|David Rees AM||Cadeirydd y Pwyllgor|
|Dawn Bowden AM|
|Jane Hutt AM|
|Jenny Rathbone AM|
|Mark Isherwood AM|
|Michelle Brown AM|
|Steffan Lewis AM|
|Carwyn Jones AM||Prif Weinidog Cymru|
|First Minister of Wales|
|Des Clifford||Cyfarwyddwr Swyddfa Prif Weinidog Cymru, Llywodraeth Cymru|
|Director of the Office of the First Minister, Welsh Government|
|Piers Bisson||Llywodraeth Cymru|
|Gemma Gifford||Dirprwy Glerc|
|Gwyn Griffiths||Cynghorydd Cyfreithiol|
|Rhys Morgan||Ail Glerc|
|1. Trafodaethau a pharatoadau Brexit: craffu cyffredinol—sesiwn dystiolaeth gyda'r Prif Weinidog||1. Brexit negotiations and preparations: general scrutiny—evidence session with the First Minister|
|2. Papurau i'w nodi:||2. Papers to note|
|3. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o weddill y cyfarfod||3. Motion under Standing Order 17.42 to resolve to exclude the public for the remainder of the meeting|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle y mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd y cyfarfod am 15:02.
The meeting began at 15:02.
Can I welcome Members back to this afternoon's session? The next evidence session is a continuation of our evidence with the First Minister. Can I welcome Piers Bisson to this panel, who is taking the place of Hugh Rawlings?
First Minister, if we move on to our consideration of the process of Brexit and the implications for Wales and perhaps start off with the current state of play with regard to negotiations with the European Union and the United Kingdom position, what's your take on it? Because, obviously, the last few days in particular, we are seeing some dramatic comments coming from southern Ireland and the EU 27's position making it clear. So, what is your current take on the position of the negotiations and will we get somewhere by 4 December?
It's very difficult to know, not being, of course, the person leading the negotiations. The UK seems to have made an improved financial offer to the EU, but we seem to be back at an impasse where Liam Fox, certainly yesterday, seemed to suggest that the issue of the Irish border couldn't be resolved until phase 2 was reached, whereas in fact the EU have made it clear that the issue of the Irish border is something for phase 1.
I've always thought, and I've gone on ad nauseam about this, that Ireland was fundamental to the resolution of the UK's future relationship with the EU. At the time of the referendum last year, nobody remembered that there was an open land border with the Republic of Ireland, and until that's resolved, it's difficult to see how anything else can be resolved. How do you have, for example, an entirely open and unpoliced border between a country in the customs union and a country outside the customs union? The only other example of that anywhere is Gibraltar, which is outside of the customs union Spain is in, and there's a very hard border between Gibraltar and Spain. I don't think there is an answer that I can see apart from the UK remaining in the customs union and accepting, as has been the case in any event for many, many years, that the UK actually has no control over who crosses its border, particularly in Northern Ireland, and therefore there is freedom of movement of people between Ireland and the UK, so, if someone gets into Ireland, they get into the UK. These are issues that were not well considered at the time of the referendum last year.
Okay. I want to come back to some questions on Ireland later on, but, obviously, you've mentioned your position and the Welsh Government's position. I think the negotiations and the structures in place—we talked about the Joint Ministerial Committee structures at the end of the last session, so, Jane, do you want to continue with the JMC structures?
I think it’s trying to test out what level of influence Welsh Government can have. Obviously, the JMC’s just one part of that, because you’ve had meetings with the Secretary of State for Exiting the European Union and the Prime Minister—so, bilaterals—but obviously, crucially, we need to know: is the JMC a vehicle where you feel Welsh Government can not only influence, but also where you are working, obviously, with the other devolved Governments to make an impact? It’s crucial in terms of where we are with negotiations.
I’m glad now that there are regular meetings of the Joint Ministerial Committee on EU Negotiations. It took some time for them to be set up, but I think they are useful, both for the UK Government and indeed for ourselves. We seek, of course, to help to formulate the UK’s position through JMC(EN), but there are different voices in the UK Government saying different things. Part of the problem is trying to understand exactly what position the UK Government takes in terms of the future. We know, the Prime Minister has said, she doesn’t want to be in the single market or the customs union. We disagree with that. But beyond that, it’s not at all clear what solutions there might be to, for example, freedom of movement. We’ve offered a solution to that. Future trade arrangements and customs arrangements, we’ve offered a solution to that. It’s a question as to whether the UK Government wish to listen.
I think the fact that you’ve worked so closely with the Scottish Government must—. The Welsh and Scottish Governments must have some leverage, one would hope, quite apart from influence on the JMC. But it is about what the outcomes of that kind of influence can be. You’ve referred earlier on to the dispute resolution, and we haven’t had much success with that so far, but if we are going to make an impact on common frameworks, and indeed, crucially now in terms of negotiations, they’ve got to be fit for purpose, the vehicles that we have to use to make an impact and give our evidence.
Yes. We were in a position towards the end of the summer where there was no vehicle at all, or no proper vehicle at all, for there to be meetings between the devolved administrations and the UK Government. That’s changed, and of course, we seek to maximise—well, to make sure that our view is heard as part of those discussions.
You commented that the JMC(EN) are now regular. From what I understand, there was a very positive JMC(EN) last time, with a recommendation that it would meet again, but there was no fixed date, and therefore no fixed period of time between which JMCs meet. For example, in Europe, Michel Barnier meets with the European Parliament pre negotiations and post negotiations. Now, to me, that’s regular. Are they really regular, or are they still ad hoc?
Well, the next one is due to occur the week before the EU Council meeting on 14 December. So, one is planned for that week.
And do we know if they’re going to be planned continually before meetings of council, or before negotiations?
They are planned regularly, and they have happened regularly. It’s important that they continue to be regular in the future.
