2. 2. Statement: EU Transition

Part of the debate – in the Senedd at 2:32 pm on 1 November 2016.

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Photo of Carwyn Jones Carwyn Jones Labour 2:32, 1 November 2016

Nobody raises the issue of the UK not leaving the EU except those people who are Brexiters. There’s no question of the UK not leaving the EU. It’s going to happen. We know that. That argument has passed. That ship has sailed. It’s a question now of working out how this happens. All we know is that the people of Wales voted to leave the EU. We know no detail beyond that. We don’t really know what their position would be, for example, if there was a deal on the table that included some kind of partial free movement of people, as long as it involved access to the single market. We just don’t know. So, we are in a position of having to craft possibilities that are in the best interests of the people of Wales.

The reality, for me, is that tariff-free access to the single market is the single most important issue. That is the single most important issue. It is also right to say that that involves accepting, at least in part, the free movement of people. Well, if that is the case, then that has to be looked at, I’m afraid, because access to the single market is the most important issue. There are examples in other countries where there is a modification of the system of free movement. What we do know, what we can read into the result, I believe, in June, is that people weren’t happy with the current system of freedom of movement. Beyond that, we don’t know what their acceptance would be of any modification of that system.

I put forward a six-point plan in June. I still don’t have a plan from the UK Government. I still don’t know what their plan is, I still don’t know what their priorities are, and I still don’t know what the negotiating strategy is. Now, he met with David Davis. He may have said something different to him than he said to me, but every single question I put to David Davis was met with the answer, ‘It’ll be fine.’ I said, ‘What about the border between Northern Ireland and the Republic?’ ‘It’ll be fine.’ Well, it’s not fine, and Arlene Foster has the great problem now of having a situation where she will have a border with a country with a different immigration policy and that potentially is outside of the customs union as well. It is impossible not to have a hard border in those circumstances, and these are issues that, so far, have just been buried in the sand at UK level and will need to be resolved.

I think the Prime Minister wants to have a sensible approach to this. I think she does. I think this is the reason why she took the view she did before the referendum. But there are others around her who don’t. Liam Fox, Peter Lilley—these are people who have said, ‘What we need is a situation where service industries have access to other countries in order to allow their manufactured goods to come into the UK.’ That is a recipe to destroy UK manufacturing, and that is not what people voted for. For me, it’s hugely important that we’re in a position where we can access the European single market—that much is true—but I will not accept anything that would lead to manufacturing being undermined in Wales. He’s talked of free trade agreements—we must tread carefully there. Does he want a free trade agreement with New Zealand? Because what that would mean is the end of the quotas and the tariffs on lamb, with the free flow of lamb into the UK. So, we have to be very, very careful of what a free trade agreement actually means, and examine very carefully what the details are.

That is why it will take many, many years for free trade agreements to be negotiated. There’s no way that free trade agreements will be negotiated within two years—it’s impossible. The deal with Canada took seven years just to negotiate. Then there’s the question of agreement from the UK Parliament, from two regional parliaments in Belgium, member states—one of which has already said it would agree to nothing without co-sovereignty over Gibraltar. All these issues have to be resolved. None of this is easy. They have to be resolved, I know that, but to think that this is an easy option, that is far from the case.

In terms of devolved areas, well, let me give you one example of where it would make sense to have one coherent policy across GB: animal health. There’s no sense in having three different systems of animal health across Great Britain. And the reality is that, to me, it makes sense to have an agreement between the three Governments, with a common system—that clearly makes sense. There may be an argument of having a common framework for agriculture, so that there are no barriers erected within the UK to trade within the UK. That I can see as being something that would have merit.

He talks about money—under no circumstances would it be good for Welsh farming to see the current flow of money from Europe disappear into the Treasury. We get £260 million a year for farmers in Wales. We have a far greater share of the spend than Barnett would give us—a far greater spend. So, actually, we will be much, much worse off if we were to lose that share of the money. The worry I have is that, in 2020, we’ll be told, ‘You can have the money, Barnettised’. If you do that, it’s a massive cut in Welsh farming, and we would not be able to keep the current subsidy system going. For me, what we need is a guarantee that the current share of funding will continue into the future. If that’s done, then that will resolve the situation.

We have to make sure, of course, that we don’t end up in a situation where we have the powers, but not the money. And it’s hugely important, as we were told that there would be a Brexit bonus, that that is distributed fairly to the people of Wales. And in agriculture, that means not a Barnettised share—it actually means the kind of share that we get now.

Talks with UKTI—he is wrong about UKTI. We value the work that we do with UKTI—we have a good relationship with them; there is no conflict between us—but the major investment decisions that have come to Wales over the last few years have come through the sheer hard graft of Ministers and, indeed, of officials—Aston Martin, where I was yesterday, being one example of that. That was done entirely by Welsh Government Ministers. But we do work with UKTI. They have provided us with assistance in the past, and the relationship is good, and that’s going to continue in the future—that needn’t change.

But we have to understand that there are many, many issues that need to be resolved in a very, very short space of time. We’re talking about two and a half years to put in place a deal for the UK that will be of benefit to the UK. That is a hugely difficult task. At the very least, it needs the UK Government to be able to be in a position to understand where it wants to go at this stage. If it’s not at that stage yet, then how on earth will it be in a position to understand what the negotiations should look like over the two-year period of those negotiations? Now, from my perspective, I’m not starting from the perspective of looking to be publicly critical of the UK Government as it continues its negotiations. I would rather be in a position where we had an agreed way forward—I’d rather be in a position where we had an agreed way forward. But in March, I would like to see the UK Government having taken on board the views of the devolved Governments, and come to a position that can be agreed by the devolved Governments. On that basis, it makes perfect sense, then, to go into negotiations in March with a united front. But that is the challenge for the UK Government. It’s no good the UK Government saying, ‘This is what we’re going to do’, and not look for the views of the devolved Governments, or their agreement. If we’re going to get this right for the UK, we need as much agreement as possible, in order to make sure that, over the next two years, we don’t end up in the situation where we take a huge economic hit.