The following amendments have been selected: amendment 1 in the name of Paul Davies, and amendment 2 in the name of Julie James. If amendment 1 is agreed, amendment 2 will be deselected.

That brings us to the Plaid Cymru debate on continuing membership of the customs union. I call on Leanne Wood to move the motion.

Motion NDM6670 Rhun ap Iorwerth

To propose that the National Assembly for Wales:

Supports Wales and the United Kingdom’s continued membership of the current EU customs union, as opposed to a new customs union.

Motion moved.

Diolch, Llywydd. I move this Plaid Cymru motion in the name of Rhun ap Iorwerth. Our motion comes when Wales needs to articulate a clear stance on the customs union as the negotiations on EU withdrawal proceed. This is a question that affects Welsh jobs, it affects the future of Welsh ports, it affects the nature of the UK's border with Ireland, which is also the Welsh border with Ireland. Make no mistake: the position of Wales in the UK on the customs union is critical not just to our own economy, but to the future of the Irish peace process and institutions as well.

Now, Plaid Cymru has placed a lot of emphasis on the benefits of the single market, but Wales needs the customs union as well. As things stand, the Westminster Government intends to remove Wales from the customs union. This paves the way for an extreme Brexit based on undercutting, deregulation and lower standards.

This week, the UK opposition party has clarified that it would seek a customs union with the EU. The Plaid Cymru motion makes it clear that we support Wales and the UK's continued membership of the current EU customs union as opposed to a new customs union. This is more than mere semantics. Membership of the customs union allows the UK to trade freely in all goods across Europe. Crucially, membership of the customs union gives the UK access to over 50 countries outside the EU. A bilateral customs union with the EU, on the other hand, which is what the UK Labour Party is advocating, is essentially an undefined free trade agreement that will give us access to a limited set of goods. For instance, Turkey's—

Will the Member give way?

I'll finish my point. Turkey's customs union is incomplete as it doesn't include agricultural goods. In a customs union, we will not be able to automatically secure additional market access via EU FTAs with third countries. These third countries will, however, have access to our markets, and that is a disadvantage.

Does the Member accept that being a member of the EU customs union also requires being a member of the EU and of its legal structures, and ignoring the referendum result and how Wales voted?

No, I don't accept that point, and I'll explain why shortly.

We also, in this debate, need to consider the crucial question of climate change. How can it be good from a climate change perspective to be travelling more goods from even further countries? That trade with closer markets must be protected if we're serious about tackling climate change. Now, I was already anticipating the question, 'Can you be in the EU customs union if you're not an EU member state?' The answer to that question is, 'Yes, you can'. The EU customs union is made up of EU member states and, importantly, includes some territories that aren't in the European Union, like the Isle of Man and the Channel Islands. And, in terms of negotiating a new customs union, it's already been stated by the EU that the UK cannot get a deal as good as we've got now. 

Can I intervene, please? What's the difference between a customs union and the free trade area?

The customs union refers to the travelling of goods, and the single market as a whole looks at goods and services. So, the customs union is just specific to goods.

Why is the Welsh Government failing to align with a UK-fudged Labour position? We know that in the joint White Paper, as Rhun ap Iorwerth pointed out yesterday, every single positive reference to the customs union is to the existing EU one, not to a new, bespoke customs union, which does not yet exist and will have to be negotiated into being. Now, we may be used to the Welsh voice going unheard, but we do have the ability to speak out as an Assembly and to put pressure on both the Government and the opposition at Westminster, and that pressure is strongest when we can all speak as one. The recent shift by the UK opposition is too little to protect the Welsh national interest, but there could be further shifts on both the opposition and the Government benches as the debate continues. So, let us today endorse an Assembly majority position in favour of the EU customs union to uphold that Welsh national interest.

I have selected the two amendments to the motion. If amendment 1 is agreed, amendment 2 will be deselected. I call on Mark Isherwood to move amendment 1, tabled in the name of Paul Davies. Mark Isherwood.

Amendment 1. Paul Davies

Delete all and replace with:

To propose that the National Assembly for Wales:

Supports Wales and the United Kingdom’s agreement of a new customs arrangement between the UK and the EU, with customs requirements that are as frictionless as possible; building a new, economic and security relationship with the EU whilst enabling the UK to enter new trade agreements internationally.