Obviously, one of the ways in which you can make clear what the Welsh position is is through your meetings with the Prime Minister. You had a meeting with her on 30 September, and I think you also had one towards the end of October. In those meetings, was there any discussion about this idea of inserting an exit date for leaving the EU on the face of the withdrawal Bill?
No, no indication was given as to that being the plan.
So, are you able to tell us the areas of discussion that were covered?
The familiar areas. The need to make sure that our amendments were respected; that clause 11, particularly, goes; that we take the view that the powers should come to us; much of what I’ve said, really, this afternoon; and a need for a transition to avoid a cliff edge when the UK leaves in March of next year.
Transition is absolutely crucial, obviously, as has been outlined by Sir Ivan Rogers and other people in terms of the time it would take to enter into new arrangements. And I just wondered what indication the Prime Minister gave as to how long these transition arrangements could be required to take.
No, she didn't give an indication on the length of time. We've all assumed, of course, that it would be two years but she didn't give an indication to me at that meeting.
So, there's a fixed view it has to all be done within two years, even though other experts are saying this is simply not a possibility.
It seems to be the view of the UK Government; it's not a view we hold. Through speaking to somebody who had been involved in negotiating trade agreements, the indication seems to be it takes about seven years for an agreement to be concluded, whether that's the trans-Pacific partnership—now gone, of course—or indeed the agreement with Canada. Now, arguably, of course, this should be easier because regulatory convergence is already there, and this isn't a question of trying to create a free-trade agreement; it's more a question of trying to use what's already there to form part of an agreement on the relationship for the future, so it should be easier.
Might it be possible to get an agreement within two years? Well, it should be easier than a scenario where two different parties come together for the first time to formulate a free-trade agreement when there's been no commonality between them in the past. But, that said, we are now a year and a half on from the referendum and still no progress has been made on what should be the easiest issues to deal with. So, I'm not particularly optimistic about the timescale of two years beyond Brexit day as being a time within which a fully negotiated agreement can be in place.
Have you had any indication at all as to whether this imposition of an exit date on the face of the Bill is up for negotiation with the UK Government? Clearly, Parliament has to decide.
I don't think it's wise. Surely, in a situation like this, any Government would seek to give itself as much flexibility as possible in order to maximise its options in terms of negotiation, but the UK Government seems to take the opposite view; it wants to close down its options. And I don't see what the point of putting a date on the face of the Bill actually is, other than to make it appear as if it should be some kind of threat that, if the Bill isn't passed, then Brexit won't occur by that particular date. Surely, Brexit should occur at the time that's best for the UK and not at a date that's arbitrarily set down on the face of a Bill.
Obviously, the uncertainty created by all this, particularly for business and services that rely on either importing goods from the EU or exporting goods to the EU, is very considerable, particularly given the possibility of a 'no deal' scenario. Could you—? Some people say that the Welsh Government may not be providing sufficient leadership on scenario planning for the various businesses and services in Wales, and I just wondered if you could respond to that.
Our White Paper did include an analysis of what the potential overall economic impact would be of Brexit, in line with the best available data. The White Paper on Brexit and fair movement included research also that considered the implications of different scenarios. We do hear from stakeholders that they want greater certainty, that much is true, but that certainty we sometimes can't give them in terms of what will happen, for example, with immigration in the future: will they be able to recruit people? I was with our universities last week who said, 'We don't know what will happen now in terms of our ability to recruit staff or our ability to recruit students'. Those are not answers, unfortunately, that we can give them.
So, I believe we've provided as much leadership as we can in those areas where we can have influence and a degree of control.
But clearly, some of the major issues occur over the passing through customs and ports and airports. At the moment, there is no delay in processing goods and services coming through our ports and airports, but it is difficult to envisage why anybody would want to try and import perishable goods if they can't guarantee they're going to get to market in time. What can the Welsh Government do, if anything, to try and reassure people that the food that they rely on coming from Europe will be able to arrive?
The answer to it, simply, to my mind, is to stay in the customs union. Then, of course, there's no difficulty in terms of bringing goods into the UK. My concern is that, if we end up in a scenario where there are customs checks, more paperwork, more bureaucracy, the infrastructure is not in place at the ports to handle it. I don't think Dover is anywhere close to it. By now, the UK Government should have been physically putting buildings in place and hiring more people, and that hasn't happened so far. That's a problem.
As far as Wales is concerned, our focus has been on ensuring that nothing hampers the free flow of goods between the Republic of Ireland and Wales. Seventy per cent of goods that go between the two Irelands go through the Welsh ports. Anything that makes it more difficult to move goods through those ports can only be bad for business and bad for those ports. In the days, of course, before the Maastricht Treaty, there were customs checks, but they were random at the port. Not every vehicle was checked. Some were, some weren't, but it was done on a basis of—. It's not wholly random—intelligence, of course, plays a role in that—but not every vehicle was checked. That would be impossible, actually, to my mind, if that was tried.
Another concern that Members will have heard me express is that if, somehow, a more seamless border was in place between the north and south in Ireland than was the case between the Welsh ports and the ports in the Republic of Ireland, where, for example, there was some kind of financial or bureaucratic disincentive to use the Welsh ports, then there's an incentive then for freight operators to go through Liverpool, Cairnryan, Troon into the Northern Ireland ports and then down into the Republic, which means avoiding the Welsh ports because their links are directly with the Republic. And that's a point I've raised with the Taoiseach as well.
Okay. And, clearly, one of our major exports is lamb and beef, and, if they can't get their meat to market, then we are faced with an unbelievably difficult situation for those who rely in very large proportion on exporting.
Well, 90 per cent of our food and drinks exports go into the single market. It's crucial for the future of Welsh lamb. If we lost our ability to trade freely with the single market, it could only mean a reduction in demand, and we know that would eventually lead, of course, to a reduction in farmers' incomes, and that's something that we want to avoid.
