Diolch yn fawr, Llywydd. The Welsh Government last reported to the Assembly on matters related to the UK’s exit from the European Union at the end of the summer term. The purpose of today’s statement is to provide an update about the many developments that have taken place in the meantime.

The first matter I'll deal with this afternoon is the nature of the separation deal and the future relationship with the European Union sought by the UK Government, as set out in the Chequers White Paper. Our own preferences are unchanged since the publication of 'Securing Wales’ Future' with Plaid Cymru in January 2017. The Chequers White Paper moved the UK Government’s position incrementally towards our own, enabling us to offer some of its proposals a modest welcome.

Chequers concedes the principle of a customs union; it makes a commitment to ongoing regulatory alignment for goods and agricultural products. The nature of the Welsh economy, as we have said many times, means that barrier-free trade for the manufacturing industry and the rural economy is especially important. The Chequers proposals are an improvement from that perspective, as the Confederation of British Industry and the National Farmers Union have both acknowledged.

However, Llywydd, Chequers leaves unanswered a whole series of significant practical and political questions. In policy terms, it fails to resolve at least three fundamental issues. While it agrees that the end objective must be a form of customs union between the UK and the EU, it fails to set out the means by which this can be achieved. The Government's own practical proposals are convoluted, heap new costs onto businesses, rely on untested technologies and are straightforwardly unacceptable to the EU 27.

As both the Welsh and Scottish Governments said at the JMC last week, the policy answer is simple. Let the UK Government say it plainly: 'We are already in a customs union; let’s stay in it.' And rather than pretend that we can have a buccaneering trading policy while staying in the customs union, let’s commit to continued alignment of our trade policy with that of the European Union for the wider benefits that brings.

The second practical problem with Chequers lies in the attempt to separate regulatory alignment between goods, which are to be aligned, and services, which are not. That distinction, of course, strikes at the heart of the four freedoms, which the EU regards as indivisible. But this distinction simply won’t work in the real world. People who buy goods also buy services alongside them. You buy a car and a finance package to fund it. People who sell goods also sell services with them. In the aerospace sector, the servicing of an engine—a service contract—is an integral part of the sales package and is of greater value than the sale of the engine itself.