The next item is the debate on the External Affairs and Additional Legislation Committee’s report on the implications of Brexit for Welsh ports. I call on the Chair of the committee to move the motion—David Rees.

Motion NDM6525 David Rees

To propose that the National Assembly for Wales:

Notes the report of the External Affairs and Additional Legislation Committee on its inquiry into the implications of Brexit for Welsh ports, which was laid in the Table Office on 4 August 2017.

Motion moved.

Diolch, Llywydd. I move the motion. I’m very pleased to open today’s debate on the committee’s report on the implications of Brexit for Welsh ports. I’d like to start by placing on record my thanks to all the witnesses, the committee staff and colleagues who took part in the inquiry. Ports in Wales make an important contribution to our economy through supporting jobs, driving economic growth and facilitating trade. Our ports also share an important and symbiotic relationship with our European partners, so it’s natural to consider the potential implications of Brexit on our ports, which could be considerable. Our inquiry sought to look into the implications in more detail, and we spoke with many of the main actors involved in the sector, including road haulage, rail freight groups, academics and port operators themselves—and ferry operators. Our evidence gathering was greatly enriched by our rapporteur visit to Dublin earlier in the summer, and I’m certain my colleagues Mark Isherwood and Eluned Morgan would like to place on record our gratitude to everyone that we met in Ireland for the warm welcome we received and for the constructive and open way in which they approached our discussions.

Llywydd, our report threw up a number of the important issues and considerations, including questions about future border arrangements, the post-Brexit customs regime, and the infrastructure in the hinterland of our ports. In total, we have made eight recommendations to the Welsh Government. I am pleased to see that all have been either accepted or accepted in principle. I am disappointed, however, that the Cabinet Secretary’s response does not provide the greater detail that we as a committee would like to see, and perhaps you will take the opportunity to explore these areas in more detail during today’s debate.

Suzy Davies took the Chair.

Perhaps the central issue facing Welsh ports in the context of Brexit is the questions relating to the future of the Irish border. It became clear that whilst looking at the impact upon Welsh ports in totality, the ports that would be most affected would be our ferry ports at Holyhead, Fishguard and Pembroke Dock. We heard concerns of how a soft border between Northern Ireland and the Republic of Ireland and a hard maritime border between Wales and the Republic of Ireland could severely disadvantage Welsh ports. The loss of competitiveness resulting from differentiated border arrangements could lead to a displacement of traffic from Welsh ports, like Holyhead, to ports elsewhere in England and in Scotland through the Northern Ireland route. I am further concerned that this will be a realistic possibility following the publication this week by the UK Government of its White Paper for a future customs Bill. Reading through their document, there’s discussion of the soft border between Northern Ireland and the Republic of Ireland, between the need to ensure no restrictions of traffic flow between Northern Ireland and Great Britain, but there’s no reference to the border between Wales—or even the rest of Great Britain—and the Republic of Ireland. A question I might ask, perhaps: is it even on their minds? Does Wales exist in some of the minds in Westminster? I have great concerns over that.

I thank the Member for giving way. I share his concerns. He’s talked about ferry ports, and we think about people, but, just for example, the port at Milford Haven has some 2,000 tonnes of Irish seafood coming through it on to the continental markets, and we’d want that to continue to come through Wales, but also to add value to it, perhaps, in development in Milford Haven. That’s an example of what we could be losing.

I appreciate the Member’s concerns and I totally agree that there are opportunities as well that exist. The problem is that we have businesses that work to just-in-time delivery, and when it comes to food products, actually it’s very critical now, and that is therefore important. The delays that could be experienced would impact upon that.

Our first recommendation, therefore, stems from these concerns and calls upon the Welsh Government to continue to press the UK Government to ensure that no Welsh port is unfairly disadvantaged by future border arrangements. And I am pleased that the Welsh Government has accepted this recommendation.

The next key theme that emerged during our inquiry was a concern relating to the future of the UK’s customs arrangements after we leave the EU. Now, I appreciate that a position paper has been published since by the UK Government, and also the White Paper on the future of a possible customs Bill, but having read those, I received little comfort, actually, that they will address the issues.

Since 1993 and the completion of the European single market, the volume of freight between Holyhead and Dublin has increased by 694 per cent. As it stands, and as indicated in the Prime Minister’s Lancaster House speech, the UK will leave the customs union as part of the Brexit process. Most witnesses raised concerns about leaving the customs union and the effect that reintroducing customs checks would have in terms of delays—and as the Member for Mid and West Wales has already indicated, that has crucial elements for businesses in his area. Furthermore, the most recent HMRC estimate suggests that Brexit could see UK customs declarations increase from the current £55 million per year—that’s £55 million per year—to a maximum of £255 million per year. That’s a five-fold increase.

At the same time, we heard that the use of new technology could help to ameliorate some of the worst risks of delay. Technology comes to our rescue. Even the White Paper continually refers to technological solutions to help establish a frictionless border between the UK and the EU. But in order to do this, we need the IT solutions to be up and running by 2019, and everyone we spoke to said—and past history tells us—it’s unlikely to happen. Therefore, the solutions will not be in place by this time. I’m not saying it can’t happen, but time is a big factor.

Our second and third recommendations reflect these concerns and request that the Welsh Government keeps us updated on the progress of IT solutions and, perhaps, the UK’s future customs arrangements after discussions it will have, because the White Paper, again, talks about involvement with the devolved institutions and devolved Governments, and I would like to know exactly what involvement it’s had already with the publication of the White Paper on the customs Bill. However, simply waiting for the UK Government to bring about solutions, particularly in the context of the new powers over ports that will be devolved to Wales early next year, isn’t good enough. We need the Government to mitigate possible risks to Welsh businesses by ensuring that businesses have everything they need to make the most of opportunities provided by things such as the authorised economic operator and trusted trader schemes—and these, again, are focused upon in the White Paper, but we need to make sure our businesses are up and running as quickly as possible with those.