The point I've made before, more generally, is that, if we cannot come to an agreement with our biggest market that's on our doorstep, what hope have we got of coming to an agreement with any other market, whether it's the US, or India or China, if we can't do it with what should be the easiest one of all? And if we take, for example, Welsh lamb and beef, Welsh lamb is sold fresh, it's not frozen. It's an important marketing advantage to be able to say to that. And it is perishable. We don't sell frozen lamb. If there was any kind of delay at the channel ports, then it would make it far more difficult for us to sell, particularly in the southern European market, which is crucial to the future of Welsh lamb.
Just to go back to one of the earlier points made by Jenny Rathbone about discussions with the UK Government, the Welsh Government has published papers, White Papers, that have been submitted to the UK Government. I think in previous evidence to us either you or the Finance Cabinet Secretary has stated that you still haven't had full responses to one or more. So, 'Securing Wales' Future' was the first White Paper, jointly published with Plaid Cymru, and then there were 'Brexit and Fair Movement of People' and 'Brexit and Devolution'. I wonder whether you've had formal, full and comprehensive feedback from the UK Government on any—. I believe there was an issue with the Home Office not replying or not giving full, formal response to the 'Brexit and Fair Movement of People' document in particular, but I wonder if there's been an update on that.
No. We've had no formal responses. We've had letters of acknowledgement—for one of them, at least. They have formed part of the discussions that we've had with UK Government Ministers, but not a full and detailed response, no.
Again, this is something I find baffling. I'm not a unionist, and I often look at unionists and wonder how you can sell this great family of nations to everybody on that basis, but are you expecting them to at least send more than just a compliment slip through the post, saying 'Dear Carwyn, thank you for your document; all the best'? Shouldn't we have a full, formal response from the UK Government?
If it was that amicable a letter, that would be something. But we would expect a full response. We have had responses informally, orally, in the discussions that we've had, but it's right to say that there's not been a formal response, which is very disappointing, given the fact that a lot of effort went into those papers. They were far in advance of anything the UK Government had, or indeed has, produced. And it is said that those papers have formed part of their thinking, but, as time has gone on, the evidence for that, I think, is getting thinner.
And so, just to be clear, there has been an acknowledgement of receipt of all three of those papers. Is that correct, or—?
But then there has been a more—I was going to say 'comprehensive', but that's far too strong—. And has there been a fuller response to one more than another? So, for example, has the 'Brexit and Fair Movement of People' document not had anything other than an acknowledgment letter, whereas others maybe have had something a little more?
Okay, if I can expand briefly, on the back of the White Paper, then obviously there was a discussion at the joint ministerial committee meeting in February. There was a letter we received at the time of article 50 being triggered that talked about our White Paper. When we published 'Brexit and Devolution', then I think there were letters that followed that acknowledged the publication of that document. We have had a letter on the back of 'Brexit and Fair Movement of People', alluding to further discussions that would be had. So, we're looking forward to those further discussions. But we haven't had a very long explanatory note, saying, 'The UK Government agrees with this, and disagrees with that', and aspects, and wants to follow up on A, B and C. So, that's the position: there have been aspects, but there hasn't been the full type of response that we would like to have.
Perhaps the other thing I could add, if I may, Chair, is that there has been a response in the sense of movement of UK position. It would be great to think that was in some way accounted for by the arguments that we have marshalled. So, for example, the concept of transition, which the UK Government now accepts, at least as a theoretically beneficial concept, you'll remember that formed part of the joint White Paper that was published almost 12 months ago. At the time that that was being published, the UK was completely dismissive of any idea of a transition period. So, there has been influence brought to bear, and I think the same is true, I think I would—we would—argue in respect of the concept of UK-wide frameworks. Again, that was something that was just absolutely not on the UK's agenda. We were the first Government to table that in the dialogue, in our paper 'Brexit and Devolution', the idea of a kind of UK-wide binding agreements of four administrations—again, not something the UK Government saw a need for at the time. So, there has been movement in their policy positions, which I would like to think owe something to the sorts of arguments that have been marshalled from Wales.
Absolutely. I think that's clear, it's just that I was trying to ascertain whether, Government to Government, there had been that courtesy, that one Government had gone to the trouble to produce documents—substantial documents—with policy proposals, and whether the receiving Government had the courtesy to provide a full, comprehensive response. Clearly, that's not there.
Can I have just one, quick—?
We mentioned transition, and I think it's important to reflect upon what he just said—what Des Clifford just said—which is that you hope it's influenced the UK Government to move. So, clearly, there is no clarification of what formal process—. Is there still a question of, 'We put things forward, and we hope to influence, not to have the negotiations'? But, when we met Michel Barnier as a committee, one of the confirmations he wanted to know was, on transition, they want to know what you're transitioning to. Have you had discussions with the UK Government as to what is the intention to transition to? They want a transition period—what is its purpose? And are you involved in those discussions?
The difficulty is that there are different voices in the UK Government that say different things. My best guess is that the transition period would lead to a comprehensive free-trade agreement with the EU, whatever that might look like. Beyond that, it's difficult—only they can answer that question.
But they haven't had those discussions with you, so the hope that you would get involved in negotiations and consultations, which is what they keep talking about, is still not yet materialising.
But I don't know what they want themselves; that's part of the issue. It's very difficult to—. I know the Prime Minister has said she doesn't want to be in the single market, although there are different gradations as to what that means. She doesn't want to be in the customs union—that's clear. Beyond that, I don't know what a free-trade agreement looks like, or what the eventual aim is. We've been clear in what we think is important—we stay in the customs union, and full and unfettered access to the single market, with Welsh businesses being able to sell as they do now. But I don't know what a comprehensive free-trade agreement would look like for the UK Government, in terms of being acceptable.
Okay. The answer's 'no'.
Dawn, and then I'll come back to you, Steffan.
