National Assembly for Wales

Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

External Affairs and Additional Legislation Committee

17/09/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David Rees AM Cadeirydd y Pwyllgor
Committee Chair
Jane Hutt AM
Jenny Rathbone AM
Mark Isherwood AM
Michelle Brown AM
Steffan Lewis AM
Suzy Davies AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Carwyn Jones AM Prif Weinidog Cymru
First Minister of Wales
Liz Lalley Llywodraeth Cymru
Welsh Government
Piers Bisson Llywodraeth Cymru
Welsh Government

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

Alun Davidson Clerc
Clerk
Elisabeth Jones Cynghorydd Cyfreithiol
Legal Adviser
Manon George Ymchwilydd
Researcher
Yan Thomas Dirprwy Glerc
Deputy Clerk

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle 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 14:00.

The meeting began at 14:00.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Good afternoon. Can I welcome Members back to the autumn session of the Assembly and to this afternoon's session of the External Affairs and Additional Legislation Committee? Can I also welcome members of the public? Can I remind people that this meeting is bilingual? If you require simultaneous translation, that's available on the headphones via channel 1. If you require amplification, then that's available on the headphones via channel 0. Please turn your mobile phones off or on to silent so that they don't interfere with the broadcasting equipment. In the event of a fire alarm, follow the directions of the ushers to make sure that we all leave safely, although there is not one scheduled for this afternoon. We have received apologies from Michelle Brown, with no substitute coming. 

2. Sesiwn graffu gyda Phrif Weinidog Cymru
2. Scrutiny session with the First Minister of Wales

We move on to the next item on the agenda, which is our scrutiny session with the First Minister. Can I welcome the First Minister to this afternoon's session and your officials, Piers Bisson and Liz Lalley, who's deputy director of the transition team? Welcome, because I think it's your first time before the committee.

We'll try and be as nice to you as possible, but we'll go straight into questions if that's okay with you, First Minister.

I suppose the first one is that it's been a while since we last met and things have been moving quite fast over the summer period and it seems to be that the negotiations are still at the stage we were at before the start of the summer recess. But what do you see, perhaps, as the situation in regard to the future relationship? The White Paper was published, and we understand totally that you've told us before now—and other members of the Cabinet have told us—that there was very little involvement from the Welsh Government in the production of the White Paper on the future relationship. But, since then, what discussions have you had with UK Government as to how it intends to implement that White Paper and where it now goes? And how can you influence any changes to that White Paper?

Well, there's a meeting today in London to do with agriculture and fisheries and there'll be another Joint Ministerial Committee (EU Negotiations) meeting on 11 October. We've had very little engagement with that paper. Our position remains the same—that the greatest possible access to the single market is hugely important, as is being part of the customs union. 

If we look, for example, at the Chequers plan, it goes some way towards the position we would want the UK Government to adopt, but not the whole way. It presents what appears to be a customs union of a fashion, but the biggest problem with it that I can see is the distinction that's made between goods on the one hand and services on the other. It's not quite that clear. For example: what is software? Is software a good or a service? You can't hold it in your hand, but people buy it as a one-off, so, therefore, it must be a good. Are the updates then goods or services? It's very difficult to actually make a distinction in the modern world between what are goods and what are services. I think that's where there is a problem in terms of the detail.

Now, we wait to see what happens. I mean, it's a hugely unpredictable situation. The Prime Minister has said today that it is Chequers or 'no deal'. Well, 'no deal' is no good, so we'll wait and see what happens with Chequers, but it's anyone's guess as to where this will end up in terms of the machinations and votes in Parliament.

We'll come on to some questions on 'no deal' a little bit later this afternoon, but, again, this is a question of, 'Have you had an opportunity yourself to have discussions with the Prime Minister or David Lidington regarding that White Paper?', and you've just said, 'All right, Chequers goes some way towards it, but there are gaps there'. So, how do you look at addressing those gaps that you think are important and need to be in place for Wales?

No, I haven't. The JMC(EN), of course, is attended by Mark Drakeford. There's been little contact at ministerial level over the course of the summer. I haven't discussed the issue with the Prime Minister—she tends to leave it to JMC(EN)—but we've made our position very clear many, many times as to what we'd want to see as a Welsh Government in terms of the future relationship that we have in Europe. We don't have much opportunity to influence the White Papers that the UK Government produces. Sometimes, we get snippets that are shared with us, but not the whole White Paper, so it makes it very difficult then for us to seek to influence the content of the White Paper and, indeed, to provide advice to the UK Government.

14:05

With the deadline fast approaching for a council meeting in October, which might be extended—we are aware that that's a possibility—is that deeply worrying to you, because, if you haven't had ministerial contact over the summer and we are now six weeks away from a point at which a deal has to be decided upon, you must—

I think the problem has been that, for some time, the UK Government didn't know what it wanted. Chequers provides some certainty in terms of what the future is, but I met with Michel Barnier in July and two things struck me: first of all, a sense of frustration about not knowing what the UK Government wanted at that point, but, secondly, a willingness to be flexible. So, for example, if the UK and the EU were close to a deal then there might be the possibility of extending the time period in order for the deal to happen, but we have to be close to a deal for that to happen.

I've seen what's been said over the past week in terms of the possibility of a deal being done. I've seen no evidence of how that would work, but, clearly, if there is a deal on the table by November that's acceptable that would be hugely helpful, but what that deal would look like is anyone's guess, because there's no indication so far in terms of the UK Government's position as to how that deal would work. So, for example, if we look at the idea of a facilitated customs arrangement, where it said that the UK would collect the EU's customs duties and the EU would collect the UK's customs duties—well, the EU's already ruled that out. Now, that's a fundamental part of the Chequers plan and if that doesn't work it's very difficult to see how the rest of it can work.

Well, since you've rolled on to the facilitated customs arrangements, we have some questions in relation to the Irish border issue, because that's another important aspect that we still have some concerns around. We don't want an Irish-UK border down the Irish Sea. Mark. 

Thank you very much indeed. On that very subject, I think you probably recall our reference in the previous sessions to our visits to Ireland and meetings with Irish Government and Irish agencies well over a year ago now when they told us that, even in the worst-case scenario, from their modelling, the UK land bridge would still have the advantage over other routes for their trade goods. We know that, shortly after we went into recess, I think it was 18 or 19 July, the International Monetary Fund published a report highlighting significant economic damage to the EU if the UK left without a trade deal, and they said that southern Ireland would be the worst hit in those circumstances. I'm wondering if you have any, or have managed to acquire any, more information about the report in today's The Times that the EU is proposing or working on their own Irish border plan, which, according to The Times, would use technological solutions to minimise customs checks between Northern Ireland and the Irish Republic.

Well, first of all, in terms of The Times report, I don't know any more than I've seen in The Times. For some time now, there have been discussions about technological solutions to the issue of the border. I've not seen any, I have to say. In the documents I've seen, there has been talk of exploring technological solutions, though I don't see how that would work. The Prime Minister this morning said that you can't really have a technological solution if it means shifting the border—she said 20 km into Ireland; the point she's trying to make is if it means the border being somewhere else other than on the political border. So, the Prime Minister herself seems to have ruled out the possibility of a technological solution to this. Now, what the EU is thinking about, I don't know. It's certainly not something that's been explored with me in the meetings that I've had. So, the issue really is still unresolved. How do you have, potentially, two markets that have very different arrangements and yet have an open border between each other? That's the fundamental issue that's not yet been dealt with to my mind.

Well, again, according to The Times, under the EU plan, goods could be tracked using barcodes on shipping containers under trusted trader schemes administered by registered companies, which would remove, to quote,

'the need for a new border infrastructure.'

I fully accept that this is only today that this has been reported and that you won't yet have the information. Is the Welsh Government able and can and will Welsh Government make some enquiries to establish whether you can confirm that this is happening and more detail about what it might involve?

We will certainly be looking to do that, but, at the moment, it's not—. I don't know what the solution that the EU is proposing actually looks like. What I do know is that it seems to have been ruled out already by the Prime Minister. Whether she said that before or after she was aware of the story, I don't know. There's a fundamental issue when you have an open border that is, in reality, impossible to police, which, for 25 years, saw a great deal of conflict, where smuggling was a problem for many, many years—particularly diesel, and other goods as well. Of course, it comes back to the point that some Brexiteers have made: they have said, 'We want to take back control of our own borders'. Well, it just won't happen, because you can get into the UK through Ireland without any checks at all. It's true to say, of course, that Ireland is not in Schengen—neither is the UK—so, there's that safeguard, but the reality, of course, is that people will be able to cross with no difficulty at all. I think I'd need to see more detail as to how a proposed technological solution—. There may well be one, and let's have a look at it, but I've not seen any evidence of one working yet, and I've not obviously seen the evidence of what was discussed today in The Times.