Another key concern centres on the physical capacity constraints faced by the ports themselves. We heard that the lack of space to accommodate new border and customs checks after Brexit could lead to lengthy delays at our ports—not just applicable to Wales, because Dover has the same problem, as has been highlighted very often. And whilst we’re talking about Dover, please remember Holyhead is the second-busiest roll-on, roll-off port in the UK behind Dover. So, our fifth recommendation calls for the Welsh Government to undertake urgent work in this area—and urgent work, by the way, does not mean some of the solutions we heard at the evidence session, where someone said, ‘Well, we’ll be out of the EU, the habitats directive won’t be operational any more, we can span even easier’. That’s not the intention that we seek.

Although we welcome the fact that the Cabinet Secretary has agreed to this recommendation in principle, the lack of detail, perhaps, in his response is a little bit disappointing and, perhaps, fails to address sufficiently the concerns we have highlighted. He may wish to expand upon that in his response. Crucially, it does not commit the Welsh Government to drawing up the highways management contingency plan that we asked for, and I would ask him to reconsider the need for this.

Moving on to the response to recommendation 6, we all recognise that many aspects of the UK’s withdrawal are not in the gift of the Welsh Government, nor, for that matter, in the gift of this institution. However, this does not preclude us from planning for each scenario. In shining a light on our ports, we had hoped to bring issues in need of consideration to the Welsh Government’s attention. And we hope the Cabinet Secretary, therefore, does further commit in his response to undertake the detailed scenario planning that we would like to see, particularly as I’m hearing more and more from the UK Government that they are now planning for a no-deal Brexit. I think, therefore, we need to be actively planning now.

When we set out to look at Welsh ports, it was clear to us that we would need to seek evidence from our nearest neighbour, and to that end I was delighted to go to Dublin on a rapporteur visit. The Irish representatives we met were delighted to meet with us, and I think that was an important aspect—they wanted to engage. It was clear, as somebody said in our inquiry, that all our ferry ports point towards Ireland. So, it was a matter of great concern to us that the Cabinet Secretary at that point had not actually sought meetings with his counterparts in Ireland, but we did hear when he visited us in the committee that he was making arrangements to do so. I would be grateful to hear if he has actually now done so.

The clock is ticking on these negotiations and if Welsh interests are to be safeguarded, there must be proactive engagement with our friends and allies all across Europe, by all Ministers, not just the First Minister and the Cabinet Secretary for Finance and Local Government. As I said, the Cabinet Secretary’s response indicated that he has had ministerial discussions with his counterpart in Ireland. I would be grateful for more details of that, and perhaps how he intends to take those further.

Looking at the future, our final recommendation centres on the idea of free ports, which are areas where import duties, VAT and other import charges may not apply, or where importers can defer such payments. They are an underexplored concept in Wales. We haven’t had to need them necessarily, but now may be an opportunity for us to look at the opportunities that Brexit will give as a consequence of that. Our recommendation 8 calls upon the Welsh Government to look at these opportunities of seeking whether free port designation in Wales can be effective and helpful. I’m pleased the Cabinet Secretary has committed himself to working with the sector to achieve this.

Chair, our report paints a sobering picture. It’s absolutely vital that we get this right and keep Wales and Welsh trade moving after Brexit. If our worst fears of lengthy delays at our ports disrupting the supply chains and tailbacks on our roads are not to become a reality, then we will need to see action being taken now and in the weeks and months ahead. We only have 15 months, approximately, before we leave the EU. Chair, I recommend this report to the National Assembly, and I look forward to hearing the Members’ contributions this afternoon.

I think it’s really important for us on the external affairs committee of this Assembly to be realistic in terms of the extent to which we are likely to be able to influence the Brexit debate. With this in mind, I think it does make sense for us to focus on areas where we can shed light on what Brexit will mean for Wales where the UK Government is unlikely to focus. I represent the constituency of Mid and West Wales, where we can boast some of the most excellent harbours in the United Kingdom. Our relationship with Ireland, one of the biggest export markets, is crucial, and our fear was that the UK Government would focus all its attention on the implications of Brexit on the major ports of the south-east of England. So, it’s critical that there’s a real understanding of what a hard Brexit would mean for ports in Wales. The fact is that trucks going to and from the EU through Dover take around two minutes to process. Now, if you’re driving a truck from outside the EU into or out of the UK, then it takes around 20 minutes to process. So, there are logistical and practical problems that will be thrown up by a hard border with Ireland, which would cause huge disruptions at our ports where there’s very limited land for expansion where lorries would need to be parked up.

Now, the negotiations in the EU are stuck at the very, very early stages, and one of the reasons for this is because we’re so far from the situation where we can find a resolution to the Irish border situation. The UK Government is still clinging on to some belief that it will be possible for the Northern Irish border to become the external border of the EU—a hard border—and yet they really believe that this is going to be possible without any need for customs checks.

Now, the UK Government seems to think that technology is going to provide all the answers to the questions around these EU border arrangements, but witness after witness told us that the complications associated with developing a technologically led solution would mean that we would need to integrate the HMRC procedures in Ireland and the UK into a wholly custom integrated system, and there is no way this can be delivered in time if we crash out of the EU, as seems to be increasingly likely. Now, I don’t need to remind the Chamber of the desperately poor record of the UK Government on high-tech IT solutions in relation to public services.

Now there’s only one other country that is really concerned about Brexit, and that is the Irish Republic. In our dealings with representatives from the Republic, it was clear that their focus has been very much on resolving the border issues with Northern Ireland and that they hadn’t given as much thought to what impact a soft border with Northern Ireland, where lorries could potentially just zip through unhindered, would have on direct trade between the Republic and the UK via Wales, which, potentially, could be subject to that significant time and paperwork hold-up. We heard that the Cabinet Secretary for the economy hadn’t met his Irish counterpart, and it would be good to hear, as the Chair suggested, whether that meeting has taken place.