Amendment 1 moved.

Whether people voted leave or remain, they now want to see a Brexit deal that works for a global UK. The UK Government is therefore committed to delivering control of our money, borders and laws while building a new, deep and special economic and security relationship with the European Union. Plaid Cymru's motion today shows that they're instead continuing to try and frustrate the Brexit process. The same could be said of the First Minister's narrow and continuously recycled suite of arguments. The ambiguity of the UK Labour position, outlined by Jeremy Corbyn this week, adds further to the confusion. So, let us be clear: remaining in the customs union would limit the UK's ability to reach new trade agreements with fast-growing economies and to develop new ways for poorer nations to trade their way out of poverty.

Our amendment, therefore, proposes that this Assembly

'supports Wales and the United Kingdom’s agreement of a new customs arrangement between the UK and the EU, with customs requirements that are as frictionless as possible'—[Interruption.]

I'll finish the quote and then bring you in.

'Building a new, economic and security relationship with the EU whilst enabling the UK to enter new trade agreements internationally.'

David. 

I thank the Member for taking an intervention. I listened to his opening comments about the customs union, and I also listened to the comments he just made about what the declaration of this motion is—about supporting the agreement. Can you tell me what agreement has been reached yet on a relationship and exactly what this 'special relationship' actually means?

I didn't use the term 'special relationship'. This is what the next stage—. He knows from the evidence we've taken on the committee that we're just starting stage 2 and the full negotiations outside the EU can't begin until we've actually left—formally left—the EU. But there's going to be a transition period, as you know, which will further smooth that process.

With groundhog day regularity, Carwyn Jones has scaremongered about the borders between Northern Ireland and the Republic and the UK and the island of Ireland; we heard more about that from the leader of Plaid Cymru today. We must support access to the EU single market but to remain in the single market and customs union would mean that we had effectively not left the EU at all. In reality, the Prime Minister confirmed last December that the common travel area with Ireland, which had been in operation since the 1920s, would be maintained and that both the UK and EU had pledged that there will be no hard border between Northern Ireland and Ireland. She's also warned Brussels today against its demands that she signs up to legal commitments preventing a hard border in Ireland, even if that means customs checks between Northern Ireland and the rest of the UK.

The chief executive of HMRC—Her Majesty's Revenue and Customs—has consistently advised Ministers that there will be no need for physical infrastructure at the border between Northern Ireland and the Republic under any circumstances, and last November's report 'Avoiding a hard border on the island of Ireland for Customs control and the free movement of persons', written by leading customs expert Lars Karlsson for the European Parliament Committee on Constitutional Affairs, identified measures introduced to create low-friction borders across the world and proposed a technical solution for the border on the island of Ireland and for the future of movement of persons and goods between the EU and the UK.

After Jeremy Corbyn backed UK membership of a customs union, pro-Brexit Labour MPs described this as a betrayal of voters, and Frank Field MP accused the leadership of treating voters as 'thick', yet pro-remain party figures said that Mr Corbyn hadn't gone far enough. By supporting a customs union, Mr Corbyn appears to be ripping up UK Labour's manifesto and threatening to prevent the UK from signing economy-boosting, job-creating free trade deals around the world. However, in not committing Labour to membership of the EU customs union, Mr Corbyn's statement is actually ambiguous enough to mean anything, where the EU itself has consistently stated that you're either in the customs union and bound by its rules or outside it.

The First Minister frequently scaremongers that UK exit from the single market and customs union would generate a regulatory race to the bottom, and we heard more scaremongering from the leader of Plaid Cymru to the same effect today. However, the UK Brexit Secretary clearly stated last week that the UK will not seek to lower legal and regulatory standards in order to compete with the European market, and proposed instead a system of mutual recognition. Last month, former UK international trade Minister Lord Price told the Commons that Britain has already agreed free trade deals in principle with dozens of non-EU countries ready to take effect the day after Brexit. Economic reality mocks the Brexit gloom in this place. UK production output increased by 2.1 per cent in 2017, with manufacturing providing the largest upward contribution. CBI reports show that Britain's record on job creation is set to continue in 2018 and that volumes, profits and hiring are on the up in Britain's services sector. And builders merchants' sales have completed another year of growth—4.8 per cent.