14:10

No. Well, clearly, the Prime Minister was responding to proposals by some members of her own Westminster party last week, not to whatever the EU may be proposing. So, can you confirm to us today that you will endeavour to establish what this involves so that we may have a better understanding of it?

Can I also therefore clarify what I think we've heard? Because, clearly, what would be taking place between north Ireland and southern Ireland, in the sense of border issues, you would expect to be applicable to the Welsh ports as well, because there would need to be the same rules applied on both borders, in one sense.

Yes. I was concerned at one point, though I think it's now less likely, that it would be seen as easier to go through the Scottish ports into Northern Ireland and down into the Republic than going through the Welsh ports direct to the Republic. I'm less concerned about that now than I was before, because it seems that the common travel area will remain, and there'll be minimal checks between the UK and Ireland. What I wouldn't want to see is Northern Ireland being in a more favourable position with regard to customs than Wales, because that would affect trade going through the Welsh ports. The temptation would be to take the easier route, although it's a longer route, from Belfast or Larne into Cairnryan, and then into GB.

Okay. The economic partnership has been mentioned, again because of the deals. How do you assess that on the implications for Welsh fishermen and Welsh farmers?

Well, what we have to remember about fisheries particularly is—. People have said to me, 'Well, we'll regain control of our fisheries', and we will be out of the common fisheries policy, possibly, that's true. People have also said, 'Well, we'll be able to remove' what is alleged to be red tape in terms of farming, but, of course, the markets for Welsh produce, and particularly Welsh fish, are in Europe and, without access to those markets for what is a highly perishable good, then, actually, we see the collapse of the fisheries sector and a hit on the agriculture sector. Because if they can't get fish, for example, through Dover quickly, well, fish is not the most durable of goods; it won't be able to reach the customers in time. It also affects the Republic of Ireland, of course, because they use GB as a land bridge. If there are delays in Dover, it actually affects the Irish fishing industry as well. It is right to say that Ireland would be deeply affected by Brexit. That's true, because Ireland has a great deal of trade with the UK.

So, there is a meeting today, as I said, in London, which Lesley Griffiths and Rebecca Evans are attending. One of the points that we will be pushing is that it's absolutely crucial that we're still able to export—and 95 per cent of Welsh lamb exports go to the EU—without any barriers. Why would we want to see barriers put up where none previously existed? We're not just talking about tariffs, although they're important; it's phytosanitary standards, biosecurity. If, for example, there are different and higher standards in the EU, that affects our ability to export into the EU. It affects Northern Ireland particularly badly because Northern Ireland is actually part of the same biosecurity area as the Republic. So, in terms of animal health, it's part of the island of Ireland and not of the UK, which is why there are checks on meat, for example, going into Northern Ireland from GB. If they found themselves in a situation where there were different standards in Great Britain compared to the Republic and the EU, well, which standards do they adhere to? They get hit both ways. So, the danger would arise if there were to be significantly different standards in terms of animal health, in terms of quality. If we were not able meet the EU standards, we wouldn't be able to export to the EU, and that, of course, means there's very little market for what Welsh farmers produce.

14:15

Just looking at it from the other side of the coin, we import a very significant amount of the food that we consume from Europe. So, how is this so-called new economic partnership going to affect the security of food that we're able to pick up in our local shops? 

It's because we have common standards at the moment and those standards apply throughout the European Union, and also those third countries that come into the European market have to meet those standards as well. A lot of vegetables, particularly, come from outside the EU. Now, if the UK was to adopt its own standards, and if they were higher standards than the EU, then there may not be as much of a problem. But if they were lower standards that the EU, it's very difficult to see how we would then be able to export and what it would mean, particularly, in terms of importing. Does that mean then that we would be willing to accept fruit and veg, for example, that were of a lower standard than the rest of Europe was willing to accept?

The reality is we are so bound up in the single market when it comes to agriculture and fisheries that we've got no choice but to have regulatory alignment. We won't be able to export into the single market unless we play by the rules of the single market, and so we'll be bound by those rules whatever happens. 

So, on the assumption that we do maintain the same regulatory standards for the very reasons you've outlined, do you think that there will be any impact at all on the way in which—? The food processing industry is so integrated across Europe. I've heard anecdotally that foods cross the Irish border 10 times before they get to market, in terms of who's processing what—which aspect of the processing is being done where.  

There are two issues. First of all—the one I've mentioned already—is the erection of barriers between ourselves and the European market, which would affect, obviously, perishable goods, which I've mentioned before. But there's a second point: the food and drink industry is very, very reliable—very, very reliant; it's reliable as well—very, very reliant on being able to recruit from the rest of Europe. They can't recruit locally. It's a message I've heard time and time and time again. Now, if they're not able to recruit the people they need to work in abattoirs, for example—not an attractive job for a lot of people—then it'll be very difficult for those plants to carry on going and to carry on operating. So, it's not simply a question of the market being available in a frictionless way for what they produce; it's being able to recruit the people they need in order to carry on operating. 

There is a disconnect, is there not, between what the people on the street continue to talk about—the problem of immigration, just on the television at lunch time—versus the need for us to import labour to fill gaps in our markets? And I wondered if you've had any discussions with the UK Government on how we're going to avoid serious hiccups in our production processes. 

Well, we have full employment in Wales, in reality. By any definition, we have full employment—3.8 per cent is a very low level of unemployment.

The UK Government has tended to focus on highly skilled jobs. It's looked at doctors, for example, and it's looked at the people who will be needed in the financial sector. What it hasn't really addressed is the people who are actually needed to work picking vegetables, for example, that local people won't touch. The people who'll be working in abattoirs where there are—. There is a local element to the workforce in the Welsh abattoirs, but there's a huge element of that workforce that comes from Europe. And if they weren't there, the abattoirs would close, because they can't recruit locally, but they don't seem to have understood that. But actually, there is a demand for, or there's a need, actually, to be able to recruit people in areas that aren't seen as professional areas in that sense. But they've tended to focus on, 'Well, okay, with the NHS, we need to make sure we can still recruit doctors', rather than, 'We still need to make sure there's a flow of workers available for the food processing industry.'

This has really significant implications for Wales if Michael Gove is talking about banning the export of live animals. Therefore, we're going to need to kill them in abattoirs in Wales or we're going to lose huge amounts of business.

We don't really export live animals. For example, with lamb, we slaughter in Wales. Live exports are difficult and they are bad in terms of animal welfare, for example, so we have deliberately moved away from that. And, for example, if we look at the middle-eastern market, we provided assurances to the middle-eastern market about slaughter and our ability to get the lamb to them quickly. They weren't interested in importing live lambs. So, we've deliberately focused on exporting fresh rather than frozen, but also animals that have been slaughtered in Wales rather than exporting animals live. So, I can’t see that would have much of an impact.

14:20

Okay, but the implications of not being able to get European workers to enable our abattoirs to function has very significant issues for people who want to deliver animals to Europe.

Yes, it does. I mean, obviously, if our food processing industry can’t find the people they need, then they won't be able to operate. That means it’s more difficult for farmers; it means they may have to travel further to take their animals to slaughter. It’s been this way for many years. The reality is that, with the unemployment rate so low, those businesses that are seen as difficult jobs have to recruit from elsewhere. If that flow is cut off, they can’t operate.

Okay. I mean, all these are really significant issues. Can I just—?

Before you move on, Michelle Brown wanted to have a supplementary on this point.

Okay. I just wanted to move on to what discussions you've had with the UK Government on how much devolved governments and legislatures are going to be able to shape and make decisions on the common rulebook for goods.

We’ve made that very, very clear—that that’s hugely important. I think part of the problem is that there are elements in the UK Government that don't see the devolved governments as equals and don’t understand the idea of a discussion with devolved governments—not all, but certainly that is the impression we've had from time to time.

I can say that there was a ministerial forum this morning. At that forum, our plan was to press for more detailed work on how the common rulebook would be defined and how it would operate. I mean, clearly, the point I've made many times is that if we are going to have a common rulebook, it's got to be agreed between the governments and not imposed by one on the rest, which was our argument over clause 11 of the withdrawal Bill. Okay, it is right to say that the regulations will also obviously be decided, to a great extent, by EU 27, but it is hugely important the UK Government understands that, in many areas, devolution operates, and therefore they will need our input into how the common rulebook will function in the future.