I just wanted to go back, Chair, if I could, to the issue around the Irish border, and Liam Fox's comments in particular. He's basically said no deal on the Irish border until we have a trade deal. Now, I'd just be interested in your assessment of that. Do you think that he's being serious about that, or is this a bit of brinkmanship? Or is he actually using this as a kind of sense of ransom? Because, certainly, the discussions that we've had with Michel Barnier, and, I'm sure, you've had with him as well, are that that is not doable from the EU's point of view. The deal on the border has to be struck before we can get into transition and then trade deals, and we've talked about the time that it might then take to get a trade deal. You've already talked about the regulatory convergence, that it shouldn't be such a problem for us. But we're actually potentially converging away from EU regulations, whereas other countries that want to do business with the EU are converging towards it. So, I just really want your assessment of whether the Liam Fox statement has kind of thrown things up in the air a little bit, or do you think it's a bit of brinkmanship?
Well, in terms of divergence of regulations, many of those regulations will be devolved, and it would be a matter for us to decide whether we stay as we are or whether we want to put our own regulations in place. The same would be true of the Northern Ireland administration, hopefully when it gets back up and running.
I've read what the UK Government has said about exploring options for the border in Ireland. That's shorthand, for me, for 'we don't know what to do'. Really, there are only a few choices. Either there is a hard border on a border that's never had a hard border. It's almost impossible to police. At the time of the Troubles, every minor road across the border was blown up by the British army for security reasons. There were designated border crossings. There are some towns that are in both. There's at least one road that I'm aware of that snakes back and forth across the border—the line markings change colour every 50 yards or so. So, how you'd resolve that, I don't know. Then, if it's not going to be a hard border, how do you resolve the scenario where, if one is in the customs union and one is outside the customs union, how do you resolve that, when Gibraltar is the only other example with a very, very hard border.
I think there are two options for the UK, in reality. One is to stay in the customs union; it solves the problem in terms of the passage of goods back and forth over the border, and I think the UK has to accept, as it always has actually accepted, that it's not actually possible to control who crosses the UK border—it never has been. Where you have a common travel area, you have to accept that, therefore, you lose control of your border. As long as you are in the Republic of Ireland, you can cross into the UK without any problem at all. So, the UK has never controlled its borders in that sense and will not control its borders in the future unless it decides to put a hard border in place. And then the problems begin.
But if the UK Government are saying, 'We can knock this into long grass', then we're not going to get a deal with the EU. Basically, if the three conditions of the EU are not met, we don't get the second phase, do we?
No, that's right, and it's not something that can be kicked into the long grass. It's fundamental to any deal in the future. You have to sort Ireland out before you do anything else at all, actually, to my mind. I was accused of being boring about this in the past; perhaps I still am. [Laughter.] But that is the reality of the situation. There was a blind spot that people had in the referendum about that border. People saw it in terms of 'Britain's an island'. It's not an island, and there is still no workable alternative to my mind that's been offered, apart from both sides of the border staying in the customs union and an acceptance through the common travel area that people are going to cross back and forth without being detected, and that's inevitable, it seems to me.
Yes, indeed, on this. I think former Prime Minister Bertie Ahern has said today that Theresa May has constantly said that she doesn't want a 'physical border' between Northern Ireland and the Republic and should, in his words, be taken at her word. Clearly, if we stayed in the single market and customs union, and therefore couldn't enter into bilateral UK and third-party trade arrangements or agreements, and we would be bound by the four fundamental principles, we wouldn't really need frameworks or transition periods—[Inaudible.] minimal agreement on those. But, in terms of your engagement with the Irish Government and Irish agencies, what is your understanding of their current position regarding remaining outside Schengen, in terms of the movement of people and the impact on the common travel area and what comes out of this.
But also, what is your view on the questions and the answers I got from Mr Verhofstadt when this committee met him in Brussels? I twice asked him for his view on the suggestion I made that you couldn't conclude the settlement on the Irish border in stage 1 without considering broader trade arrangements between the two islands, and he twice avoided answering the question, despite being reminded by an official what I was trying to say. He did remind us that what the EU was seeking was significant progress over the three core matters, not conclusion of agreement, in order to move forward. So, what is your understanding, in that context, of where we might be, or have you had no engagement thus far?
I take the Prime Minister at her word that she doesn't want a physical manifestation of a border. As far as Ireland's concerned, it's given no indication, as far as I'm aware, that it wants to leave [correction: join] Schengen. The difficulty is this though: if you are proposing—. The proposal on the table is the UK should leave the customs union. On that basis, the first thing, it seems to me, that needs to be done is that an arrangement is in place to control what crosses a land border between the EU within the customs union on the one hand and the UK on the other. It's very difficult to include a trade agreement, to my mind, and then say, 'Now we'll deal with how we deal with smuggling', in effect. I think that has to be solved first, before you can then take the next step onwards to deal with a free trade agreement.
Why is it different—and we can argue over the actual technology that might be used—or why is it the principal difference, when cross border—effectively, free movement of goods and people, particularly goods—exists in many parts of the world and they're using technological solutions and e-manifests?
Can you give me an example of where that happens?
Well, the American borders are pretty hard in terms of the way that they operate. There is another factor here as well: that any kind of physical manifestation of the border would be regarded as a breach of the Good Friday agreement. That's the worry for me. I know that border very, very well and the only way you can tell you've crossed it is the line markings change colour on the side of the road. It wasn't like that. You went through a concrete bunker at one time, with a soldier. That's long gone, thankfully, but it would be seen by many in Northern Ireland as a straight-up breach of the Good Friday agreement if there was any kind of manifestation—even cameras, for some—on the UK side of that border. That would be regarded straight away as a breach of faith by the British Government. That's the factor here that doesn't exist anywhere else in Europe.
What brought peace to that part of the world was an acknowledgement that people could have their identity and it didn't matter, but within a broader European identity. The only identity that people in Northern Ireland shared was a European one. They don't share any other identity. We must be very, very careful, when Northern Ireland leaves the EU, if people don't feel a common sense of identity in the future, because we know where that led in the past.