Now, this week, the UK Government set out its vision for a post-EU trade and customs policy, and I suppose they do have to give something to Liam Fox to do. At the moment, there are 50 trade agreements between the EU and countries around the world. Whilst we remain members of the EU, we can’t make our own trade agreements. The UK Government is in cloud-cuckoo-land, and so is Mr Hamilton, if they think that we’re going to get anywhere near replicating the trade deals that we currently enjoy with the EU. And that’s one of the reasons why I believe we would be barking mad to leave the customs union. Witness after witness told us that a hard border with Ireland could have a significant negative impact on our ports in Wales, particularly if there’s a soft border with Northern Ireland.

I want to make sure that, if this happens, the blame for any negative impact falls exactly where it should be: on those politicians and those political parties who push and vote for the UK to leave the customs union. And I’d like to make it clear that I and the Labour Party locally will be watching in particular Stephen Crabb MP and Simon Hart MP in Pembrokeshire and the way that they vote in Parliament on this issue, and we will hold them personally responsible for any job losses, hold-ups or negative impacts on ports in Milford Haven or Fishguard as a result of leaving the customs union. Their votes really matter when the Tory Government has such a slim majority, and we and the people of Pembrokeshire will make a judgment on whether they will put the needs of their county first or the needs of their party.

Well, I’ll try and stick to the report, which states that concerns over implications of Brexit for Welsh ports centre on three areas: that a soft border between Northern Ireland and the Republic of Ireland will displace traffic from Welsh ports to those in England and Scotland via Northern Ireland; that any new customs arrangements will create technological and logistical challenges for our ports; and that many Welsh ports lack capacity to accommodate any new border controls and customs checks.

As the Welsh Government response to our report states:

Currently over 70 per cent of cargo to and from Ireland, Great Britain and the wider EU pass through Welsh ports.’

It adds:

If there were effectively no customs checks in the island of Ireland but they were introduced at mainland UK ports, freight operators may be encouraged to move cargo flows through the Irish land border and into the UK from Northern Ireland—using Liverpool and/or Scotland as part of the “land bridge”, and not Wales.’

It is therefore concerning that the Welsh Government only accepts in principle our recommendation that it seeks clarification from the UK Government on the anticipated timescales for the development and implementation of proposed new IT-led customs arrangements and sets out how it expects the costs of these new arrangements to be borne.

Stena Line Ports warned that Holyhead was constrained by space and would not have the capacity to stop vehicles. It is therefore also concerning that the Welsh Government only accepts in principle our recommendation that it sets out how it intends to address the lack of physical capacity to accommodate new borders and customs checks at Welsh ports.

In 2015, 50 per cent of more than 750,000 lorries carried along the central corridor to Dublin passed through Holyhead. After Dover, Holyhead is the second largest roll-on, roll-off ferry port in the UK, as the Chair of the committee indicated, with a business model dependent upon the open ports policy. Emulating the responsible approach being taken by the Irish Government, the Welsh Government should, therefore, be making detailed preparations now to ensure that any new arrangements do not lead to a displacement of traffic from Welsh ports, principally Holyhead.

As an antidote to some of the prophecies of doom previously heard, and perhaps more recently heard in this Chamber, let us therefore consider some of the evidence that the committee received. A 2017 survey of its members by the Irish Exporters Association found that 94 per cent do business with or export to the UK, and that 67 per cent make use of the UK land bridge to access continental markets. The Irish finance Minister told an Irish parliamentary committee earlier this year,

I cannot see how that would not be maintained because if one looks at the situation in Italy where every day thousands of trucks drive through Switzerland in both directions carrying goods and services from Italy to Germany and France and so on and they have an arrangement whereby one seals the truck so that it does not have to be physically examined and there are legal arrangements that apply. ‘

Having carried out detailed modelling, unlike the Welsh Government, the Irish Maritime Development Office told us that Brexit will not close the 18-hour advantage of the UK land bridge to continental markets. Only last Thursday, the Economy, Infrastructure and Skills Committee was told by the head of trade in Canada’s Brussels embassy that 70 per cent of its trade with the USA is carried by trucks across a few passing points on the border, and that security clearance programmes for trucks and drivers, combined with an e-manifest programme for goods, provides a very efficient and speedy system.

The Irish transport Minister told us that the common travel area issue should be resolved without any real problem and the Irish Department of Foreign Affairs and Trade told us that you can leave the customs union and still have customs arrangements afterwards.

In its response, the Welsh Government states only that it seeks to mitigate the risk to Welsh businesses of a lack of preparedness by working with HM Revenue and Customs. But Irish Ferries told us that an IT-led solution would be key and that discussions with HM Revenue and Customs and the sector were already under way. Perhaps this explains why the committee had to recommend that the Welsh Government urgently addresses the lack of engagement it has had with counterparts in Ireland and other EU member states, having heard that Ireland has had over 400 engagements over Brexit across Europe, but the Cabinet Secretary here confirmed that he had not yet met Irish Government counterparts to discuss the implications of Brexit for Ireland-Wales transport links. Diolch.

Thank you very much. Rhun ap Iorwerth.

Thank you, Chair, and thank you for the opportunity to contribute to this debate. Although we are talking about concerns about the future of ports in all parts of Wales, as the Member representing Ynys Môn I’m sure you will forgive me for focusing on Holyhead, the ancient, proud, maritime town that developed into the main crossing point over the Irish sea since Telford brought the A5 there two centuries ago. Since the beginning of the nineteenth century, therefore, the port has grown. Some of my forefathers were among those who made their livelihoods serving the postal, goods and passenger ships. Well over 1,000 people are still employed directly in the port of Holyhead—far more in the wider economy are reliant on the port. Four and a half million tonnes of goods pass through annually. As we’ve heard, only Dover is bigger in terms of roll-on, roll-off services.