If we look, for example, at agriculture and fisheries, the UK barely exists in reality. It exists in international terms, but almost everything is devolved. So, for the UK to be able to deliver on any agreements that it makes, it has to engage the devolved administrations.

So, some people want to introduce GM foods into the UK post Brexit. This is something that Wales seems to be heartily opposed to. How would we prevent that being imposed upon us?

Well, it’s devolved. It’s devolved. There are two issues that are difficult to resolve. First of all, the UK Government has responsibility for international trade. But does that mean the UK Government should be able to force the Welsh Government to allow GM foods into Wales, in an area that is devolved? There's a clear contradiction there.

The second point is this: there's nothing to stop us in Wales adopting European standards as they appear. For example, if the Commission were to say, 'Right, this is the new environmental directive', we could adopt that; there's nothing to stop us doing it. The difficulty arises where if, for example, we had very different rules on animal health—coming back to that—to England, well, are we then able to take our animals into England to export out of England? All manner of difficulties arise as a result of that. We are able, for example, to prevent animals coming into Wales on animal health grounds. That's the legacy of foot-and-mouth disease. But if we have very different regulations with regard to animals, does that mean that there might be a barrier between us and England? It's a very difficult circle to square in those circumstances. With the environment, it's different because, obviously, the environment isn’t exported as such, and it would be perfectly possible for us to have different rules on environmental issues that mirror European rules rather than adopting whatever is adopted in London, because it's mainly devolved.

14:25

Okay. So, what discussion, if any, have you had with the UK Government on the regulatory alignment or divergence post Brexit?

I think the UK Government at the moment takes the view that they would want to see regulatory alignment remain aligned as closely as possible to the EU, certainly for the time being. So, it's not an immediate issue. But clearly there will need to be discussions if we find that we go off in different directions as governments, which is why we need something to replace the Joint Ministerial Committee—a UK council of Ministers—so that these issues can be discussed. There's no way of doing it at the moment. There's no way of agreeing a common way forward because the mechanism doesn't exist to do it, and that needs to change because the UK is no longer a state where the UK Government controls everything and the Welsh Government and the Scottish Government can sometimes do things in devolved areas. That's not the way things are anymore. We're a partnership, but that's not been grasped yet by the UK Government.

Okay. So, there's nothing constitutionally to prevent Wales and, for example, Scotland saying, 'We are going to maintain alignment with the EU rules'?

Well, there's a fundamental clash. It would end up in the Supreme Court because our argument would be, no doubt, this is a devolved matter. The argument of the UK Government would be, 'Well, no. This is something that's been agreed through an international treaty, so therefore you have no choice'. There's no way through that other than through the Supreme Court deciding who's right. 

Okay. So, we could envisage the UK Parliament taking decisions that would then impose different standards on Wales. 

If the UK Government rather than Parliament—the UK Government—were to conclude a trade agreement where the UK committed to allowing GM foods—'GM crops', I think, is probably better than 'GM foods'; we already have GM foods, of course we do—GM crops to be grown in the UK, then potentially, if we were to say, 'We're not having that because plant health is devolved', they could say, 'Well, no, no, we've already agreed this at international level, and that supersedes, that trumps'—probably the wrong word—'that trumps the issue of devolution'. That then ends up in the Supreme Court. The way to avoid it of course is to make sure that we are very much part of the negotiations as they take place so that these issues can be avoided before they arise. 

Can I move on from that point? Afterwards we may have some questions on it, but can I go to Mark, who wanted a supplementary on this?

Yes, thank you very much indeed. You refer to the common rulebook, and we were talking about a UK single market framework to replace the equivalent EU framework, but, as you've described, the rules around reserved and non-reserved matters should and must continue. Was there any discussion regarding how to go forward on this at the JMC(EN) last Thursday, or did that purely focus on Chequers and related proposals for the UK-EU negotiations? And if I may slip in another, because of your comments with reference to the middle east—

Okay, sorry. If you let me come back, that's all right.

I'll ask Piers to come in on that because he was there and I was not. So, perhaps Piers could—

There are two aspects to that, one of which is the way in which the negotiations pan out, and our desire to make sure that, in relation to the governance arrangements and the way that we are able to be part of those as they develop. Secondly, it also links into issues around Sewel and common frameworks, and there was an update item around common frameworks and there is official-level activity and discussions around the concept of the UK internal market and what that would mean and then how that links into frameworks. So, those areas are things that were under discussion because they're important in particular on the common framework side as well as in relation to what comes through on the negotiations front.

The First Minister referred to environment, but that would include rivers that meander across the border, or species biodiversity that crosses the border into the Welsh Marches or what have you, as well as agriculture.

Yes, so you've got, obviously, linking back to the framework areas, some there that link directly into the concept of an internal market, you've got some there that are more specific, for reasons that they don't necessarily interfere with economic activity and trade but they're important to have in a co-ordinated management of it. So, yes, it's the frameworks area that will in particular pick up some of those issues. 

Thank you. You referred to the middle-eastern market, and clearly there was an agreement between Saudi and the UK Government this year to reopen the Saudi market to UK and Welsh lamb. We know that the BVA, the British Veterinary Association, has been campaigning for 100 per cent pre-stun. The Saudi market has requirements relating to shelf life and requirements, I understand, in part at least, on the use of recoverable stunning. In order to prepare Welsh produce for that market, what consideration has—or will—the Welsh Government given to those areas?  

14:30

We'll take advice as to what might be needed in order to access those markets. We entered the market in the United Arab Emirates by talking to the authorities in Dubai, and then being able to export. But I think it's worth emphasising that none of this can possibly make up for the European market, which is far closer and far bigger. When 95 per cent of your product goes into one market, you play around with access to that market at your peril. So, yes, we always look for new markets for Welsh lamb. We have done—I personally went to Dubai to get Welsh lamb into Dubai—but the reality is that the European market will always be the main market for us because of its size and because of its proximity. 

I think the UK market comes before the EU market with 77 per cent, but apart from that—

We won't argue about that. Michelle wants to talk about market access, and Steffan wants to come in on this point. Steffan. 

I'll come back to you, in that case. Do you want to come in now, Michellle? I put your apologies in because we weren't aware that you were—

I put your apologies in at the start of the meeting, but we're pleased to see you and understand that the cancellation of an event has allowed you to be here. 

Yes. I just wanted to ask you, First Minister, about the progress of the negotiation between the EU and the UK on the quota for New Zealand lamb coming into the EU; they've been negotiating a split. What is your preferred outcome from that, and what kind of input and influence are you able to have on that negotiation?  

There's been a consultation launched by the UK Government looking at the possibility of a free trade agreement with New Zealand. On the issue of tariff-rate quotas, it's a complicated issue. It's not simply a question of saying, 'Okay, we'll take our share of the EU TRQ and then we'll just apply it to the UK'. Everyone has said—including the World Trade Organization—that that's not possible.

I met the New Zealand High Commissioner last week. Clearly, the UK is a market that New Zealand would like to have better access to, although there are much bigger and closer markets than the UK to New Zealand, China being a case in point. It's difficult to see what the advantage to the UK is, bluntly. I mean, New Zealand is a country of 4.8 million people. It's 12,000 miles away. The market for UK goods is bound to be limited there when compared to a market of 450 million that we have a land border with. So, while I'm not opposed to the idea of a free trade deal with New Zealand that doesn't affect Wales negatively, it can never make up for the loss of easy access to the European market.   

I was actually referring to the quota that's being agreed between the EU and the WTO for the import of New Zealand lamb. I wasn't actually talking about market access for Welsh farmers into New Zealand; I was actually referring to the New Zealand farmers' access into the British market, and what your preferred outcome was in those negotiations between the EU and the UK about how much New Zealand lamb will be allowed into the UK under certain tariff circumstances.  

I would be content with the existing arrangements being adopted by the UK. I don't think you can realistically say that we don't want New Zealand lamb, because clearly there are times of the year where it's pretty much the only lamb that's available. Welsh lamb and New Zealand lamb don't directly compete with each other, really; they have quite different markets. New Zealand is a commodity producer of lamb. It has costs that we could never match; it's impossible for us to match those costs. So, we produce a quality product, a consistently good product that we sell at a higher price, because it is a good product. So, we don't really fish in the same pool in terms of markets. The United Arab Emirates is a very good market for us because people there have got money to spend on Welsh lamb, whereas in markets where there's not as much money around, New Zealanders will always have an advantage. So, in short, for me, I think the current arrangements work, and I wouldn't want to see them change to the detriment of Welsh farmers.    

Do you see an opportunity to benefit Welsh farmers from these negotiations? 