So, instead of trading on scare stories, we must take back control of the narrative and offer the public hope. The UK and Wales voted for legal and constitutional independence from the European Union. It is our duty to deliver it.

I follow, once again, the spin of the Brexiteers, as we heard during the debate on the referendum, but there we go. Can I thank Plaid Cymru, actually, for bringing this debate forward this afternoon? Because it is providing us an opportunity to highlight the risks that face us as we leave the EU without any form of agreement on how we trade with our existing partners in the future.

Now, I know Plaid Cymru fought to remain in the EU in the referendum, as did I. We fought hard, but unfortunately, I wish the vote had been in our favour. Perhaps the realisation of the consequences and complexities of leaving the single market that are now in the media being highlighted would've helped us at that time. However, it didn't, and the difference, perhaps, that we have now is that I wish to respect the majority of my constituents and their views, and perhaps the majority of theirs—although I know the Llywydd is in a different position, because her majority was slightly in a different direction—whilst we protect our economy and the fundamental rights that we have had by being in the EU. It's therefore disappointing, actually, that the focus of today's debate by Plaid Cymru is more based upon the semantics of 'the customs union' and 'a customs union', as we've just heard from the Conservatives as well, rather than the need to secure the outcomes that will protect our economy and the welfare of our citizens.

Let's go back to the important question of what would leaving the customs union actually mean to us. I think that is important. On the face of it: customs checks at EU borders, including the border between Northern Ireland and the Republic of Ireland. I know that it's something that Theresa May has said that she doesn't want, and keeps saying that she's working to ensure that it doesn't happen, but we've also highlighted the question of custom checks at our ports. I know the Member for Ynys Môn has often referred to this point in his contributions in the Assembly, and I'd ask Members to re-read the external affairs committee's report on the impact on Welsh ports and on Welsh businesses as a consequence. It is something that you perhaps need to refresh your memories on.

We heard the comments from the Conservatives' spokesperson that technology will solve the problems: checks through smart technology, number plate recognition software, using authorised trusted traders, and maybe even Boris Johnson's concept of congestion charges being equated to customs checks—who knows?

Will you give way?

I'm more than happy to.

Are you therefore rejecting the report written by the leading international expert Lars Karlsson for the European Parliament on this, and also the continued advice being provided by the head of HMRC, who I suspect might have a little more technical knowledge, even than you, on this matter?

I thank the Member for that, but when I met with individuals who represent businesses in Europe, they were not looking for the softer solutions, because they didn't know which direction they were going in. Therefore I do believe that technology will eventually get there—not tomorrow, not next year, but probably in about five years' time, and that's a long while to wait to try and do some trade with European Union nations.

Anyway, let's go back to the issue. If we want to look, perhaps, at how border checks work, go to Norway—we've mentioned Norway many times in this Chamber—and look at Norway's customs service. It has been expanded in recent decades to address the issues, but they still have difficulties in actually managing the borders. For example—and I do apologise to Norwegians if I get this pronunciation wrong—at Svinesund, which handles 70 per cent of the cross-border flows of commercial traffic between Norway and Sweden, all commercial traffic—all commercial traffic—is stopped. Every bit of it. Checks are made on both goods and drivers. Now, that's the relationship in Norway. These delay lorries. They delay the operation and therefore the just-in-time agenda will be delayed as a consequence. It might not be very much; it might be, as some say, an average of four minutes. Some lorries will be delayed longer. You put four minutes on per lorry in Holyhead and see the queues you'll get. You put two minutes on in Dover, and the recommendation from Dover port is you'll have a 10-mile queue. That's the reality of what customs union failure will do. 

Will you give way?

Yes, Adam.

I just wonder if you can clarify one point about 'the customs union' versus 'a customs union'. Can we both agree there can only be one customs union, by definition, because it involves a single geographic entity with a common external tariff? So there could only be one customs union in the EU.

I don't agree with that, because a customs union—if you're going to define it—will be a union on customs arrangements between organisations, and therefore you can have different versions of a customs union. So, I—[Interruption.] No, you've had your chance. You've had your chance. So, no. I disagree with you, okay? 

You've just described a free trade agreement.

That's what you want to call it. It's up to you, but I disagree with you.