But, if Holyhead has been created and defined by its port in the past, there is no hiding the threats facing it now. Any barrier to the flow of vehicles and goods is a threat to the port of Holyhead, and is, therefore, a threat to the well-being of the people of Holyhead. Therefore, we need assurances in a number of areas. We know of the risk to trade if there are financial barriers in place. This raises some deep questions on the whole economy—tariffs and so on—and I’m surprised that the Conservative Member didn’t make reference to that. I will focus on two elements of this report that are of particular interest to me and are particularly pertinent to the future of Holyhead, namely the future of the Irish border and the future of the customs union.

If a hard border were created between Holyhead and Dublin, clearly it would become less attractive for people to travel and do business through Holyhead. We are talking about 2 million travellers, 0.5 million cars and 400,000 goods vehicles. As witnesses told the committee, the process of moving freight always follows the easiest route—the simplest route. Therefore, there’s a real concern that if there were a soft border between Northern Ireland and the Republic of Ireland, and a hard border between Wales and the Republic of Ireland, it would have a very negative impact on us. Irish Ferries said that could have serious economic impacts on Welsh ports, in terms of direct and indirect employment.

The other threat then, of course, is Britain leaving the customs union. We’ve already hear that since the creation of the European Union single market, or its completion in 1993, abolishing the toll checks between Wales and Ireland, the amount of cargo travelling between Holyhead and Dublin has increased incredibly—almost 700 per cent since the early 1990s. I am going to quote the concerns of two of the major shipping companies working from Holyhead—first, Paddy Walsh from Irish Ferries, who warns:

na allwn ddychwelyd at Weithdrefnau Tollau cyn 1993, pan oedd yn rhaid clirio’r holl gerbydau mewnforio ac allforio drwy’r tollau... Nid yn unig y mae maint y traffig wedi cynyddu’n sylweddol, ond mae’r broses gyfan o archebu a chyflenwi nwyddau wedi newid.

People are now ordering goods today and expecting them to be delivered tomorrow without having been stored in huge warehouses, as was the case in the past. Barriers at a port don’t fit into the modern way of trading. Ian Davies from Stena Line Ports says clearly that the growth of trade between Holyhead and Ireland happened because of the policies of open ports. There is a good balance, he says now, between goods and passengers:

Os tarfwch ar un o’r llifoedd hynny, rydych yn amharu ar y model busnes cyfan. Ac felly’r canlyniad, yn lle cael 28 croesiad y dydd, efallai y bydd gennych lawer iawn llai o gysylltedd â phorthladdoedd Cymru yn y pen draw.

That would be very bad news for the future of Holyhead. We would also need to change the structure of the port, if there were a need for new checks. Quite simply, according to the port managers, the space and the capacity simply aren’t there, and this was one of the conclusions of the committee too, and I was very pleased to see that included. This is what I was told:

Rhaid i’r Llywodraeth sylweddoli na allwn greu gofod ychwanegol allan o ddim yn y porthladd os gwelir bod angen gwiriadau tollau llawn ar y ffin.

In his evidence to the committee, Ian Davies from Stena Line said:

Mae gennym rai o’r llongau fferi mwyaf yn Ewrop yn dod i mewn... Byddai’r porthladd cyfan yn dod i stop... Nid yw’n ffisegol bosibl ei wneud yn y porthladdoedd ar hyn o bryd.

I am coming to a conclusion. I’m pleased that the Government accepts in principle the committee’s recommendation to outline how they intend to tackle this lack of capacity in Welsh ports, but I very much hope that we will get more meat on the bone from the Cabinet Secretary so that I can report back to the managers and staff of the port. We are facing a series of challenges here. It’s not just a proud history, but a confident and prosperous future that I want to see for the port of Holyhead.

Thanks to the additional legislation committee for bringing today’s debate. It is on an important issue. There are economic complications that will inevitably arise from Brexit, and I don’t seek to minimise them. I don’t want to see these problems exaggerated for political effect because my view is that the people of the UK have had their say, and they want Brexit; that is what they voted for, and that is also what Wales voted for. So, perhaps our old friend Eluned Morgan needs to just occasionally remember that outcome. [Interruption.] Okay, that’s your view, if you think that the electorate of the entire UK is so credulous as to swallow a lot of lies, then that is certainly a reflection on your view of the electorate, and it’s not a very good reflection. [Interruption.]

If you want to make an intervention, please ask the speaker.

Thank you.

Will you take an intervention?

No, I’m just starting, Rhun, and I’m not going to get through it with all this nonsense. So, we shouldn’t exaggerate difficulties for political effect, but we certainly shouldn’t minimise them either. What we have to do is rationally consider all of the economic implications. In the case of the position of trade passing through Welsh ports, if there are any ways in which we can meaningfully move towards trying to resolve these issues, or at least meaningfully address them, then that is what we should be doing now, as far as we can, in the time remaining before we leave the EU. That is what the committee appeared to be doing with this report. So, I think this report may be helpful.

The report is fairly clear in what it recommends, and to be fair, it hasn’t shied away from criticism of the Welsh Government’s actions to date, or the lack of them. I quote from the Chair’s foreword:

We were disappointed to hear that Welsh Government engagement with our friends and colleagues in Ireland has been so limited to date and urge the Cabinet Secretary to address this urgently.’

The First Minister has spent a lot of time since the Brexit referendum talking about Brexit and all of the problems he thinks it is causing. One issue he tends to mention every single time, without fail, is the issue of the border between the Republic of Ireland and Northern Ireland. So, it’s rather odd to note that a foreword written by his own Labour colleague David Rees notes that he has done so little to address this issue himself. The First Minister seems to want to talk about his issue till the cows come home so that he can raise people’s fears, but he doesn’t seem to actually want to do anything about it. So, I’m hopeful that the economy Minister, who is here today, will tell us what actions he is proposing to take, and I hope for all our sakes that he is planning to be more proactive in this regard than the First Minister has been.