No, because Welsh farmers—. I mean, I can't see how we could realistically export lamb fresh to New Zealand. The cost is enormous. New Zealanders, remember, sell us a lot of frozen lamb as well. We don't freeze lamb. The logistics of getting to New Zealand with what wouldn't be a substantial load, really, because we're not bulk producers, would be astronomical compared to, for example, being able to get it to Spain and Greece and Italy, which is where our market, in the main, is.

14:35

I'd like to go back to the question on the common rulebook. I wondered if we were any closer to knowing whether or not the UK plans to have a state aid regime post withdrawal from the European Union, and if it does intend to have one whether the devolved administrations will be involved in its composition.

It has not spoken directly about this, but the intimation is that the current EU state aid regime would be kept until such time as a new one is brought forward. It all depends, of course, on what's needed in order to ensure the market access that we need. To my mind, I see no reason why we don't just keep the existing regime, because that will give us the market access that we want. 

Let's say, for example, that that regime disappears. Well, there are two schools of thought. One is that we should have no state aid rules at all—and I've heard it expressed, which is a mistake to my mind, because if there are no rules, the biggest wins, and we're not the biggest—or that we have our own state aid regime. What's absolutely crucial if that happens is that it's not one produced by the UK Government and imposed on everyone else; that it's properly negotiated and, importantly, that there is an independent body, independent of Government, that is able to arbitrate and decide what is and what isn't an infraction of those rules. You can't have the UK Government acting as judge and jury.

This is part of the problem we have with the constitution; that the UK Government is also the English Government. Let's say, for example, there was a dispute on a state aid issue between Wales and England. It would then be decided, potentially, by the UK Government. Well, that can't be right. So, to my mind, there would need to be a court as well that can take the final decision. That's easy enough. You can ask the Supreme Court to do it, to fulfil the role the ECJ has at the moment. It's very, very difficult to know what sort of state aid regime will be with us in the future because much of it will depend on what the deal looks like in November and whether we need to stay part of the state aid regime in order to get the kind of deal that we want.

I understand that it all depends on what deal we end up with—if we end up with a deal—in November. In the latter of those two options, you highlighted the possibility of an independent body that will oversee this, but based upon your experience to date of the constitutional arrangements and the structures and the agreements that need to be had—whether we have an agreement, what option, or whether it's an imposed option—do you have the confidence that you actually can get something like that?

It has not been addressed properly yet. Part of the problem is that the UK Government is very focused on—and you might understand why this is—getting a deal with the EU. What it hasn't addressed is what the internal workings of the UK will look like once we leave. To me, the two things go together. We have to have a way of working through the issues within the UK and the mechanism has to be there when we leave, not years afterwards. They've not really expressed a view on what kind of state aid regime will be with us in the medium to long term, or whether there should be one at all, apart from saying that the European regime could be with us for the time being. But, to my mind—. Well, in terms of order of preference, my preference would be to stick with the existing EU state aid regime. If that doesn't happen, there would need to be a UK regime that would have to be agreed with a clear independent method of determining disputes.

With the possibility of no deal, because we are very much aware of this being highlighted even more and more these days as a strong possibility, then those types of situations will need to be in place as of 30 March next year. It doesn't seem to me we'll be anywhere near having things in place if we leave without any deal.

No, that's true. What would have to happen is the existing regime would have to carry over, otherwise we'd have nothing. That, to me, is the sensible way of doing it, and then, between Governments, look at whether there should be a UK regime—although what use that would be, I'm not quite sure—or whether we should keep the existing EU regime. 

Going back to some of the issues in the White Paper on future EU and UK Government relationships, it has been clearly stated that new institutional relationships would have to be formed and, indeed, association agreements have been proposed. They do exist between the EU and third countries. So, has the Welsh Government given any consideration to such a proposal for an association agreement with the EU, and what it could look like?

14:40

Well, we've consistently said that such an agreement could offer the right form of governance for the future UK-EU relationship. It seems the UK Government has now accepted that position. We'll continue to press for full participation in those future governance arrangements, and those issues will have been raised this morning in the meeting I've already referred to.

At the moment, obviously, our focus is on influencing the negotiations that are taking place to deliver the right form of Brexit for Wales, rather than the institutional architecture, but in terms of such an agreement providing the kind of certainty and governance that we would want to see, we would support that. 

Did you say that it might have come up this morning or today in the forum?

It was going to be raised in the forum this morning.

It was going to be raised. Because, obviously, it's crucial that Welsh Government is involved—and it's clear that it needs to be fully involved—in those discussions, in terms of a future association agreement. I mean, we've been talking this afternoon, with you commenting, and Members, about whether we're likely to see an agreement being reached between the EU and the UK. Last week, I think, Michel Barnier talked about the realistic and possible chance of a deal. I mean, what's your view, First Minister, as you sit there today, in terms of the changes and the ups and downs?

I welcome Michel Barnier's words. He's not somebody who would have said that without there being merit in those words, and if he feels there is the possibility of an agreement in November, then that's welcome, because that's not something, really, that's been mentioned before. There are issues, of course, that still need to be resolved. Those issues could be resolved, if the UK Government accepted our position, but what is absolutely crucial is that there is a decent deal on the table in November. If that doesn't happen, then we will head to a 'no deal' Brexit.

Also, I welcome the fact that you raised these issues in your speech, in your presentation last week, at the Institute for Government, and I think, very clearly, you also laid out the importance of inter-governmental relations on behalf of the Welsh Government. Do you see that there's common cause with counterparts in Scotland, in Edinburgh, and do you feel that there is a recognition of how important your view, and the view of Welsh Government and Wales, is in terms of reaching that kind of deal—an appropriate deal?

Yes. I mean, as far as the Scottish Government are concerned, I suppose their long-term position would mean that they would have little interest in the way that the UK operates. In the shorter term, though, there's no opposition to the need for the inter-governmental relations between the UK Governments to strengthen. It does need a level of acceptance by the UK Government that they sit around a table with us as equals, particularly when it comes to dealing with England, which is something that they've been reluctant to do, although the parliamentary arithmetic has meant that they've had to change their position, I suspect, over the course of the past year, but this can't be avoided. If we are going to have a proper partnership within the UK, there needs to be a proper mechanism for agreement—agreeing things—and for resolving disputes when they arise. At the moment, we have a situation where there is a dispute resolution process within the JMC, but the UK Government resolves every dispute. So, for example, if we have a dispute with the UK Government, the UK Government resolves it.

Even more extreme than that, we raised the issue of the £1 billion payment to Northern Ireland, which, we argued strongly, drove a coach and horses through Barnett, together with the Scots. We raised that as an issue via the dispute resolution process, and we were told that there was no dispute. So, there was no point, because the UK Government didn't accept there was a dispute at all. So, we have this bizarre scenario where it's a bit like going to court where the other side's advocate is not only the person who decides the case, but is also the person who decides whether you've got a case at all. But that's where we are. That, clearly, is not an acceptable position to be in in the future.

I think some of the comments you've made this afternoon are of great concern, because you talk about how sometimes you feel you can influence and sometimes you get traction. But, actually, this was one of the key points, wasn't it, in 'Securing Wales' Future', that there had to be reform of inter-governmental relationships. This is critical, isn't it, in terms of our future prospects.

14:45

The UK won't work without this change. It's not difficult; these are not difficult things to do, practically. The establishment of a Council of Ministers is not difficult. The designation of a court to deal with trade issues isn't difficult really, but it does require a change of approach from the UK Government that, until now, they've not properly demonstrated. 

Thank you, Chair. In the speech that Jane Hutt referred to, you said that we should stop talking about devolution and start talking about the union. What did you mean by that?

The need to understand that the union is a partnership and the need to understand that devolution is no longer an issue because it's resolved, to my mind. The resolution of it means we do have to have a Council of Ministers, we do have to make sure that we have powers returned to us, and agree where powers are not returned to us they are held in the larder, and then see how the union might be made to work better in the future. Because it doesn't work now with the current structure, it won't work in the future with the current structure, but it can be made to work with the changes that I've proposed. 

What you've been describing this afternoon, First Minister, doesn't sound like much of a partnership to me and, in fact, if we were in a partnership, wouldn't the UK Government be more willing to engage on the basis of equality and partnership that you've described in the first place? Isn't it the case that whilst you say that these changes are easy to implement—a court of arbitration, a Council of Ministers—the reason why it is actually very difficult for those things to be deduced is because that would require the central Government to relinquish power? Something that there's no incentive for it to do at all. 

I think that's a fair analysis. I do think that there is a difficulty in Whitehall in understanding that the UK is not a unitary state with levels of Government below the UK Government—or constitutionally it's true, in reality and politically it's not. The point I made to UK Government Ministers is there's no avoiding this, it has to be done.