Can I go on? Because it's important. We also must remember that UK businesses and firms are far more integrated into European supply chains than Norway's, so again there's more of a problem there. Now, it was mentioned by the Member for North Wales for the Conservatives that there's been a lot of scaremongering about the border between Northern Ireland and southern Ireland. Well, actually, the traffic between Norway and Sweden has 40 roads—40 roads—causing those difficulties. There are 270 across that border, let alone other flows between other European nations and the UK. Therefore, there are far more challenging effects as a consequence of the reality of managing those border arrangements, because what we don't want—and I'm sure no-one in this Chamber wants this—is damage to the peace agreement in Northern Ireland. Therefore, we don't want those border arrangements to be in place.

Llywydd, I appreciate that time is going on, but I want to comment on this point finally. I actually took the decision to go and see those Brexit papers last week in the Wales Office. I know some other Members have been there, as I saw their names in the book that I had to sign. I put my phone away, it was locked up, because that was what had to happen for me to see them. But I remind the Members on the benches to my left that that document, which is actually a set of PowerPoint slides, really, reminded everyone—and it was commissioned by the UK Government, and they didn't like the answers they got—it highlighted the impact upon the Welsh economy of leaving the EU as a reduction of between 2 per cent and 10 per cent of GDP. The fact is that it's 2 per cent if we were members of the EEA, which is unlikely to be happening, because then—well, it's been highlighted again. So, it would be a big difference.

They also showed that the sectors that would be hardest hit are many sectors that are important to Wales. So, the UK Government has evidence that argues that remaining in the or a customs union is far more beneficial to the UK economy than simply following the ideological doctrines that drive the hardline Brexiteers and the fears that Theresa May has of them. It's time they came wide awake. It's time those Brexiteers in the Cabinet came to the conclusion that the people and economy of the UK are far more important than their ideological beliefs.

The Chairman of the external affairs committee just complained that this is a debate about a semantic distinction, but the semantic distinction was one that was introduced by his party, of course. That's the whole point of this. But I think I can help him, actually, to reinforce the point that was made by Adam Price a minute ago. On the European Commission's own website, it says that

'The Customs Union is a foundation of the European Union and an essential element in the functioning of the single market. The single market can only function properly when there is a common application of common rules at its external borders. To achieve that, the 28 national customs administrations of the EU act as though they were one.'

That is the whole point. That is the point of a union in this particular instance. Now, I've taken a different view both from his party and Plaid Cymru on the merits of remaining in the European Union, but I'm with Plaid Cymru in their interpretation of this debate in this respect: that what the Labour Party is now putting forward is incoherent and it's a sticking plaster to try to cover over the disputes within their own party on the question of whether we should remain members of the European Union. Nobody seriously believes the European Commission is going to have a special customs union deal for Britain. They keep telling us that cherry-picking is not allowed in relation to the single market or the customs union. It's take it or leave it—whatever they put forward to us. So, the Labour Party proposals are a non-starter, and I simply don't understand how any intelligent person in the Labour Party could believe that this is serious.

Jeremy Corbyn is very worried about the EU's rules on state aids, the EU's competition policy, and its rules on procurement, but he has to accept that the EU's rules on each of those vitally important areas, which relaxations could enable the Labour Party to realise some of its policy aspirations, are just not on offer from the European Union. What I really don't understand about those who think that we should be members of the customs union or a customs union but we're not going to be members of the EU is why they want to outsource the international trade policy of the United Kingdom to people who are not responsible ultimately to our voters and not responsible to our UK Parliaments in their various jurisdictions. This is utter absurdity to me.

I can see there are arguments for remaining inside the EU, although I don't share them, but I can see no argument whatsoever for being outside the EU and allowing other people to legislate for us and have no say or vote in their decisions. The common external tariff is changing all the time, every month, and sometimes in very significant particulars. For example, the tax on oranges—the input of oranges into the EU has gone up from 4 per cent to 17 per cent in the last few years. This applies to all sorts of goods that are listed in this very complicated document, which sets out what the tariffs on different products are. Surely, we want to be able to decide for ourselves what taxes are going to be imposed upon products, particularly food products and other staples of daily life—clothing, footwear and so many things that affect the spending power of people on low incomes. What I don't understand about the position of Labour and Plaid Cymru is that the common external tariff, as it applies in practice, is generally against the interests of the third world or developing countries—whatever we like to call them—against the interests of ordinary people, and particularly those who are on low incomes. This is what they seek to defend. If they had been Members of this Assembly or Members of the United Kingdom Parliament in the 1840s, they would have been defending the corn laws. I give way.