Well, we visited the Canadian consulate in Brussels and were told how their system worked. As little as an hour before people are crossing the border with goods, they can register on e-manifests and that enables free movement to occur. So, could that not be a technology or a model for development as a technology, as the UK Government is suggesting?
It's worth looking at as a model, but the roads that run between the Republic and the north are very, very busy—one's a motorway. It's physically—
No, I'm talking about an open border between the two islands, so the checks—
Assuming, as we began this conversation, that there would be no physical border between the north and south of the island of Ireland, but a trade agreement will put some restrictions or requirements in place between the two British isles—how we manage that at the entry points by adapting or adopting technologies in regular and frequent use in many parts of the world, and within Europe but also, in terms of evidence this committee took, between the United States and Canada.
So, are you talking about a customs border between the island of Ireland and the island of Britain?
Yes, how we would check. What you were referring to earlier as displacement of trade, because of a hard border, in the Welsh ports, and between Northern Ireland into northern English ports, could be mitigated, both by the statement to us by the Irish Maritime Development Office that there would still be an 18-hour time advantage in using the Irish-UK land route, and also the evidence that we've taken regarding the application of technologies to enable the free flow of goods across borders where there are barriers in place.
But what you are suggesting would imply that there would be customs checks between Belfast and Cairnryan.
Sorry, trade from the Republic of Ireland, and therefore the EU, into the UK, under whatever agreement is agreed between the EU and UK during the transition period. That will determine how freely or not trade occurs. But, even where we have nations and states that are regularly and routinely trading across borders on a daily basis now, technology is enabling them to do that without having to have huge back-ups of ferries and trucks.
For the record, we've received information, obviously, that technology could be a solution to possible problems of different customs arrangements between the two nations. I will highlight also that I've received on numerous occasions concerns over whether that technology could be implemented in sufficient time for Brexit, but it could be a longer term solution. I think what Mark is trying to identify is: is that a possibility? Therefore, the customs arrangements could be perhaps a smokescreen to discuss other matters, I think.
I'm more interested in what engagement the Welsh Government is having with both the UK and the Irish Governments, and broadly with the EU, over these matters, other than simply saying, 'Oh, it's going to be a disaster.'
Well, I've spoken to Michel Barnier about it, I've spoken to the Prime Minister about it, and I've spoken to the Taoiseach about it—about our concern that—. Our interest is this: that we don't want it to be seen as easier to go through non-Welsh ports than through the Welsh ports. It's got to be the same for everybody. So, if there is a seamless border between the north and the south in Ireland, if that's achievable, then that border should be just as seamless between the Welsh ports and the Irish ports. It should be the same for everyone. It's not clear at the moment how that could be done. I don't think anybody knows how it could be done. But, our position has always been that it has got to be one rule for everybody.
One of the suggestions that has been put forward—and I thought that's what Mark was referring to, but he did clarify it then—was that there should be some kind of check between the two islands. So, in other words, if goods leave the port of Belfast, coming in to GB, there would be some kind of customs check. Well, the DUP won't wear that, obviously, and nor would the British Government.
I'm not suggesting any sort of barrier between any parts of the United Kingdom, but more about the impact on Welsh ports, reflecting our earlier work here, receiving goods from the Republic of Ireland.
If we returned to the customs arrangements of the past, where you had random checks, that is more manageable than if there are regular checks on all vehicles coming in. There would need to be infrastructure put in place at the ports to do it. But, clearly, that is a more manageable scenario than would be the case if there were automatic checks on everything coming in, which is what happened in the early 1990s and before.
I think the question we were looking at is: what discussions are you having with regard to the introduction of technology to resolve some of the problems so that that becomes a more seamless process?
I have had discussions, but no one can tell me what that technology looks like.
Just very quickly—since we last took evidence from you, the European Medicines Agency has announced that it is leaving London and will be going to Amsterdam. I wondered what preparations the Welsh Government has made in terms of the implications for the Welsh national health service. I was looking at their database of the number of trials that have been conducted in Welsh health boards through the European Medicines Agency, and there is a comprehensive database there, which of course means that treatments and drugs are readily available to our patients and that they are cheaper. And, as we will be leaving—so it seems to for some reason unknown to me or anyone else—the European Medicines Agency, would it be the case that it would be up to the Welsh Government to try and achieve a bilateral agreement with the EMA, post separation, or would that be a matter for the UK Government to do on our behalf? Because, of course, health is mostly devolved, but not entirely devolved. So, if we wanted, say, a Swiss kind of arrangement with the EMA post separation, would that be up to Welsh Government to conclude or would we have to wait on the UK Government?
Drug approvals aren't devolved, so it would be for the UK Government to take that forward. It's not clear, at the moment, as to whether the UK Government could simply enter into an agreement with the European Medicines Agency anyway. It's not clear whether you need to be in the EU for a government to be able to do that, but it would be for the UK Government, because drug approvals are reserved.
I'm just keen for us to establish that, because, of course, with currency fluctuations and other factors due to the downturn in the UK economy, there will be ramifications, potentially, for Welsh health boards and Welsh patients. The Swiss government have a bilateral agreement—it's not great and it's very limited—and EEA states are allowed membership of the EMA. I just wondered whether Welsh Government would either seek to intervene in order to press the UK Government to find some sort of arrangement with the EMA that would be satisfactory, given the nature of the devolution of healthcare, or whether you would seek some shared relationship with the UK on drugs approval to make it easier for Welsh Government to plough ahead.
It's an interesting scenario. I don't see why the UK Government couldn't come to a comprehensive agreement with the EMA in the future. I don't see the point of having a separate UK agency doing exactly the same thing as the European Medicines Agency is doing. Surely, it makes perfect sense—and I'm sure the Member wouldn't disagree with me on this—to have the widest spread of drug approval possible, so that drugs are approved across the whole of Europe and can be used across the whole of Europe. That's something certainly I think—. Well, the UK Government will need to consider that in terms of its relationship in the future. But it does seem to me that this is an area that's not devolved, but does ask the question, 'Would we look to press the UK Government to get a satisfactory solution?' The answer to that is 'yes'.