If the internal market of the UK is going to function in the future, then ways have to be found to make sure that, in areas where that market might be impaired, there's a way of agreeing ways forward. For example, if we all had very different animal—I'm coming back to it again—but if we all had very different animal health regulations that prevented Scotland, England and Wales from moving animals into each other's countries, which is possible—not sensible, but it's possible—there has to be some way of resolving those issues. And that doesn't exist at the moment. As it happens, we have a common approach across GB, but that doesn't mean to say in the future that that approach might not change. So, let's say, for example, we're in a situation with very different animal health regimes. Who then sits down to resolve the issues without a formal process to do it? And that process doesn't exist at the moment.

I've been asked that question several times. The difficulty with federalism is England—what do you do with England? That's not a question I have an easy answer to. 

Well, some will say, 'Let's regionalise England', but there doesn't seem to be any appetite for that in England at the moment. To me, the issue of federalism is complicated by the fact that you have one very, very large entity within the UK and how you deal with that very large entity.

I think, actually, it's easy to do in terms of Wales and Scotland. My view has always been, 'Let's have a look at the Canadian model.' Let's pool sovereignty. Let's see the end of parliamentary sovereignty as it is as the moment and let's share sovereignty across the UK. Canada does it. Canada is a stable and prosperous country. There's no way why the UK can't do it. But the unresolved question to me is, 'What do you do with England?' How do you deal with this big country that sits within the UK? It's easy to have an English Parliament, or it's possible, and what do you do then with regional options within England itself? 

You made the proposal in your Institute for Government speech around the Sewel convention and reform of that Sewel convention. That involved, if I'm correct—if I'm incorrect, please correct me—devolved governments raising concerns at the beginning of the legislative process, and if there was a failure by the UK Government or Parliament to get consent, that meant that there had to be a revisiting of the whole issue by the UK Parliament at the end of the legislative process. Is that—  

Yes, the UK Parliament would need to be aware that there was no—. It would have to be stated by—. The UK Government would have to be aware that there was no agreement to the legislation as it passed through both houses of the UK Parliament.

Constitutionally, the UK Parliament still would not be bound to stop proceeding with the legislation on the basis of a refusal to consent.

14:50

That's true, and it comes then to the point as to whether Sewel should be justiciable. We know, from the Miller case, that that's not the case. The question then is: how do you create a situation where one country doesn't have a veto over the other? Let's say, for example, that we in Wales took a very different view, that Scotland, England and Northern Ireland were agreed, but we said, 'No, it's not happening', so it didn't happen. How do you get around that? Well, one of the suggestions we've made is: you have the Council of Ministers and you have a system of weighted voting where you say—. Well, for example, you have to recognise the size of England and say, 'Well, it could be England plus one', or other scenarios that would work, and then, of course, you can start to resolve the issues by using the Council of Ministers in a way that, perhaps in the longer term, would mean that Sewel would no longer be needed.

And in that context of a Council of Ministers with weighted voting and reform of Sewel, why then would we require, in a post-Brexit scenario in particular, where decisions would be made at levels that are clarified, why would we need a Secretary of State for Wales? I'm trying to understand the constitutional—. I understand you're not a federalist, because of the reasons you've outlined. I understand that you are opposed to any one nation having a veto over any other, although it sounds to me like England would probably still end up with a veto because of its size. Why, then, will we have somebody around the British Cabinet table able to undermine the inter-governmental arrangements that are being put in place for a new context? It seems a bit pre-devolution to me—the existence of a—

Well, I think, at that point, you do start raising the question of the existence of the Wales Office. I don't think we're at that point now. I think it's important that we have somebody around the UK Cabinet table, although what I will say is that I think it's absolutely important—and this is our practice—that we don't have to discuss matters with the UK Government through the intercession of the Wales Office, because we have direct relationships with UK Government departments and the Wales Office shouldn't be the conduit through which we have to go every single time. That's not what happens. But, yes, with the proper inter-governmental machinery, the proper decision-making process, probably you are in a position then of wondering whether you need territorial offices or not.

Just finally, Chair, for me, we've been discussing what might seem very sensible to people who are involved in devolution every day, and I, of course, am very sceptical that we'll get these constitutional changes, because that's not how the United Kingdom works or is configured. Do you think that a 'no deal' Brexit, or even a Brexit with a deal but without constitutional reform—does that make Welsh independence more or less likely, do you think, in the longer term?

I think it makes it more difficult to operate the UK. I'm not going to say that I think independence, then, is likely. That's not the step that I advocate, for obvious reasons, but there's no doubt that if the UK doesn't get its internal governance right in terms of the relationship between the different governments within the UK, that will cause problems in the future that could be avoided. There's no need for this to happen. It could be done very sensibly and very quickly, to my mind. Otherwise, you'll end up in a situation where you can have perpetual disputes between the different governments in the UK, and that's not in anybody's interest.

And I'll allow him to make the case for independence. [Laughter.]

You've highlighted the comments that have been discussed here on the constitutional arrangements, and some of the aspects, but the Public Administration and Constitutional Affairs Committee of the House of Commons published a report in July of this year related to its consideration of Brexit and the devolution impact. Have you had a chance to read that report yet, and perhaps respond to it? Because it is very much along the lines, I think, of what you were saying about some of the changes that need to be put in place, and they are highlighting those issues.

Well, I gave evidence to it. This is the committee, if I remember rightly, that was chaired by Bernard Jenkin. Jenkin was not the most—. He didn't strike me beforehand as the most ardent devolutionist. In fairness, he listened, he understood the issues, and now we see the report that that committee has produced. I think it's important that the UK Government takes note and implements much of what that committee suggested.

Are you able, therefore, in your meetings with the UK Government, to highlight the points in that report, to basically substantiate the comments and the issues you've been raising since 'Securing Wales' Future' has been published?

I've not raised the report directly with the UK Government, but that said, I've not met the Prime Minister for some time, either, and that's not unusual because these things tend to be left to JMC(EN), which again, I think is the wrong approach. One of the problems is that, for example, no UK Prime Minister, actually, has attended the British-Irish Council in the nine years I've been First Minister. Not one. No—once; I beg your pardon. That was in July 2016, when the Prime Minister did come to Cardiff, but that was of course in the shadow of Brexit—the vote, the referendum, rather. I've not seen a UK Government Prime Minister at any of those meetings, apart from that one, in the past nine years. The Taoiseach always attends. Heads of Government of the Ireland administrations and ourselves, we attend, as do the Scots, every single time. It's a perfect opportunity, within the margins of the British-Irish Council, to have that kind of meeting, but the UK Government, the Prime Minister, never comes.

14:55

On the discussion we've just had, with reference to my earlier question, is this not precisely what the inter-governmental discussion regarding future UK single market frameworks is about, and will that not also include consideration of what sort of adjudication arrangements will be required, given that the last time we had UK Ministers sitting where you are—some months ago, but this year—they also agreed that those systems, mechanisms, would be required, although they admitted thus far they had done no work on what that should be?

Yes, but the difficulty is that the UK Government have done this after being dragged to that position. That's the sad thing about it. We could have done all this a year ago, but at the start of this process the UK Government was adamant that all the powers coming back from Brussels would go to the UK Government and they would decide when and if those powers would be released, as they saw it, to the devolved administrations. After a year of discussions we ended up where we are, which to my mind is the right place—where most powers return, but there are some that we've agreed should be kept in suspense because they need to be implemented on a joint UK basis. But we could have done this a long time ago, and that's the—. The difficulty from our perspective is that everything the UK Government has agreed to, it's taken a lot of pushing and a lot of dragging to get them to that position, whereas we could have done all this months ago, because all we wanted was to get to an agreement that was sensible. And this is what we have with the UK Government now. The Scots have taken a different view; I know that. But our view is that what we have now represents not everything we'd want, of course—agreements are not like that—but a reasonable compromise between ourselves and the UK Government.

And as I recall—correct me if I'm wrong—a year or so ago you were rejecting the term 'adjudication' and using a different term. You're recognising a body might be required, but today, earlier on in your presentation, you referred to judicial decision making. Did you fully accept that, in your view, this would need to have judicial status—adjudication where disputes might exist? 

The Council of Ministers, do you mean?

Yes. There would have to be an established dispute resolution process where there was an adjudication at the end of it. That would mean a court. At the moment we don't have that, of course, because there is no independent body that decides on dispute resolution within the UK. It's done by the UK Government. 

