Thank you, Deputy Presiding Officer. It is now two years since the UK left the European Union, and 13 months since the end of the transition period, when our relationships with the European Union changed radically. Today I want to give an update with my assessment of the current impact on Wales, as our relationship with what remains our closest and most important trading partner moves into a new normal. I'll also talk about our plans to further strengthen our relationship with Europe.

The UK's exit from the European Union has radically changed both the UK's position in the world and the role of devolved Governments. We have significant new responsibilities and duties in relation to matters that previously sat with European institutions. Our EU exit has also led to significant changes in the governance of the UK and the relations between the Governments of the UK. Some of these are the product, I'm afraid, of the UK Government's hostility towards devolution, but others are even more fundamental and arise from our democratic devolution settlement being designed around the UK's membership of the EU.

Leaving the EU has given the UK the ability to enter into its own free trade agreements with countries across the world. Whilst we remain generally supportive of new free trade agreements, these deals have been comparatively small to date and will not make up for the loss of trade with our closest trading partners. For example, the UK Government's own impact assessment of the free trade agreement with Australia is that it could increase UK gross domestic product in the long run by 0.08 per cent. And, of course, the Office for Budget Responsibility's current assessment is that leaving the EU could reduce GDP by 4 per cent. We will continue to support our businesses to adapt to the new trading relationship with the EU, including those changes that have yet to take effect. However, there should be no illusions about the hit that EU exit is having on the economy of Wales and, indeed, the UK as a whole.

With that backdrop, I want to set out how we are trying to manage our new relationship with the EU, as set out in the trade and co-operation agreement. The TCA provides for a system of governance and oversight. This consists of a series of official-level specialised committees and trade specialised committees that ultimately report to the partnership council. Members will recall that we have consistently pressed for proper Welsh Government engagement in these structures, given our legitimate devolved interests. On the whole, in respect of the committees and working groups in which we do have a devolved interest, I'm pleased to report that engagement with the UK Government at official level has been generally good. Officials have been engaged in the preparations for a number of committees and have attended as observers. It is, however, disappointing that the UK Government has not responded to our legitimate call for devolved Government Ministers to be active participants in meetings of the UK-EU partnership council. I intend to raise this again with Liz Truss, who, as Members know, has succeeded Lord Frost as the lead UK Minister.

Before I turn to Wales’s relationship with Europe, I want to briefly mention the Northern Ireland protocol. Our position has consistently been that respecting and safeguarding the Good Friday agreement must be the first priority of the discussions about the future of the protocol. We also have a direct interest in anything that affects the way in which goods flow between Great Britain and the island of Ireland, particularly given the significant impact the EU exit has already had upon our west-facing ports. Only last week, Stena Line reported a 30 per cent reduction in volumes through Welsh ports since the end of transition, which it linked explicitly to leaving the EU. There is real uncertainty about whether this fall in trade will recover or whether the loss is permanent.

It’s vitally important that the issues at stake are resolved, and this can only happen through continued dialogue. I therefore hope that the more constructive tone that we have heard in recent weeks will continue. If agreement on the protocol can be reached, it might also help to move the relationship as a whole away from the antagonistic approach that has all too often been adopted by the UK Government and to put it on a more positive and constructive footing. We want to move over the medium to long term towards the stronger and closer relationship with the EU that we have always advocated.

Deputy Llywydd, following the agreement of the TCA, the First Minister wrote to European Commission President, Ursula von der Leyen, setting out our vision for a close and constructive relationship between Wales and the EU. Our economic, social and cultural histories are intertwined with the rest of Europe and we share with the EU fundamental values covering human dignity, freedom, democracy, equality, the rule of law and human rights.

The EU will continue to be the UK’s closest and most important trading partner, and the influence of the EU on policy making and the regulatory framework in Wales will remain significant for the foreseeable future. It is for all these reasons that we have appointed Derek Vaughan to be our representative on Europe. Supported by our Brussels office, Derek will make connections, gather relevant information and work across the Welsh Government and with stakeholders to support developing policy priorities. He visited Brussels last week for the first time in this role and held very positive and constructive discussions with senior colleagues in the EU institutions, UK Government, other devolved Governments and stakeholders. There is much goodwill towards Wales still within Europe, but many challenges to develop a relationship that can support the needs of the Welsh economy and citizens.

All of our European engagement will support the priorities set out in our international strategy: raising our profile, growing our economy and being globally responsible. We in the Welsh Government will continue to do everything in our power to build a close and positive relationship with the EU, for the benefit of all Welsh businesses and, of course, our citizens. Thank you, Dirprwy Lywydd.