A further point from the Chair’s foreword, which summarises the report. Again, I quote:

Furthermore, we are clear that the WelshGovernment will need to clarify the timescales for work on technological solutions to future customs arrangements with HM Revenue and Customs and the UK Government.’

This is quite a specific request, so I think it could be responded to fairly specifically. We know that the economy Minister usually has a good grasp of his subject, he can give us detailed answers, as we found out yesterday and on many previous occasions, so perhaps he could enlighten us today in his response on this specific point, which the committee identified. After all, David Rees, in his contribution, which I thought was pretty good, pointed to the need to start doing things now. If we are going to do something, let’s get the ball rolling now, and I agree with him.

I will return to the foreword to draw out a final point from it:

Above all, we want to see the Welsh Government work with the sector to prepare for the various Brexit scenarios and therefore call for detailed contingency plans to be drawn-up.’

I realise that there are limits as to what the Welsh Government can do. [Interruption.] Of course I do. The complaint of the First Minister, which we had from him again yesterday, is that he can’t do much as long as we are unclear what the UK Government wants to do. That is a reasonable point as far as it goes. However, in this area of the position of the Welsh ports, I think there are specific actions that the Welsh Government can take. These actions could be useful actions rather than merely pointless whingeing.

We’ve heard from several people about the actual issue of the displacement of traffic through Northern Ireland, which would mean it would be bypassing the Welsh ports. There is this risk. I do acknowledge that the risk exists and we have to look at it, but I’m also grateful to Mark Isherwood, who’s a member of this committee—of which I’m not a member—for clarifying several of the points relating to the evidence that they heard, because his outlook is far more optimistic. He realises that there is a challenge, there is a potential economic risk, but he also recognises that the technology is there that will help us to overcome this risk. He pointed also to the border between the USA and Canada, where there is a massive volume of traffic moving through, but due to the technology being in place, it passes through freely without much delay.

Free trade zone.

Okay. There may be differences in the trading relationship between the USA and Canada and ours with Ireland, but the reality is we don’t know what our future relationship with Ireland is going to be because of this issue of the common travel area that we enjoyed with Ireland before either of us even joined the EU. That may be in place once we leave the EU, so we don’t know.

Can I ask you to bring your remarks to a close?

Thanks, Cadeirydd, I will bring them to a conclusion. The last point is the free ports—I think that’s a very interesting concept. I’m very pleased the committee wants to investigate this and I’m interested to hear what the economy Minister has to say about the free ports because that is an opportunity that Brexit could bring. Thank you.

Thank you, we’ve heard from all parties now. I’d be very grateful if the next speakers could keep to time. Joyce Watson.

I’ll do my best, Chair. Anyway, I was a member of the previous Assembly’s Enterprise and Business Committee, and I did take part in the 2012 inquiry into international connectivity through Welsh ports. Again, in February 2016, that committee reported on the potential of the maritime economy. Of course, we all know that much has changed since then. Brexit looms and it does have a massive implication for our ports. So, I’m really pleased to see that this committee has revisited this particular issue.

As somebody who represents Mid and West Wales, and that actually means most of the coastline of Wales, I understand the reality of this particular topic in our area. We have harbours like Burry Port, Aberaeron and Pwllheli, two major docks at Fishguard and Milford Haven, and they are absolutely integral to the economy, especially that economy in Mid and West Wales. I am hugely concerned about the potential of leaving the customs union, the single market, the common fisheries policy and the EU’s environmental frameworks, and that will represent dramatic changes for those ports.

We know that there will be global opportunities, but it does remain the fact that nearly half of UK exports and more than half of imports are to and from the EU. We have to get Brexit right, and that does mean not impeding trade at customs and checkpoints. It is absolutely critical. The committee report does highlight that at present over 70 per cent of Irish cargo passes through Wales, mostly roll-on and roll-off at Holyhead, which has already been mentioned. But that also happens in Fishguard and in Pembroke as well.

So, it’s fairly obvious that I, therefore, share the concerns that the committee has that a soft border between Northern Ireland and the Republic of Ireland would disadvantage Wales to the benefit of the English and the Scottish ports with those Northern Ireland connections. That is if it’s a soft border, because what we don’t know at this point is what on earth this Government intends to do. I note the Prime Minister in her Florence speech was once again conspicuously silent on this huge and problematic question.

I’ve recently read some interesting reports on how the border between Norway and Sweden operates. Norway, as quite a few Brexiteers—and I’m not one—were eager to point out during the referendum campaign, has the closest possible trading relationship with the EU without actually being part of that bloc. The two countries have had border agreements since 1959, and Norway with the EU since 1997, yet smuggling remains a huge problem. As a result, last year alone, there were nearly 0.25 million vehicle checks at that crossing. In short, the Norway-Sweden experience suggests that, even without the island of Ireland’s unique circumstance, plans for a frictionless border between Northern Ireland and the Republic of Ireland will be difficult to achieve.

Nonetheless, we have to ensure that Welsh ports are best prepared for whatever the post-Brexit arrangement is. People have mentioned here today—so I won’t go into the detail, to save some time—the report on the technological solutions to speed up checks. They are not there at the moment. That availability is there, but the infrastructure is clearly not there. I wouldn’t actually set any great store on this Government giving Wales any extra money to be prepared for anything whatsoever, because we’ve already seen their reneging on promises of infrastructure development in Wales so far. So, I really don’t think that we can rely on that in any shape or form, but I do agree with one thing here already, and that is the fact that we will be watching—

Due warning, Joyce, I think.

[Continues.]—in Pembrokeshire very carefully the voting patterns of the two MPs who do owe their constituents explanations about their actions, which secure the jobs and the futures of the people that depend on them in Pembrokeshire.