I remember years ago putting forward the suggestion that there should be an independent body of people who would take the final decision, perhaps members of the House of Lords, people who've got constitutional experience, who would command sufficient respect cross-party to take the final decision. But the UK Government didn't accept that. No UK Government has accepted that, whatever party has run the UK Government. But, we're beyond that point now with Brexit. We would have to have a clear dispute resolution process with an end point where a court or its equivalent decided the issue at that point.

Did you want to say something?

Maybe just quickly if I could add that, at the JMC last week, the importance of making progress on the governance issues and the cross-cutting issues was emphasised by the Cabinet Secretary for Finance as something that we're particularly aware of and we want to see, because we see it as helpful then for the individual discussions on specific framework areas as well. 

We move on to the withdrawal and implementation Bill, which I think is now called the EU withdrawal Bill. [Interruption.] The European Union (Withdrawal Agreement) Bill. Thank you. I understand that the Welsh Government had sight of this prior to its publication, which is perhaps different to what it was on some of the other White Papers and Bills that have come through in the past, and as such you've had a chance to respond to that and see whether those responses were reflected in the White Paper. Could you confirm as to whether the changes you suggested or issues you raised have been reflected upon? And what is your view as to the situation with Sewel—you've just talked about that—if we say 'no', because I understand it's to require an LCM. If we say 'no', will we be overridden just like Scotland was overridden on the previous one, because it is a question now of normally—?

Could you confirm as to whether the changes you suggested or issues you raised have been reflected upon? And what is your view as to the situation with Sewel—you've just talked about that—if we say 'no', because I understand it's to require an LCM. If we say 'no', will we be overridden just like Scotland was overridden on the previous one, because it is a question now of normally—?

15:00

Yes, that's before—it goes to the Supreme Court at the moment. But you ask about the withdrawal agreement. We were provided—unusually, we were provided with copies of the draft White Paper a few weeks ahead of the publication. There were discussions with Department for Exiting the European Union officials who were leading on the Bill. We did suggest some redrafting in order for the text to be clearer in terms of the devolved administrations. That was taken into account in the published document. Those discussions continue, not just with DExEU, but with the Cabinet Office and with the Scots as well. We have drawn attention to the importance of the timing of a debate in the Assembly on an LCM, given the compressed timetable for the Bill to gain Royal Assent before exit day. So, we've made that point and we believe that legislative consent will be needed for aspects relating to the transition arrangements themselves and to citizens' rights, but we need to see the Bill first in order to make an assessment of what exactly will need legislative consent.

When is your expectation of a Bill? Is it going to be within days of a withdrawal agreement being reached or is it a bit longer than that?

Immediately after you've reached the deal, if one can be reached, with the EU then the next stage is the meaningful vote votes in Parliament, and then it would be on the back of the meaningful vote and votes that the withdrawal agreement Bill would be introduced. We don't have clarity on exact timings yet, because of obviously the uncertainty earlier on in that process.

So, we are within a very tight timescale in that sense. Okay. And have you made your views clear to the UK Government that, if an LCM is rejected in Wales, you wouldn't want us to be treated the same way as Scotland has just been treated?

I think the problem is that, if the UK Government wins the case in the Supreme Court they will feel emboldened to do what they want, and that drives a coach and horses through Sewel. I was particularly disturbed by the arguments put forward by the Advocate General for Scotland—the advocate general is the UK Government's law officer in Scotland—who seemed to be taking the view that if anything touched on international relations it was reserved. Now that, of course, would again drive another coach and horses through the agreement that we reached with UK Government. I don't know how far he was freelancing or whether that represented the view of the UK Government. If it did it would cut across everything they've agreed with us so far, so I hope it's the former rather than the latter. In fact—

Have you had a chance to raise that, therefore, with the UK Government to seek clarification?

Officials have been discussing the issue with the UK Government. No answer yet as to whether it was a frolic of the advocate's own or whether it was meant to represent the UK Government's position.

Okay. So, we'll watch this space very carefully in that case.

Well, if the UK Government ignores—if the UK Parliament, rather, ignores the lack of an LCM on something so fundamental, it's not difficult to see them ignoring LCMs and the Sewel convention in the future, which brings us back to the point that we need then to have constitutional reform in order to avoid a situation where it's felt that the devolved Governments and Assemblies—and Parliaments, rather, can just be overridden at the drop of a hat. 

Okay. If we move on to the 'no deal' scenario, and we've talked about other guidance, obviously, we've had a lot of technical papers from the UK Government, some of which are 'polite', which is the polite word, in their actions as a consequence of some things. Have you had a chance to look at these papers yet and identify where you agree with the impacts and perhaps the suggested solutions?

Well, we agree with the impacts because none of it is good. Not one of these technical notices appears to put the UK in a better position than it was in before. There's nothing in the technical notices that makes it easier for Welsh businesses. They raise questions for car manufacturers, for shipping, ferry companies. It's clear there's going to be more red tape; there has to be more red tape if there's a 'no deal' Brexit—it's inevitable—which makes it more difficult for businesses. It puts more hurdles up that they would have to jump over, and they don't draw a line under any issue particularly; they just raise further questions. So, at the moment—I wouldn't disagree with the analysis within the notices, but in terms of them offering a way forward, I don't see that they do that at the moment and, of course, some of the major ones are yet to come.

15:05

I just asked the question because I was looking at the 'Upholding environmental standards if there's no Brexit deal' technical notice, where its solution is:

'We are considering what interim measures may be necessary in a no deal scenario'.

And it worries me that they are considering this now, with six months to go. I just wondered whether you are actually now taking more positive action rather than just simply considering something.

Well, this is an issue that's mainly devolved. It's a matter for the Assembly and the Government to decide what happens in Wales. From my perspective, I don't see why we should try to enact wholesale change in environmental standards and regulations before March, and it would then be a matter for the Assembly and the Government to decide how environmental standards were to be drafted and implemented in the future. That's a matter for Wales. It's not a matter for the UK Government to dictate to us what our environmental standards should be.

Are we preparing, therefore, for a 'no deal' scenario, so, come 30 March 2019, we may be looking at having to take action?

Well, if I can give the committee an idea of where we are in terms of preparedness, the first thing I have to say is that we can try to mitigate, but we can't—we cannot put Wales in as advantageous a position as it was before if there's a 'no deal'. But what are we doing? First of all, there's the legislative issue of keeping a close eye on legislation, and what would be needed and by when, in order to make sure that the statute book is right. Secondly, we have, of course, put forward the preparedness plan—£50 million has been allocated to that. I think £13 million has been allocated already; there will be an announcement in the very near future as to where the rest of the money goes. And we've got the Brexit portal, of course, that's there to help businesses as well. We're also recruiting more staff—for the first time in many years, actually. We are going to recruit 198 extra staff. Some of them will be redeployments, but most, I suspect, will be new people because they will be needed to deal with the issue of Brexit preparedness. Literally thousands have been recruited in Whitehall. We need to make sure that we have sufficient staff to do what we need to do in the event of—well, any type of Brexit, but a 'no deal' Brexit as well, in terms of legislation, and in terms of what support might need to be made available to business.

Suzy, do you want to ask the question on the transition point?

Yes, I've got a few more around this, if I may. Before I go on to ask about the £50 million and the £20 million that you're getting in addition to that, can I just bring you back to the Chair's original question? We've got one good example there of a UK technical notice, where you've said, 'Well, it's all devolved'. Can you tell us what preparation you've done just to respond to that one technical notice?

Well, they've not long been published, and we expect more to come. But the technical notices—the difficulty with them is, again, they confuse what is and what isn't devolved. So, in terms of environmental standards—that is not entirely, but it's mainly an issue for us to deal with.

So, I'm less worried about that. What concerns me more are the technical notices that deal with trade. The one that's received most attention, I suppose, is the one on mobile phones, but, ultimately, they all present a scenario that's far worse than where we are now. 

Yes, I've got your views on that; I don't want to linger on that, particularly. So, there's nothing specific being done in response to that technical notice.

On 10 September, you wrote to the committee with an update on preparedness and the recommendations that we made in our report, in which it's confirmed again that the Welsh Government's undertaking research that has overtaken early analysis, which presumably means those nine sectoral analyses that were done. What's happened to those, then? How have then been superseded? Have they got any life in them at the moment?

They're equally as relevant, but the difficulty is—there are several different ways of analysing how Brexit will work out, and it depends on whether there's a deal or not and what the deal actually looks like. Do you want to come in, Piers?

