9. Plaid Cymru debate: Continued membership of the Customs Union

Part of the debate – in the Senedd at 5:36 pm on 28 February 2018.

Alert me about debates like this

Photo of Ken Skates Ken Skates Labour 5:36, 28 February 2018

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.