Can I ask a simple question that? Have you analysed whether it will impact upon the research base in Cardiff University and the clinical trials that are undertaken in Wales, and could Welsh patients lose out as a consequence of that move?
I spoke to higher education representatives last week about this. Their concern is being able to recruit the best staff and obviously being able to recruit the best students. They are finding already that people are being put off coming to the UK, because it's seen as more awkward, more difficult to come to than other countries in Europe or indeed elsewhere. I don't think anybody would disagree with the suggestion that the UK needs to be part of international research projects. Nobody, surely, in the referendum last year said, 'What we want is to make sure that we don't take part in things like Erasmus+ and things like Horizon 2020.' These things can be done, but the UK Government will need to make it clear pretty soon as to what kind of visa regime will be put in place. We don't know yet what that might look like; we don't know what kind of deterrent effect it might have on recruiting staff; we don't know what sort of deterrent effect it might have on recruiting students. We do know that there's been a deterrent for Indian students coming to the UK, because we've seen their numbers drop quite dramatically, because of a change in UK visa regulations. So, if the UK is seen as a difficult place to come to with more attractive options elsewhere, then the UK will lose out in terms of attracting the brightest and the best.
Okay, thank you. Can I move on to two points, just for clarification? In July, when you came before the committee, you were asked about the publication of reports to the sub-committee of the Cabinet, and you agreed that you didn't see any reason as to why they couldn't be published, subject to confidentiality issues. What we're not seeing at the moment is them being published. We see the minutes but we don't see any reports published on the website. Are they there at the moment? Is there something that we are missing?
A number of the papers that would come to Cabinet sub-committee would be drafts—working drafts—of then the policy papers that have been published. So, in line with established practice, we would make—obviously the final publication would be the one that is then public. A number of the items are oral in nature, given the fast-moving pace of the agenda and the developments across the UK. So, I don't think we have routinely released papers. It's something that we're always mindful about—what exists that could be shared. So that's the position, really, that we're in. As I say, a number of the papers that I can recall relate to documents that are drafts of the things that would be then published in White Papers or policy documents.
And I'm assuming it's the same for the advisory committee to yourself. Obviously, as much published as possible would be helpful for transparency, and keeping us informed of the work of the JMC and the common frameworks and the agendas would be very helpful as well, because it is important we get an understanding of what, actually, is being discussed on these issues.
Can I also talk about—? We talked about the Trade Bill in the earlier session, and if you've read the trade Bill, yes, Schedule 1, paragraph 2 does reflect very much the thinking, previously, and therefore I understand how the UK Government—. But it requires an LCM. Have you indicated when you will publish or lay the LCM on this particular Bill?
We are considering a number of complex issues at the moment and taking advice on them. Once that process is done, obviously we'll be able to announce a date as to when the LCM will be published.
When we asked earlier on this, you expressed, perhaps, a little bit of disappointment. I understand Hugh Rawlings's comments this Bill—that it has kept in line with the previous Bill. They didn't want to, obviously, say anything. Based upon the fact that you didn't get notification of article 50, you didn't get notification of the Trade Bill, you didn't get notification of the customs Bill, you didn't get notification of the EU withdrawal Bill, and this Bill is worded the same as the other Bill, is there concern that the UK Government is going on a certain route and it doesn't seem to be moving from that route?
Well, the Scots are in the same position as well. I don't think any of this works well in terms of the operation of the UK. I can understand governments not wanting to share documents that are sensitive and confidential, but we were perfectly prepared to give undertakings about keeping them, obviously, private, so that there could be discussions between the Governments. Unfortunately, that's not something the UK Government have seen fit to do.
Well, yes, if those consultations took place, you could understand it, but they don't seem to be taking place.
The problem is that consultations then take place on papers that we think are flawed. The same thing happened with the original Wales Bill, if I remember rightly, where we had no way of knowing what was in the Bill and when it was published it was so bad it was withdrawn. With these things, I think it's best to identify problems beforehand to see if they can be resolved as early as possible.
Thank you, Chair. First of all, I wonder if you considered the creation of an external affairs department and Cabinet Secretary prior to or during your recent reshuffle.
No. In effect, external affairs is something that I am responsible for.
Isn't it the case, though, that given the multifaceted nature of external affairs now at a devolved level, it makes sense to maybe replicate what happens in Scotland? There is a Europe Minister, and there is obviously a Secretary for EU transition as well, as well as the First Minister there leading the overall strategy.
Yes, but the Scots are able to have many more Ministers in Government than we are, and it means then that we have to cover far more areas than—. They have greater responsibilities in the field of justice, for example, but the restrictions are not the same on the Scottish Government as they are on us. So, it's quite common for Ministers—especially for myself—to take on board responsibilities that, in Scotland, might be the responsibility of a discrete Minister, but that's because they can appoint more Ministers.
So, if you could appoint more Ministers, you probably would appoint a Cabinet Secretary for external affairs.
It's a hypothetical question, in the current state of legislation.
Okay, thank you for that. You announced today the opening of five more overseas trade offices. I wonder if you can elaborate further on whether this marks the beginning of a renewed trade strategy from the Welsh Government's point of view, or whether this is an extension of the existing approach to trade.
