I think it's a credit to the external affairs committee that, despite the very strong feelings that there are on the issues involved in relation to the European Union, it consistently produces fair, balanced and authoritative reports. I'd like to commend, in particular, David Rees on his chairmanship of this committee and the way that he has directed its work. I particularly agree with the point that he made right at the start of his speech this afternoon, that Wales is leaving the EU but it's not leaving Europe. We're often, on this side of the argument, characterised as Little Englanders or Little Wales-ers or whatever and wont to have a kind of laager mentality, concentrating purely upon Britain, but of course Brexit gives us an opportunity to concentrate on the wider world as well as on maintaining our links with the European Union.

One of the problems that we have, I think, in producing reports of this kind is that the evidence that is received, generally speaking, tends to be from producer interests, and producer interests generally tend to favour the status quo because, of course, they're dealing with what they know and what they've experienced and they want to maintain that in order to continue the regime under which they currently operate. The future is unknown, it is uncertain—even though there may be bigger opportunities under a different regime—but those are not known at the moment and therefore there is a certain amount of speculation involved. But I personally believe that Wales has nothing to fear from even a 'no deal' situation, should that turn out to be the result of the current negotiations. I do think that the UK Government has made it very, very difficult to get the best deal for Britain by its constant flirtation with this idea of some kind of a customs union. That plays right into the EU's hands, because if the EU thinks that we're desperate to maintain existing institutions and existing ways of trading with one another, then they have no incentive at all to enter into a different kind of trading relationship, which would be better for us on all grounds. 

The EU policy of negotiation of sequencing, as was described by Yanis Varoufakis, who's the Greek finance Minister with huge experience of dealing with the EU Commission over the attempted solution to Greece's debt problems—. He pointed out the danger of not taking the future trading relationship into account at the same time as all the other aspects of our relationship with the EU and the need to negotiate it. That has maximised the amount of uncertainty that has been caused and is merely a continuation of the project fear campaign that we enjoyed throughout the referendum campaign and which is still in full spate.

It's very important, I believe, that we don't make a fetish of the customs union advantages. I think we ought to keep in perspective what exactly is the nature of the trade that we do with the EU. If we didn't have a trade agreement, how much difficulty would Welsh firms have in selling into EU markets? We start, of course, from the position where we have not just regulatory alignment with the EU, but we are actually under the same regime. So, if, in future, there is going to be any regulatory divergence, that is a discrete issue that will be discussed, with all its pros and cons, at that time.

But as regards the tariff regime of the EU, I think it's important to point out that, if we weren't able to enter into a free-trade agreement with the EU, the tariffs that would apply to Welsh producers in general would be very small. Agriculture is a different case altogether, but in the case of manufactured goods in particular, these are very small. The document produced by the Welsh Government, 'Trade Policy: the issues for Wales' is very explicit on this. If we look at Annex A on page 23 of this document, the areas of trade that are of greatest interest and importance to Wales are things like electrical goods and telecoms, miscellaneous manufactured products, miscellaneous base metal products, miscellaneous chemical products. All of those have potential tariffs of less than 5 per cent. Vehicles are a different case again. That's in general about 10 per cent, but we have to remember that, if we are subject to tariffs on our exports to the EU, they of course are subject to the reverse, and as we have a significant trade deficit in the United Kingdom with the European Union they would be the ones who would end up worse off. If we were to leave the EU without a trade deal, the tariff income to the United Kingdom from the EU would be something like £13 billion a year, whereas the tariff income to the EU would be only £5 billion a year. So, we would be very much better off.

Nobody who has any common sense wants to see trade barriers or tariff barriers between Wales and the European Union, and it's in everybody's interest that we continue to trade as frictionlessly as possible, but the ball is in the EU's court. They're the ones who are actually imposing the impediments and making the difficulties in coming to a sensible deal. I regret that the continuation of the project fear campaign is making it much more difficult to get the commonsense deal that absolutely everybody who has the interests of Wales at heart wants.