3. Statement by the First Minister: 'Trade Policy: the Issues for Wales'

Part of the debate – in the Senedd at 2:51 pm on 6 February 2018.

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Photo of Mark Isherwood Mark Isherwood Conservative 2:51, 6 February 2018

Yesterday, EU negotiator Michel Barnier said he respected the UK's decision to rule out any form of long-term customs union, but he did add—and I'm sure the First Minister will be alluding to this—that, without a customs union and outside the single market, 

'barriers to trade in goods and services are unavoidable', which, of course, is exactly the position we would expect at the start of negotiations towards an agreed deal and just as apparently uncompromising as the position taken at the start of negotiations on the stage 1 discussions [Correction: 'deal'], which were successfully concluded with compromise on both sides before Christmas.

In response, the Secretary of State for Exiting the European Union in the UK Government, David Davis, yesterday said that he wanted a free trade deal with the EU, but also the freedom to strike deals with other countries where trade opportunities are growing. Well, given that the First Minister has repeatedly stated that he accepts the outcome of the referendum and believes this was more a protest vote than about control of borders, laws, trade and money, will he confirm to the people of Wales that continued membership of the single market and customs union would mean that the UK could not strike trade deals with countries outside the EU, other than through the EU?

According to both Her Majesty's Revenue and Customs and the Office for National Statistics figures and subject to small adjustments for finance, travel and transport, some 90 per cent of the UK economy and 85 per cent of the Welsh economy is not involved in exporting to the EU. The UK does more trade with the rest of the world than the EU. I know that, in Wales, the position is fractionally different, but we're talking about negotiations into the UK single market, which Wales is key to. That trade with the rest of the world is growing faster than UK trade with the EU, and because the EU sells some £80 billion more to the UK than the UK to the EU, clearly, it would not be in their interests to stop that trading.

When the External Affairs and Additional Legislation Committee met the Flemish Government, they told us that they were reliant on access to the UK and Welsh markets and were working with similar regions and sectors across the EU that needed a deal that enabled them to continue frictionless access to the UK market. So, what engagement have you had with regions and sectors across the EU that need a deal that enables them to continue to have free trade with Wales and the UK?

Of course, HMRC published details of changes to how regional trade statistics are calculated in May 2016, the result of which, under the old methodology, were that Welsh EU exports accounted for 39.2 per cent of all exports in the four quarters ending in June 2016, but, at the stroke of a pen, that rose to 67.4 per cent of all Welsh exports. So, in practice, not a lot had changed. Now, in his statement today and in the document published last Friday, the First Minister talks about 61 per cent of identifiable Welsh goods exports being traded with the EU single market. Why has that figure, therefore, already apparently fallen from 67 per cent to 61 per cent?

He talks about his belief that continued full and unfettered access to Europe’s single market is vital to Wales's forward economic interests, and says,

'We remain to be convinced that leaving a customs union with the EU is in our interests, at least for the foreseeable future.'

What do you mean by 'at least for the foreseeable future'? I'd be grateful if you could clarify. Is that simply a transition period, or do you have something else in mind? As you indicate, you,

'welcome the UK Government’s recognition in their White Paper, Preparing for our Future UK Trade policy, that Devolved Governments (and...legislatures) have an important role in shaping future trade policy'.

But, in evidence, as we heard earlier from the leader of Plaid Cymru, yesterday from you to the House of Commons Public Administration and Constitutional Affairs Committee, you said you 'don't think we should have a veto—it's hugely important that we have consultation'. And, of course, in your seven years in office, you have fostered the least diverse export economy in the UK, leaving Wales more reliant than any other nation on EU trade. So, what discussions is the Welsh Government, official to official, having with the UK Government, which I know are going on in detail, regarding frameworks, regarding a UK single market with agreed approaches on a range of matters, of course, including trade? Perhaps you could provide us with a progress report on discussions that are clearly already happening. Thank you.