I rather hope that my invitation to keep to time will be observed from now on. Simon Thomas.

Thank you, Chair. Can I not repeat some of the issues that have been already raised, but just speak particularly for the port of Milford Haven in my region? We’ve heard, now, that Holyhead is the biggest passenger port, but Milford Haven is the biggest energy port, and some 5,000 jobs are reliant on the energy that comes through the port of Milford Haven. But there are other developments and opportunities there that I want to address in the context of this report—a very good report from the committee—as well. I won’t repeat what’s been said about Brexit and the need to retain a soft border between Wales and Ireland—I think that’s very, very clear in the comments I made in an intervention on the Chair—but I also just want to say this: wouldn’t it be ironic if we get rid of the tolls on the Cleddau bridge between the two sides of Milford Haven port, within an enterprise zone, at the same time as we have tolls coming in on goods that are coming through the port, or individuals coming through the port? I think that’s just so ironic and so disrespectful, if I can almost put it that way, of the Welsh economy and the way we need to develop the economy in our ports, and Milford Haven in particular.

Now, one of the things that is developing in Milford Haven is the alternative energy developments there, and so we want to see—. And there’s a link here with the marine plan that we want to see from the Welsh Government. We want to see some sort of decision on the tidal lagoon, because there are engineering companies in the port of Milford Haven that could be part of developing a tidal lagoon in Swansea bay and wider. On Friday, I’m looking forward to visiting Ledwood Engineering and the WaveSub unveiling that’s going on there—another alternative wave power device. So, we know the richness of our seas, not only in fish but in energy and in tourism, and the ports are the gateways to exploit that economy. I hope that we’ll see—. Next week, I think, there’s a statement from the UK Government on green and clean industrial development of some sort. Let’s see if there’s a commitment there to the tidal lagoon, which is really what we want to see.

I think there are two opportunities as well, for Milford Haven, that I’d like to see explored further by the Welsh Government. Let’s take fishing, to start with: traditionally not seen as a big thing that we major on in Wales, but that’s because our fishing quotas have basically been sold to the Belgians for the last 40 years. When we do have a reconfiguration, coming out of the European Union, we need to ask ourselves whether we can do something around a quota—that’s landing our quota, if you see what I mean—whether we can have a way that the Scottish Government has been suggesting, that a certain amount of the Welsh quota has to be landed at Welsh ports, so, once again, we can stamp things ‘landed in Wales’ or ‘landed at the port of Milford Haven’ and grow our own then—more fish processing and other ideas around that. The Chesapeake bay that David Melding speaks of isn’t far from Milford Haven. A lot of the shellfish could be landed there, processed there—as well as those links with the Irish shellfish industry and fishing industry, including fish farming, which is developing in Ireland and needs markets coming through Wales. So, there’s an opportunity to develop our fishing industry and to review the 10m rule around boats as well, because that’s been something that’s been just enshrined in European legislation. In our ports, we can review that.

The second idea has already been mentioned I think, which is the free ports idea. Now, usually, within a customs union, you wouldn’t really want free ports, not when you’ve got a big trading bloc. But there is the opportunity to look at tightly defined areas where excise duty or duties are not exercised, are not raised, in order to allow transit of goods through them. This may be a workable solution in terms of the border between Ireland and Wales. This may be a solution, and one of the areas that that could be applied to is Milford Haven. I’m sure that, if there were to be development of the free port idea by the Welsh Government, then Holyhead and also Cardiff Wales airport would all be very interested in seeing how that could be developed. But it’s a possible practical solution in order to unlock some of the difficulties around coming out of the customs union, though I would put on record my own belief that we should remain in the customs union, as the most appropriate and practical way of dealing with the issue of ports and Brexit.

So, I hope, whatever happens, we will pay attention to our Welsh ports as real economic drivers and as areas that employ a great deal of people in my region and ones that I want to see taken seriously by the Welsh Government. To that, I very much welcome the report, as it at least puts this on the political map.

Well done, Simon. You won. Neil Hamilton.

Diolch, Cadeirydd. I’m delighted to follow Simon Thomas, whose speeches are always informative and interesting, and today’s has been no exception. I warmly endorse what he said about the opportunity for free ports that leaving the customs union will give us.

I’m grateful to Eluned Morgan not just for the extra publicity by mentioning my name in her speech, but also for bringing the position of the Irish republic to the forefront of this debate. This is an excellent report from the committee, I think, because it’s very fair and balanced, but it draws attention to some potentially serious transitional problems arising out of Britain’s decision to leave the EU. I commend David Rees, as the Chairman of the committee, for being a model of partisan impartiality, if I can put it that way, and having made a real contribution to this debate more widely. Because, if there is no deal with the EU, this is a very serious matter for the Irish republic as well for Wales—much more serious, perhaps, for the Irish republic, than it is for us, because 50 per cent of Irish exports come to Britain. Ninety per cent of Ireland’s oil and gas comes from Britain, through Milford Haven, very largely. Fifteen billion pounds’ worth of goods are exported to the UK. Half of the Irish republic’s beef exports come to Britain, and 42 per cent of all its food and drink exports. Fifty per cent of Irish hauliers serve European continental countries through the land bridge with the United Kingdom, and 30 per cent of that traffic is refrigerated. So, given the time delays that would inevitably be the consequence of trying to re-route from the existing ports that are being used, then there are very serious downside risks for the Irish republic, which makes it perhaps all the more surprising that the European Commission is being quite so intransigent in these negotiations. Are the Irish going to fare any better than the Greeks in the minds of the European Commission, Monsieur Barnier and Monsieur Juncker and their colleagues?