Thank you. Do you now, then, acknowledge that, without a form of customs union—or the customs union—there will be a tariff tax on goods that are exported from Wales?

No, not at all. It would be up to the United Kingdom Government to decide whether it wants to impose tariffs or not. For example, the common external tariff of the European Union applies a tax of 4.7 per cent on umbrellas having telescopic shafts. It applies a tariff of 1.7 per cent on swords, cutlasses, bayonets, lances, scabbards and sheaths. It applies a 15 per cent tariff on the import of unicycles. This is the absurdity of the complexity of the 12,561 items that are listed in the—

Will the Member give way?

I give way.

Is he aware that, on average, every time a woman buys a bra, she has to pay a tax of £1 to the European Union, even though we don't produce any bras in this country?

I entirely agree. [Interruption.] I think we must really keep this in perspective in any event. The average tariff that applies to goods being imported into the European Union is about 3.5 per cent. There are specific sectors that are affected more than that: motor cars, as we all know—10 per cent, and agricultural products are a special case, very often, even in free trade agreements, as has already been pointed out, and are exempted in the case of Turkey. But the proportion of the economy that is accounted for by these areas of production are almost vanishingly small. Agriculture, as we know, is only 2 per cent of the entire gross domestic product of the country. If we want to support farmers and farm incomes, we can do that in many other ways than imposing taxes on the import of goods, if we want to, but ultimately, it's a question of democracy.

It's up to us to decide, ourselves, as an independent country, what tax, if any, we want to impose upon the import of goods from other countries. Why should we impose an import tax of 17 per cent on sports footwear, for example, from the far east? Why do we want to have a tax on the importation of oranges, which can't be grown in the United Kingdom? There are so many absurdities of this. When you outsource the power of legislating for taxation to a body to which the British people have no power to control, then this is what will happen. We don't know, from one week to another, what the European Commission is going to do in this area. So, fundamentally, this is a question of democracy, and I can't understand why a party like the Labour Party, of all parties, which is devoted to the principles of democracy, and came into existence to defend the interests of working people, should now be throwing that to the winds and being followed so enthusiastically by Plaid Cymru.

I call on the Cabinet Secretary for Economy and Transport, Ken Skates.

Diolch, Llywydd. In our recent trade policy paper, which was published on 2 February, the Welsh Government set out its position on the customs union. In essence, we are not convinced that leaving a customs union with the EU is in our interests. Our position is mirrored by the Scottish Government, which in its publication 'Scotland's Place in Europe' also puts forward its case for the UK remaining in both the single market and—let me emphasise this again—a customs union. When the UK leaves the EU, it will cease to be a member of the customs union.

Will you take an intervention? And I apologise if it's premature and that you're going to explain, but what has changed since the White Paper that we produced jointly, where clearly it was the current European Union customs union that we sought to pursue? 

Absolutely. Look, at the time of producing the White Paper, we made it absolutely clear that issues around the customs union were far more complex than was the case with single market participation. Over the last year, I think it's fair to say that we've gathered far more evidence and talked to a range of experts and stakeholders, and this has led to greater understanding of the continued participation in the customs union and the implications. But, you know, the Scottish Government have also reached this same conclusion—that when the UK leaves the EU, it will cease to be a member of the customs union, which is an integral part of the European Union's legal order. In our view, it's inconceivable that the European Commission could, or would, agree to negotiate with third countries on behalf of the UK once we have left the EU. It's thus impossible for us to remain part of the customs union. But if there is any evidence that exists that suggests that the European Commission would agree to negotiate on behalf of the UK once we've left the EU, then I'd welcome that evidence. The UK could, nonetheless, negotiate a new customs union with the EU as part of our post-Brexit arrangements, which would involve us retaining the common external tariff. Taken with a firm commitment to continuing to work within the regulatory framework of the single market, this would enable goods to circulate between the EU-27 and the UK on much the same basis as today.

