in a No Deal scenario, you give consumers a shot in the arm. You could ease the cost of living on consumers.
“We’re not going to put up tariffs, and we’re not going to have the EU protectionist tariff wall applying to the rest of the world. Why would we do that? Actually we would say we’re open for business. This country wants to be global, competitive.
“But also, this is about your average, aspirational, lower-middle-class consumer who can do better than we can under the protectionist umbrella of the EU. So that’s one thing where we can take the initiative and really go into this planning and preparation on the front foot. But we haven’t really heard anything about what the strategy is.
“The second one is fiscally. We had a big discussion about a fiscal stimulus…”
ConHome: “You mean in Cabinet you had a big discussion?”
Raab: “Yeah. I’m certainly of the view that we ought to be saying to businesses, Deal or No Deal, at this moment of change we’re going to provide the fiscal stimulus to give you the confidence to double down what you’re doing in the UK and to be able to do so with confidence.”
ConHome: “Can you specify what taxes would be cut?”
Raab: “Well the obvious one is Corporation Tax.”
ConHome: “We have been cutting that, haven’t we.”
Raab: “And that’s been brilliant, because we had our second highest level of FDI into the UK in the first half of 2018, second only to China.
“But I would have thought if we’re going into a period where the global context is quite uncertain, but we’ve got Brexit, that would be another thing that we should do.
“And there are other tax cuts which sector by sector, and without infringing on state aid rules domestic or international, we could provide businesses, who are undoubtedly feeling a bit uncertain right now, with a bit of confidence.”
ConHome: “Can you give some examples of tax cuts sector by sector?”
Raab: “Well there is a strategy under way, so I don’t think there’s any point reinventing the wheel. But we haven’t heard from Government, publicly, this is what we’re going to do to give you the rocket boosters to see you through what will undoubtedly be a difficult moment.
“And so rather than just being reactive and saying Brexit is something that will happen to us, whether it’s the EU dictating terms or No Deal being upon us because we can’t accept those terms, let’s get on the front foot and give the public and businesses that reassurance.”
ConHome: “Steve Baker has said the Government is heading for a further substantial defeat if it fails to get the required changes. Do you think that’s right?”
Raab: “I think what Steve’s worried about is that we have the Malthouse Compromise and it’s not clear whether it’s even been presented in Brussels. And I suspect that’s a question that’ll be asked this week.
“I’m not sure. I take the Prime Minister at her word and the Government at its word. We were given a range of assurances. That’s how the Government won virtually all the votes and certainly the most important votes last Tuesday.
“So I think it’ll be quite important that the Government has, just for starters, been into bat with Barnier, with Juncker, on the Malthouse Compromise and with the legal changes to the Withdrawal Agreement.”
ConHome: “There are two things. One is going in to bat. The other is how many runs you make.”
Raab: “Well you can’t score any runs until you go into bat.”
ConHome: “No, but on the other hand, you can be out first ball.”
Raab: “I would hope for a slightly longer innings. I think people just need to know they’ve gone in to bat on the basis of the assurances that they gave, because that’s how they won the vote.”
ConHome: “So they must make the proper demands.”
Raab: “I think for a starter that’s what we want to see. And also, no one like to see this Prime Minister, or this Government, being beaten up by the EU.
“I think it’s very important that the Government is seen to be going in to bat, because we want to secure the Malthouse Compromise and legal changes to the Withdrawal Agreement.
“And secondly, if it’s the EU that is consistently saying No to reasonable compromises made by reasonable people, being put forward by the Government, I think we need to be outing that and be very clear on whose side responsibility lies for the failure – if this is where we get to, and I hope it isn’t – to get this deal over the line.”
ConHome: “And will public opinion then shift? Will people start to feel quite angry with Brussels?”
Raab: “I think it’s already shifted, if you look at the most recent polling on this, and particularly on the attitudes to leaving on WTO terms.
“It will be important for people to see that if the EU remain stubbornly intransigent, they are the ones courting the WTO exit. People understand that we need to leave on 29th March. Whether they voted Leave or Remain, the one thing you hear is get this thing done and dusted.”
ConHome: “So the Government isn’t selling No Deal. It’s using it as a negotiating ploy, mainly to get the Commons to rally round the deal.
“And I see you think it’s a mistake sending David Lidington as part of our negotiatiing team.”
Raab: “David Lidington has huge diplomatic expertise. He’s listened to, and he’s got great Cabinet Office expertise. I think the only point I was making is that there’d been a lot of discussion at the time of the vote last Tuesday about the negotiating team and how it was important it’s politically led and driven.
“I think we want to be careful that we don’t send a message that we’re soft-pedalling. However tough and robust David Lidington went in, I wonder whether there would be a perception back home…”
ConHome: “A perception here rather than in Brussels?”
Raab: “Possibly both. But it’s not a personal criticism of David.”
ConHome: “But who should our opening batsman be? Are you a cricketer yourself?”
Raab: “Not really. I quite enjoy watching it, but I don’t turn out for Brendan Carlin’s Sunday team.”
ConHome: “Brendan’s average is not intimidatingly high [according to Carlin, it is “just under 10 but improving”].”
Raab: “I’m not going to start naming the people who should go out there. I want to see us make a success of this and the nature of the political team that is sent out to close this deal is quite important in terms of the message Brussels gets, but also in terms of the confidence that it instils at home.”