I’ve never actually been under any illusion about these negotiations because the EU, having been from its inception a political project, not an economic one, despite the fact it was originally called the European Economic Community—what is obviously uppermost in the minds of the negotiators for the EU is the ultimate destination, which they see, of a federal states of Europe, which certainly nobody in Britain ever signed up to, and nobody was ever asked in any other part of Europe. For them, small countries are a small price to pay for the achievement of their grand continental political objectives. So, I think that the Government is to be deprecated, actually, for not going into these negotiations expecting to fail, and therefore having wasted the last nine months or a year or so when it could have been making preparations to deal with the very severe practical problems that have been referred to in this debate, and which do certainly need now to be accelerated—or the solutions, if there is no deal, need to be accelerated—over the course of the next few months.

I do think that the technological advances that were referred to by Mark Isherwood in his speech offer a partial solution to the problem, and certainly mitigate the difficulties that will arise, and the experience of other countries, whether it be Canada, Switzerland, Norway, Sweden—Germany, indeed, has similar arrangements through these authorised economic operator systems, which are mentioned in the report. But I personally think that there is every reason to believe that, if the member states of the European Union are prepared to put pressure upon the Commission, a deal might be forged. What has always amazed me is how supine the member states are when faced with the drive towards federal union from the Commission when it threatens their own domestic national interests—in some cases, in the case of southern European countries, very, very dramatically indeed. I don’t want to see the Irish republic suffer from Brexit any more than I want to see Britain suffer from Brexit. We should have the closest possible connections with our geographical neighbours, not least because of the need to maintain the peace process in Northern Ireland. I think it would be criminal if the European Union were, by its intransigence, to put all that at risk, but that is certainly a possibility.

I do believe that this report offers the way forward in practical terms to deal with these problems, and I look forward to hearing the Cabinet Secretary’s enlightenment on the various questions that it poses for him and on the criticisms that were made in the report.

I call on the Cabinet Secretary for Economy and Infrastructure—Ken Skates.

Thank you, acting Deputy Presiding Officer.

That’ll do.

Excellent. I’d like to thank the Chair and members of the committee for their inquiry and for their report. I think it’s fair to say that Welsh ports currently punch well above their weight with over 11 per cent of the total freight moved through the UK handled by Welsh ports and over 70 per cent of cargo to and from Ireland, Great Britain and the wider EU passing through ports in Wales. So, it’s clear that the sector already makes a major contribution towards our ambition of providing a united, connected, sustainable and also a more prosperous Wales.

This is an important time for us as we look forward to the devolution of ports-related functions under the Wales Act next year, during our Year of the Sea. Devolution will signal a new contract between the sector and the Welsh Government and that enhanced relationship will allow us to work together to exploit the opportunities that lie ahead.

Ports in Wales have achieved great success with a commercial and market-led environment. I believe it’s essential to maintain that environment. I want to ensure the right conditions are in place to enable ports to achieve even more success, but we must recognise the uncertainty that lies ahead following the decision to leave the EU. This presents unique challenges.

In our White Paper, we set out clearly our priorities for Brexit, including the critical importance of avoiding disruption to our trade. We also stressed that any changes to migration and/or customs rules would have an immediate and major impact at Welsh ports, and the committee report highlights the seriousness of these potential impacts.

The key to managing these threats and opportunities is to ensure close and collaborative engagement between all relevant parties, and I am pleased to have accepted all of the committee’s recommendations, either in full or in principle.

The common thread connecting each recommendation is the need to work in partnership, whether towards ensuring customs arrangements do not disadvantage Welsh ports or towards consideration of an IT-based solution. This approach will enable us to promote and preserve maritime economic opportunities and increase prosperity throughout Wales.

The Welsh Government is being proactive in this area. In addition to the well-established engagement fora that already exist between Governments, businesses and the sector, we have asked the UK Government to ensure that they are engaged with us, with Welsh ports, and with relevant businesses on customs issues.

This approach, which is fully supported by the Welsh ports group, will enable us to understand the practical impact of new customs arrangements in Wales, both in terms of ports and the wider economic implications for Welsh business. We will then be able to determine, at the earliest possible stage, the right combination of solutions needed to maximise frictionless trade. Our key priority in this reserved space is to work with ports in Wales to influence the UK Government towards the most beneficial customs and tariffs arrangements that will provide growth for our ports and wider economy as well as enhancing commercial activity right across Wales.

We will continue to collaborate closely with the sector on the threats and the opportunities that could impact on our ability to protect and enhance the role of ports following Brexit, and we will continue to press the UK Government on the need to ensure that Welsh ports are not unfairly disadvantaged as a result of any potential differentiated border arrangements, as recommended in the committee’s report.

As recommended in the report, we will also continue to work closely with other partners such as the Government of Ireland to assess the implications of Brexit and explore mutual challenges and opportunities, and I’m pleased to have had the opportunity to personally engage with Shane Ross, my counterpart across the water, to discuss planning for a post-Brexit relationship. Wales provides a strategic link with Ireland for the rest of the UK and mainland Europe. Ensuring that link is maintained will be of benefit to all parties, as Members have rightly identified.

Since the publication of the committee’s report, the UK Government has set out its preferred approach to streamlining customs arrangements post Brexit and yesterday published a customs White Paper together with a trade White Paper. The customs White Paper sets out plans to legislate for the stand-alone customs, VAT and excise regimes that the UK will need once it leaves the EU, and also detail on the contingency planning in the event of a ‘no deal’. The strong representations we and industry have made in respect of frictionless trade I think have been heard, but how that will work in practice remains unclear, especially in the event of ‘no deal’, and a priority must still be to reach an agreement with the EU. Business simply cannot afford to face any risk of excessive delays or administration for new customs checks. We risk seeing important trade lost to ports in Scotland and the north of England, and much of the goods that cross from Ireland to Holyhead are perishable and they are in the other direction, so any delays—any lengthy delays—would be disastrous. I recognise that the paper appears to address the soft and hard border question and the potential detriment to Welsh ports by stressing that the answer to avoiding a hard border between Northern Ireland and Ireland cannot be to impose a new customs border between Northern Ireland and Great Britain. But, again, how that will work in practice remains unclear, and I’m concerned the customs Bill White Paper essentially proposes to introduce detailed arrangements via secondary legislation.