Yes, the focus of the research that we have, which extends on the White Paper, is the Cardiff Business School report, which was published at the time of the trade policy paper back in January, or the start of February, and that presents a kind of much more authoritative sector-by-sector view, including consideration of different issues such as both tariffs and non-tariff barriers, employment and so on. And then we've been looking to see what we can do more to expand on that, which includes both understanding direct exports, but it's also considering the way in which supply chains involve Welsh businesses, but they may not then be directly involved in imports directly into Wales or directly out, because they might flow through businesses, for example, in another part of the UK. And that's an area where it's quite difficult to come up with authoritative data on how Welsh businesses are involved in a supply chain that then exports subsequently. So, that's an area that we're looking to try and probe and come up with some much more detailed information on, because it's an area that we haven't needed to understand and have that technical analysis previously, but we absolutely do and that's why that's the next focus—on extending the work in that Cardiff Business School report.

15:10

Okay, thank you for that. But does that research bring you to a position that's an equivalent of what we've got in the UK technical notices, basically? What I'm trying to get to is whether, in Wales at the moment, we have an equivalent of those 25 technical notices where they apply to devolved issues. There would be a bit of a gap in time, I gather that, but what have you got that we can see?

The technical notices—we pushed hard to get sight of them in advance and we had limited opportunity to comment, but we were able to try and contribute to them, because, wherever possible, there are a set of issues there that are common across the UK, so we try and make sure that those technical notices best reflect, to the extent that we can influence them, the devolved circumstances, too. And then, on occasion, we have supplemented those with specific guidance alongside those, or soon after, to Welsh Ministers. So, I think in relation to the first one covering structural funds and the Treasury guarantee, the Welsh European Funding Office then wrote out to Welsh stakeholders to expand on what that would mean in a Welsh context, and similarly, at the time, there have been communications within the Welsh NHS to talk about some of the health implications as well.

So, what we've been trying to do is get the technical notices to be as accurate and reflect devolution as well as possible so that you don't end up, needlessly, with two sets of notices flying around, but then, equally, look to expand on it where we think there are specific Welsh circumstances, and that's what we will continue to do in relation to future technical notices that the UK Government does. So, that's the approach we've been trying to take and think about how we supplement and not compete with UK Government announcements. 

Okay. At what point will Assembly Members be able to see those communications? As you say, they're direct communications, and it does say that in your letter of 10 September to interested parties, shall we say, but that doesn't help us as a Parliament to scrutinise the kind of advice you're giving. How can we see that?

Well, I'll see what can be released to Members. I think it would be useful to Members—

—to know what the current situation is, so let me see what I can do in terms of releasing—well, as much as I can.

Before we progress, you talked about supplementing the technical notices—how many have been supplemented, or how many do you see proposed to be supplemented as a consequence of what we're seeing?

I don't have the exact figure to hand and it continues to change as they put out more technical notices, so, alongside considering what we can release, we can give you an overview of where we've obviously given—

If you're able to, perhaps, send us a note as to—of those that have already been published—how many you think would need to be supplemented to meet Welsh businesses. That would be very helpful for us.

The other thing that I perhaps ought to mention is that, above and beyond what is written, there's obviously a huge amount of dialogue that happens regularly with stakeholders, which we then try and hold a central register of, because it's important that you are able to have the kind of free and ready discussions. So, often, when there are set-piece meetings, you might well end up having conversations within them or within the margins of them in which we're able to help stakeholders to understand what has been said. That's just part of—[Inaudible.].

No, and I accept that. It does lead me to the next question, though, about the European transition team and the work that that does and how we can scrutinise that. I've got two paragraphs on what that group does.

Well, the scrutiny would come via the Minister, not via the civil servants—

No, it wouldn't be direct, I appreciate that, but to get a sense of the questions we could be asking it—

Yes, well, that would come via me, so if Members had questions about the work of the transition team, then the correct way to do that would be to go via me.

Okay. So, First Minister's questions or just written questions for something like that.

Okay, thank you. I'm just going to turn to those preparedness funds now. The £50 million, we know about; we had early steer, I think, to this committee some time ago. I appreciate that there's a statement coming on how the rest of that has been spent, and obviously, we'd like to scrutinise that as well, particularly as the portal seems to have opened after some of the early decisions on that were made. Can you just confirm, first of all, though, that that £50 million and the £20 million-odd that is coming from the UK Government are—? They're not part of the same sum, are they? We've actually got £70 million-odd in total. The letter from Mark Drakeford suggests they are different.

15:15

It's input as opposed to output, so—. Obviously, we get consequentials on a whole range of things, including the £20 million that comes in, and then, separate to that, Welsh Ministers made the announcement that there was the £50 million that we would use. That, obviously, was made before we had knowledge of the exact level of consequential that we were getting from that, but we were confident that we were able to commit that sum and make it available. That drew on, obviously, consequentials we've had for other things previously. So, it's an input versus an output.

Just say this in English for me: have we got a £50 million transition fund, plus £20 million coming from the UK?

Sorry, it might be coming—. The £20 million is part of money that comes into Welsh Government. What we have committed to is the £50 million, which is the fund, which is money that goes out of Welsh Government to external partners to help them prepare.

We don't get money for specific purposes— 

—it all goes into the block. So, at the moment, the sum is £50 million.

It's a matter then for us to decide how the rest of the money is allocated, but, of course—. You understand the problem. We know it's £20 million in. We have allocated £50 million. At the moment, the fund is £50 million.

Okay. Because the letter from Mark Drakeford suggests it's additional. So, I'm glad we've cleared that up.

That letter also suggested that that £20 million, or at least a portion of it, was going to go toward staffing, and you mentioned that Welsh Government needs staff, and we would accept that. Presumably, you're not going to be spending £20 million on staff, though.

Can you guarantee that all that £20 million has gone, at least, into the fund?

Well, we would have to take a decision as to how best to spend that money. There may be other ways of doing it. But the fund itself is £50 million and there's no extra money available, at the moment, for that. Any extra money that we spend will—. Obviously, staffing is one issue. But we'll look to see how else the money can be used. But it wouldn't be right to say that it's a £70 million pot as far as the transition fund is concerned.

No, I'm grateful to you for the confirmation on that.

That's it. Thank you, Chair. Thank you.

Can I just highlight that it says 

'our "share" of the £3bn over two years'

is £20 million? That's what Mark Drakeford says. That's a small proportion of that £3 billion, in consideration of the challenges ahead of us. Has this been raised?

A significant proportion of the £3 billion went towards HM Revenue and Customs. So, there are significant sums that went to the Department for Environment, Food and Rural Affairs; we get consequentials from those. I think that's the large proportion. Other areas have had some, but, in some cases, there will be things that went on in non-comparable areas.

That answer sets out the position very clearly. Thank you for that. Anything else, Suzy?

I'll just double-check. Oh, just briefly, then, the European Commission has produced its own preparedness notes as well, which I'm guessing you've seen. Have they had any influence on the responses that you've given in your updates to the technical notes?

We are considering them at the moment.

So, we're aware of them. We have them. We're looking now to look at how we might respond to them.

Okay. And, when you do respond to them, how will we know? Will it be by statement or is it a bit early to say? I don't mind, as long as we get a response.

We can—. Well, that can be done in terms of the scrutiny of me in this committee, or my successor, or I can communicate it to the committee.

A written statement or something, or just a letter—

Yes. I mean, there is—. We'll find a way of doing it.

If we move on to the question of trade, which you've mentioned briefly this afternoon, we had a response from the Cabinet Secretary for Economy and Transport, dated 3 August, that clearly highlights, again, the lack of involvement of the Welsh Government in the trade policies and mandates and the different trade negotiations being engaged on and trade working groups as they were set by the Department for International Trade. How is this going to actually be changed so that we can ensure Wales's voice in these trade discussions, and the agendas for trade discussions, is heard so that when it comes to a situation where a new trade deal is negotiated, beyond Brexit, the issues relating to Wales will be in the frame?

At the moment, the UK Government sees this as a non-devolved issue and, I think, sees us as a Government to be informed of what's going on, rather than asked our views before negotiation takes place, which is—. I don't think it's sensible, because we can offer a perspective for the UK Government to consider. There was a time when we would go to Brussels, to the Council of Ministers, and all the administrations would be there, we'd all be able to have our input, and we'd all agree on a way forward. We weren't in the room. The way that the Council of Ministers worked was the UK Government Minister—well, the DEFRA Secretary of State—would be in the room. Sometimes you’d be in there as well—one of the devolved administrations would be in there as well—but, in the main, we'd be outside. The point was the DEFRA Secretary of State would come out and say, 'Look, this is where we are now. What do you think?' and we would then be able to give the DEFRA Secretary of State our viewpoint and then that would be taken back into the chamber. And that was a good system. There’s no reason why that system shouldn’t apply on this occasion, but so far we’ve seen—. I've made this point to UK Government Ministers. I've been around longer than most and remember the old system. There's no reason why that cannot apply in the future. But so far they've not bitten on that suggestion.