A number of stakeholders, and I think, personally, probably the most interesting of which is the British Irish Chamber of Commerce, have put forward proposals that would see the EU and the UK negotiating new free trade agreements in parallel with one another. And this, I believe, would have attractions not just for ourselves, but also for the EU-27, and should be, in my belief, a firm objective of the UK in the forthcoming negotiations. I do not believe the UK has presented sound economic evidence or a cost-benefit analysis to justify its preference for a rupture with the single market and customs union in order to pursue the doubtful prospect of great new bilateral free trade agreements elsewhere across the globe. Indeed, the recent leak of UK Government Brexit analysis confirms that new trade deals could not compensate for the economic damage done by following the Government's red lines of leaving the single market and the customs union. If the UK Government pursues its policy of leaving the single market and the customs union in favour of a wholly independent trade policy, this will risk the imposition of non-tariff barriers and tariffs, which will be no doubt deeply damaging to the Welsh economy.

Our trade paper, supported by a Cardiff Business School impact study shows that the Welsh economy is best protected by retaining full and unfettered access to the European single market, and membership of a customs union. Research confirms our analysis that a hard Brexit would have devastating consequences for Welsh jobs and communities, reducing the economy by between 8 and 10 per cent, which is the equivalent of between £1,500 and £2,000 per person in our country. Certainly, we do respect the democratic decision of the people of Wales to leave the EU, but we don't believe that the people of Wales voted for Brexit in order to be less well off. Staying within a customs union with the EU is the best way to safeguard that. So, let me be absolutely clear, we, like the CBI and many others, believe that the evidence is unequivocal—that the interests of Welsh businesses, Welsh communities, Welsh families, Welsh workers, are best served by being in a customs union with the EU, at least for the foreseeable future, and by continuing to participate in the single market from outside the EU.

Without such a commitment, I think it remains deeply unclear how the issue of the border in Northern Ireland could be resolved, regardless of what opposition Members may assert. This issue still has the potential of leading to the unravelling of the entire EU-UK negotiations. This is a position that we have advocated in our White Paper, 'Securing Wales' Future', which was jointly authored with Plaid Cymru, and it remains our position. It's the position that sets out our amendment to the motion.

I call on Rhun ap Iorwerth to reply to the debate.

Diolch yn fawr iawn. Thank you for all the contributions to this afternoon's debate. You know, Cabinet Secretary, there's so much that we agree on on this matter, but I would really like to know, and would welcome an intervention or a lengthy letter, as you wish, whether there are other elements of the White Paper that you are now distancing yourselves from.

Let's remind ourselves of the title of that White Paper, 'Securing Wales' Future'. I think, above all, that should be the duty of us in this National Assembly for Wales, to secure Wales's future and to press for those actions that will stand Wales in good stead, post leaving the European Union. And, yes, as always happens, we're accused of wanting to frustrate the will of the people, that this is somehow a bid to stop Brexit. There are people across three parties in this Chamber who don't want to be leaving the European Union. I certainly don't. But this motion, as with so many of our actions in this party, and joined by other like-minded Assembly Members, is about trying to address the pragmatic and face the reality that, as it stands, we're on a trajectory to leave the European Union and we have to do everything within our powers to make sure that that departure is in Wales's interest. 

We believe, in this party, that post Brexit we should be a member of the single market. We believe in this party that post Brexit we should be a member of the customs union, the only customs union that can protect Welsh agriculture, that can save Welsh jobs, can stop the port of Holyhead in my constituency from being choked—it hasn't got the room for the checks on lorries. And I thank Dai Rees for so eloquently speaking in favour of our motion this afternoon, because that is, in effect, what you were doing. I understand that a line has now been laid out by the leader of the Labour Party on a customs union, and you are dutifully following that line, but let's focus on what we need to secure in order to make sure that Wales's interests are served as we move forward. 

There are people complaining about being bound by European rules. What on earth is wrong about being bound by rules that actually work in our favour—in favour of Welsh jobs, in favour of Welsh communities and the Welsh economy? Support the motion.

The proposal is to agree the motion without amendment. Does any Member object? [Objection.] I will defer voting until voting time.

Voting deferred until voting time.

Unless three Members wish for the bell to be rung, I move to voting time.