As a number of Members have identified, the White Paper also places a great deal of trust in technology providing the answer to frictionless trade. It might well do that, but I think there is a high-risk approach here, leaving no room for mistakes or delay in an area where the UK Government’s track record is not good. Furthermore, details of the proposed IT solution have not been fully disclosed, and therefore it makes accurately assessing the cost at this stage impossible.

Acting Deputy Presiding Officer, I can assure Members that we will consider and engage on further detail via both White Papers and will update the Assembly as developments progress. On the point of free ports, I would like to say that such zones are not physically constrained to ports, but we are engaging proactively with the sector and with individual ports on the potential of free zones, and we will seek to influence UK Government’s position as that position becomes clear.

Thank you. I call on David Rees to respond to the debate.

Diolch, Gadeirydd. Can I thank all Members? As Russell George said, it’s nice to have Members who are not on our committee actually participating in the debate this afternoon. And can I thank the Cabinet Secretary for the Economy and Infrastructure for his response, particularly to some of the comments we’ve highlighted today?

I’ll just go through a few things. Eluned Morgan highlighted the current implication of the customs rules today—and it’s very important—but she also highlighted something perhaps people didn’t realise: that when we went to Ireland, we actually brought to their attention the possible implications for Irish ports. Because if they did decide to go through the Northern Ireland route, because businesses will take the route of least resistance, of course there would be an implication for the ports of Dublin and Rosslare as well. They hadn’t even thought of that at that point, so I think it’s well worth having these discussions, and the work we did also hopefully helped the Irish Government look at that aspect.

It is devastating to leave the customs union, but it seems that’s the way we’re going. But everyone’s been talking about—I’ll pick one topic—IT solutions; everyone’s talking about it. Just to let you know, I used to lecture in software engineering and software development. I know my colleague Mike Hedges has also been in the IT world. I can tell you that it’s not easy to do a solution for this, and if people think they can do it quickly, and if they’ve got solutions somewhere else because it works somewhere else, I’m sorry, the complications, the complexities, the different requirements, different facilities—it doesn’t transfer automatically. This is a very difficult, complex solution. It is long term, and cannot be done in 12 months, which is the time you’re talking about. Yes, it will be perhaps a longer term solution, and eventually we will get there, but not if we don’t get this right by March 2019.

Yes, the land bridge was highlighted—that the UK will still be a land bridge, probably. They did talk about the options of going via Cherbourg. The timescale on the ferry crossing was a challenge for them, but they didn’t actually rule out the option of increasingly going via the north of Ireland, and therefore that’s what our concern was: that that option would be available to us and to them because of the different arrangements that might be in place.

Rhun, you’re naturally focused upon the impact upon Holyhead and communities in your own area. It could have a devastating impact, if we’re not careful, on Holyhead and the communities around Holyhead, and the businesses and people working there. We didn’t want to see Holyhead, basically the whole town, become a parking bay for lorries, which is what could happen. Because let’s remember one thing: when there are problems in Calais, what happens in Kent? The M20 is shut and becomes a big parking bay for lorries. We do not want solutions like that anywhere. We need to address these issues now to make sure it doesn’t happen.

Simon, yes, again, actually our report focuses very much on the roll-on, roll-off ferries, but you’re quite right that ports do cover other areas. There are many bulk ports in Wales, and fishing, and the implications for fishing, also have to be considered, because Milford Haven does have opportunities to look at how the fishing quotas can be changed and how the fishing industry in Milford Haven can actually change as well. It is important. And Joyce—the effect on the different maritime industries across the whole range, everywhere in that region. Yes, you’re right: get Brexit right, that’s the message we must send, but I don’t think the Government’s doing that at the moment—and I’m talking about the UK Government here, not the Welsh Government.

Can I go to, perhaps, my colleagues—[Interruption.] Yes, Mark.

On the IT, you will recall that, several months ago, Irish Ferries told us that they were, amongst others, in dialogue with HM Revenue and Customs over IT solutions. Would you not, like me, hope that, by now, the Welsh Government would have engaged with this to establish what IT solutions were being considered by HM Revenue and Customs, as the body that will ultimately decide on this?

Well, you’re quite right, it is important to get the positions of where we are with IT solution arguments between HMRC and other bodies and groups and organisations; it has to be vital. But I do think—indeed, they did tell us that they even didn’t think they’d get it done in time, and that’s the biggest problem. So we’ve got to get something between now and then.

Gareth Bennett, thank you for reporting on my foreword—I wish I hadn’t written it now, sometimes—but can I remind you, as a Chair of a committee, that I’m not political? That’s the intention of the committee. Committees reflect upon the issues and report to the Assembly. We are not voices of Government or any other party, we are voices of the Assembly. That’s the job, and that’s what we did. And you talk about not being political, and then spent a long time being exactly that, but there you are.

Neil, I will mention you, so you’ll have a mention from me as well. Thank you for saying that this is a fair and balanced report; we try to keep to that. And you’re right, there is a huge impact for Ireland as well—this could have a huge impact upon Ireland, so it is important that we address this issue and we work with Ireland to address this issue. But then you lost it and went off on a rant about the EU Commission not doing deals. Well, I’m sorry, you were going so well, but there you go.

And so are you, Chairman, but we’re running out of time.

Two seconds—well, 10 seconds. Cabinet Secretary, thank you for your answers. There are obviously some areas we need to explore further on this issue. But I’ve one question for you: you talked about the UK Government and being asked to join in the forum; can I just ask, have they? Have they actually come forward and said, ‘Yes, we want to take part’? Because it is important that they start listening to what’s happening here in Wales. Thank you, everyone.

The proposal is to note the committee’s report. Does any Member object? The motion is therefore agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.