It's an extension of the existing approach because it works well. That said, it's important with Brexit that we extend our presence abroad. It had shrunk. Up until 2011, it had shrunk quite badly. We had very few offices. I wanted to make sure, post 2011, that we had more and better co-ordination between the different offices. North America is an example where there wasn't much co-ordination between the different offices there. Now, everything is run from Washington. It's effectively the headquarters with satellite offices around North America. The question for us is always: do you strengthen existing offices or do you look to open new ones? That's always the balance that we have to strike. I took the view that it was important for us to extend our presence in Europe. We just have Brussels at the moment. We'll be in Berlin, in Düsseldorf and in Paris—all connected, of course, as well, through flights from Cardiff Airport. Montreal we've been looking at for a while—an office in Canada. The Government of Quebec was very, very keen to have us in Montreal. They made a very strong case, and obviously we're going to Montreal to have a presence in Canada. And Doha—obviously, with the new flights starting next year, it was important to have a presence in the middle east. At the moment, were just in Dubai; we needed to extend that. So, all of these decisions were taken according to connectivity, where the maximum impact could be and what we could add in terms of trade and investment.
Are you open-minded, though, to the idea of a new trade policy for this country, albeit with the uncertainty of our relationship with our most important trading partner at the moment? So, for example, the Irish Government has moved very quickly since the separation referendum and it has established an arm's-length international trade body. Its performance is very good, I think—well respected globally. Have you looked and considered—or will you look to consider whether or not that model can work for Wales?
No. I don't think it's appropriate. I mean, this is going back to the days of—. I know the Member will say it's not the Welsh Development Agency, but it's similar, and I was responsible for part of WDA and I saw the problems that occurred when you have an organisation that tries to operate separate from government and the confusion that arises as a result of that. If we look at our investment figures for the past few years, we can see the improvement that there's been. I think it's important that we have people based in offices who are responsible for trade and investment, but who are directly responsible, actually, to me. I have monthly reports from all of our offices around the world so I know what they're doing, and they know that what they're doing is noticed as well. I think that's important, and that wasn't the case, I believe, 10 years ago.
Okay. The Welsh Government currently has a range of agreements with other governments overseas and regional governments as well. Are you working on any new agreements, trade or otherwise, with other governments at the moment?
Yes, we are. I signed a memorandum of understanding, for example, at the Conference of Peripheral Maritime Regions last week in Cardiff. I think it's hugely important that, when we sign memoranda of understanding, they're worth something. A lot was signed at the beginning of the last decade that didn't really lead to very much, so I want to make sure that where we do sign memoranda, they actually lead to something that is of benefit to Wales and, of course, the other party.
On that point, obviously, memoranda of understanding are clearly important to us, and as we leave the EU, there's a possibility that in a few years time there's going to be a divergence of trade regulations, possibly. Is that a concern to you? How do you look to address that issue in these memoranda of understanding you talk about?
It's difficult to predict, because we don't know what the final state of play will be when it comes to trade. If we want to export to the European market, then, clearly, our exporters will have to conform to the requirements of that market. I have not heard any businesses say to me that they want to see divergence of regulations. They like the idea of being able to have no restrictions in terms of selling to a particular market, and we should tread very carefully, I think, in the UK when it comes to looking at changing regulations. I mean, one of the arguments that's been used to me is, 'We don't want to change anything, but we want to have the ability to change them if we want'. Well, there we are, but from my perspective it's hugely important that we don't seek to change things just because we can. We need to make sure that we can still continue to export into the markets that we already export into.
I just wanted to clarify whether you're considering keeping open the office in Brussels once we leave the EU, because, obviously, it's crucially important, and has been, in terms of the collaboration regionally and nationally. What's the thinking about that from Welsh Government?
Yes, we'll keep it. Brussels is the political capital of the EU and it's hugely important for us to have first-hand knowledge of what's happening in the Commission, particularly, so that we can understand what we need to do in order to have the fullest possible access to the single market.
Given the level of uncertainty about future trade agreements, what consideration is the Welsh Government giving to how we might need to look at import substitution of things that we currently take for granted—in terms of, you know, ordering things just in time and they arrive within a well-established timescale?
That would be true of some things, but the UK has never fed itself. It would be impossible now anyway; people are now so used to being able to go into a supermarket and buy vegetables that are out of season, that are imported from other countries—often from outside the EU, actually. I don't think we could go back to a scenario that existed when I was growing up, where potatoes were a certain size and shape according to the time of year. People have got use to that level of choice.
If we look, for example, at Welsh lamb, demand for Welsh lamb in the UK is actually quite small—well, demand for lamb in the UK has traditionally dropped over the years, but it tends to be for bigger cuts of meat, which New Zealand tends to supply in a way that we can't, because their animals are bigger. As a result, Welsh lamb has always depended on the export market to sell in Europe and the middle east as well now—I was in Dubai in July and it was good to see that Welsh lamb was there as the market leader in Waitrose in Dubai.
So, there's an opportunity for some import substitution, but we will never be in a position where we can substitute most of the food that we import into the UK with our own products. There's scope for it, but because seasonality has disappeared in our supermarkets, it can only be done for certain times of the year as well.
Everything has its price, though. And if there's a big increase in the price of imported goods, particularly from areas a long way away, that might change people's habits. That's one thing. The other issue is with industrial processes where there's a lot of concentration of doing one thing, like British Aerospace doing the wings in Britain and other parts being constructed elsewhere in Europe. If things become more difficult to import than what we've become used to in the single market, what consideration needs to be given to some import substitution where it's relatively straightforward?
Well, of course, if imported goods become so expensive that people can't buy them, then there'll be an opportunity, I suppose, for a UK producer to be able to satisfy the UK market, but the UK market is small. One of the concerns that I have, if we look at the automotive sector—and the same applies to Airbus as well—in reality, they're European operations: they make no distinction between what they produce in Germany or in Spain or what they produce in the UK. If they feel that, for example, the UK has to be treated separately to the European market, and they want to supply the UK market, then they may well do so on a UK basis, but then it would be much smaller, because the UK market is much smaller, demand is much lower and they need fewer workers in order to be able to work in the manufacturing plants.
Now, that's troubling, because—. It doesn't need to happen, but if that were to happen, it would mean that demand would drop because of the size of the UK market and therefore demand for workers in the workforce would drop as well. In the automotive sector—Ford, as an example, is a European operation. If you're thinking about a UK operation, it would only, I suspect, put itself in a situation where it geared up its workforce to support the UK market and not the European market, and that's a much smaller market.
I might take the privilege of asking the last few questions. We've talked about Ireland a lot today, and when you came before us in July, you indicated, obviously, that there was a new Taoiseach, and you were actually going to speak to him that afternoon, I think, at that particular meeting. What I'm trying to find out is: what relationship have you now built up with Ireland and Irish Ministers, because it's critical, in one sense, to have that relationship, particularly as it seems that the Republic of Ireland is definitely becoming a very dominant figure in the EU negotiations?
I have spoken to him several times on the phone. I was due to meet up with him at the British-Irish Council in Jersey, but because of the tragic situation with Carl, I didn't go. We've tried to fix up a meeting in the meantime and it looks now as if it'll be early in the new year.
Of course, he may be facing different challenges of his own at that point in time. But it is important, because we're concerned that perhaps there is a need now to start looking very much at the relationship with Ireland and Irish Ministers. I am aware that the Cabinet Secretary for Finance was over in Ireland last week, but have you got plans to actually have more of your colleagues in the Cabinet visit their counterparts in Ireland so that that relationship is built up very strongly?
Very much so. We have an office, of course, in Dublin. We'd very much like to see Ireland reopen its full-time consulate in Cardiff, and that's something, certainly, we've been looking to discuss with them. I think that would certainly help to strengthen, again, the relationship between Wales and Ireland.
And you'll be discussing your Brexit papers in relation to many of those points with Ireland, and Irish officials.
Yes. I know Des has been, so I'll ask Des just to—
Yes, just to add, we have very, very close relationships with the Irish embassy in London. I've been there several times to meet the ambassador and other colleagues. We also have a very direct and close relationship with the Department of Foreign Affairs and Trade in Dublin. Mark Drakeford met the Irish foreign Minister, Simon Coveney, in Cambridge, as a matter of fact, in September. The First Minister has referenced our office in Dublin, which also meets fairly regularly with different parts of the Irish Government. So, I think, taken altogether, we've got a fairly close network of relationships. There will be visits from the First Minister; we're hoping we'll go to Dublin, probably in January, and there are a couple of other visits from Ministers in the pipeline. So, we do have, I think, a very close network of relationships. It's worth mentioning that the Taoiseach made a speech in Belfast in the summer as well where he referenced the phone call that he'd had with the First Minister and the First Minister of Scotland as well. So, I think we've got a good matrix of relationships there.
That's good to hear, because I appreciate that Welsh Government officials are meeting with their counterparts, but it's also important for the political agenda as well.
The final question from me is: as part of the EU withdrawal Bill, we've heard very much from David Davis, the Secretary of State for Exiting the EU, in relation to the introduction of a withdrawal agreement and implementation Bill that will be laid before Parliament. He basically said along the lines of 'take it or leave it' to the parliamentarians—we'll have no vote in that, it'll be the UK Parliament—but that leaves us with the situation of a 'no deal' scenario. I know you've often mentioned you don't think there'll be a 'no deal' scenario, and the Cabinet Secretary for Finance has said the same, and Michel Barnier doesn't want that, but this now puts on the table a clear possibility of a 'no deal' situation. When will the Welsh Government start looking at scenarios for a 'no deal'?
Two things. First, in the referendum campaign last year, nobody campaigned for a 'no deal' Brexit. It was always assumed there would be some kind of deal. Nobody said, 'Well, there'll be no deal and that's all fine.' I have to be absolutely clear that there is no way of preparing for a 'no deal' Brexit. We can mitigate a little in terms of providing funds for businesses, but what we cannot do is put ourselves in the situation where, for example, if there are financial or other trade barriers, we will be able to overcome them. It's just not possible and it would be misleading of me to say anything else. So, it's hugely important that all work is done to make sure that a 'no deal' scenario doesn't come about.
Will you, at some point, make a decision as to whether you need to prepare to get the best mitigation procedures and policies in place?
It's limited mitigation. We can't pretend that somehow there's a way of avoiding the impact of a 'no deal' Brexit. For example, coming back to the point of Ireland, that would mean tariffs being imposed at the border and at the Welsh ports, and a vast amount of bureaucracy being created there and a vast amount of delays. No-one argues for a hard Brexit. There are some who seem comfortable with it. I'm not, and it has to be avoided.
First Minister, can I just say, presumably you'll have the chance to make that point very clearly when you have the next JMC, because it's before the council?
Yes, we're aware of that.
Can I thank you for the evidence session this afternoon? As you're aware, First Minister, you will receive a copy of the transcript for any factual inaccuracies. If there are any, please let our staff know as soon as possible. Once again, thank you to you and your officials for attending.
We move on to the next item on the agenda: papers to note. We've received a letter from the Minister of State for Trade Policy, the Rt Hon Greg Hands MP, regarding our letter on the Trade Bill. Are Members happy to note that? To let you know, it is my intention that we'll accept the offer in the letter to meet with the Minister of State, to look at the possibility of a future session with the committee.
The second paper to note is a letter from the Llywydd regarding the European Union (Withdrawal) Bill LCM and the request to extend the deadline. At the moment, the Business Committee has indicated that they will move it a couple of days—the new deadline is therefore 13 December. We will try and deliver to that, but we may well request again a further extension, based upon the fact that the EU withdrawal Bill is still going through Committee Stage in the House of Commons—it's been delayed by the Commons, not by us—and, in one sense, an LCM may be based upon, clearly, what happens in the Commons. So, we may well try again. But at this point in time, are Members happy to note the letter? They are. Thank you for that.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).
Cynigiwyd y cynnig.
The next item on the agenda is: under Standing Order 17.42(vi), are Members content to move into private session for the remainder of this meeting? I see that Members are content, so we now move into private session.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 16:04.
The public part of the meeting ended at 16:04.