15:20

Well, one obvious strength to be able to support you is evidence of the Welsh trade figures and data. Have you been able to improve the Welsh trade data?

We're looking to get a better understanding of trade flows between Wales and the rest of the UK particularly in order to inform our thinking in the future. It is something we're considering taking forward as part of the EU transition fund, and we would expect to make an announcement soon with regard to that.

And linked into this, of course, is the Trade Bill, which is going through the Houses of Parliament. I think it passed through the House of Commons into the House of Lords at the end of the summer. There were elements of that Bill that raised concerns in this committee when we looked at a legislative consent motion for that Bill. Have you had discussions with the UK Government about the needed changes to that Bill as a consequence of the EU withdrawal Bill being changed?

Well, the UK Government has tabled amendments in response to concerns that we've raised, which, of course, we welcome. There is still an issue in relation to the trade remedies authority. The Bill contains provisions to establish that authority, but it comes back to the point as to how independent it would be. If it's an authority—the authority itself would have to be sufficiently independent of the UK Government for it to have any credibility at all. To my mind, such a body would have to be set up with the agreement of the Governments, plural. The Food Standards Agency is an example of that, where we—. Food standards are devolved, but the Food Standards Agency carries out the devolved function in Wales, and that's something that we're not planning to change. But if it's simply—. A body set up by the UK Government must put itself in a position where there can be no question of it receiving instructions from the UK Government in the event of a trade dispute between the UK Government and the Welsh Government, for example. So, that issue of independence is absolutely crucial to the credibility of such a body.

Well, obviously I’ve got some concerns about the trade remedies authority and ensuring that it works fast, because, for steel in my constituency, I want to make sure it can respond very quickly to world market issues. But I'll come back to that one at a future time. 

I want to go back to the 'no deal' scenario and perhaps the common frameworks. Something's vexing me a little bit in the sense of we are still having deep discussions about the common frameworks. The agreement that's been made between the Welsh Government and the UK Government in relation to the EU withdrawal Bill will allow this long period of time for the common frameworks to be in place before we take over the situation. If we have a 'no deal', what happens to those common frameworks? Where will we be on 30 March?

Well, sensibly I would assume that there would be agreement between the Governments to carry on with the current systems that exist. Otherwise, we have a free for all. We literally have a situation where, potentially, when it comes, for example, to agricultural subsidies, Governments could do whatever they wanted to and could even possibly provide revenue subsidies to make their produce cheaper than other markets. Clearly, we don't want that to happen. But I think it's right to say that, with a 'no deal', if there's no agreement to continue the current system until such time as there's agreement to change it, potentially you inflict damage on the internal market of the UK.

Have those discussions taken place with the UK Government? Has someone made them aware that this is a consequence that we need to resolve very quickly?

Well, no, because the UK Government will say, 'We're planning for a "no deal" Brexit, but that's not what we want, so it's not something that we need to be particularly concerned about'. But the easy answer is to say, 'Look, we'll carry on with the existing system for now, rather than having no system at all', which I suspect will be the default position.

Okay. I'm just worried that we seem to be moving towards a situation where things aren't in place for 30 March. That's the deep worry I have, and the UK Government seems to be slow in its uptake in discussions on getting certain things ready. From what you're saying this afternoon, there are still deep worries there.  

15:25

The problem is that, two years ago, at the time of the referendum, nobody said, 'Of course, one of the outcomes might be that we don't have a deal'. No-one said it. Everybody said, 'Oh well, there will be a deal on the table', whether it was done by the EU or magically by the German car manufacturers. Nobody actually said, 'Let's vote to leave the EU and let's consider a situation where there's no deal at all'. This is all new. It would be a failure to leave the EU with no deal at all. That's not what people were told would actually happen. And, as a result, the planning for it has been pretty late, because no-one really believed we'd be in this position, but we are.

The effects of a 'no deal' are catastrophic in many ways. For example, what happens to medicines regulation? What happens to our ability to buy the kind of radioactive substances we need, for example, in the NHS? Nobody really said, 'Well, actually, what we need to do is to leave the European Medicines Agency'. Why on earth would we want to do that? That was never an issue, surely, in the referendum. But all these things—. People say that it'll never happen. Well, my fear is that we are on the verge of it actually happening—a 'no deal' Brexit. I hope not, and it's encouraging what's been said over the course of the past week, but that just doesn't work. If we can't come to an agreement with our closest, biggest market, a market with which we already have almost total regulatory alignment, we've got no chance of doing it with anyone else. 

Just on this, we all know—. We've heard the phrase many times, 'Nothing's agreed until everything is agreed', but media reports over the last few days have suggested that somewhere between 80 per cent and 95 per cent of matters have now been agreed, and we know that the Prime Minister is off to Europe this week to further discussions regarding that. But, with the First Minister's consent, could I ask Mr Bisson whether the discussions he referred to earlier at JMC(EN) on frameworks have been focused only on a scenario where there's a deal, or is the principle that the frameworks—UK frameworks—would apply with or without?  

So, in that sense, frameworks are useful both in a 'no deal' situation and in a 'deal' situation, so we haven't been confining it. What further work will need to be done is to match some of the information coming out through technical notices into the world of frameworks to consider whether there are additional things specific to a 'no deal' situation that then need to be taken into account in the frameworks context. 

The other thing to remember, of course, is that one of the main reasons for having a framework is to ensure the integrity of the UK's own internal market. Now, that will apply whether there's a deal or no deal; we'll still need to secure that. 

But is it fair to say that a 'no deal' situation will not give us the backdrop of the transition period where we will be abiding by EU rules anyway?   

It would not give us the backdrop of keeping within the EU rules, if we don't have a deal. 

Well, the reality is, of course, that most exporters will have to anyway, because, if they want to export into the single market, they'll have to play by the rules of the single market in any event, except the UK won't have any control over those rules any more. But, yes, the worry—. It's the bureaucracy and the barriers that get erected that trouble me: the possibility—well, the likelihood—of queues, for example, in Dover, if there's no deal; the kinds of checks that might be required. But, as I've said before, I think it's right nothing is agreed until everything's agreed. I think that's a reasonable position to take. But, for me, nothing can be agreed unless Ireland is agreed. That's at the heart of everything. The open border between the UK and the EU has to be resolved before anything else can be resolved.

I've seen an example of a border between an entity outside the customs union and an entity inside the customs union, and that's the border between Gibraltar and Spain, and they're both in the EU, and that's an exceptionally hard border. How on earth it would work without any real controls with substantial divergence between the UK and the Republic of Ireland—. I just can't see it.    

Okay. Any further questions from Members? I see there are none. Then can I express our thanks to the First Minister for giving evidence this afternoon, and to your officials? Before you leave, perhaps it would be possible to have a written update to the committee on today's ministerial forum. 

15:30

And perhaps the future programme for the forum; it would be very helpful for us to know how that's moving forward. Thank you. You will receive a copy of the transcript to check for any factual inaccuracies; please let us know if there are any.

3. Papurau i’w nodi
3. Papers to note

Can I move on to item 3 on the agenda, which is papers to note? We have a large number of papers to note; in fact, we have 12. Are Members content to note them? But I'll go through each one in case someone wishes to raise a point on any of them. Are Members content to note them all? Okay. I'll just quickly note the papers. If you have an issue on that point, please raise it. Paper 1 is from the Llywydd regarding the Senedd initiative at Aberystwyth in December. Are Members interested in looking at a possibility of holding a session in Aberystwyth on 3 December?

What day of the week is 3 December? It's a Monday, is it?

Okay. So, that's something we can ask the clerks to look at the possibility of.

We need to think clearly, though, how this committee's presence in Aberystwyth could be made relevant to the people of Aberystwyth.

It will be obviously on a session that must have some form of relevance to Aberystwyth, whether it's higher education engagement or whether it's agricultural engagement. We'll look at it. The question is: are you content to look at it?

There's no point in just going there just to a tick box.

No, no, but the whole point is that we need to ensure—. I mean, this is a very dry subject, Brexit, whilst it's crucial. We've got to be thinking quite hard how we would make it relevant—

I'm sure people will realise that the consequences are not dry, but, okay, we'll ask the clerking team to have look at that.

Paper 2 is from the First Minister regarding equality and human rights—

I asked, Chair, earlier on and in a previous discussion, whether we could have a debate or a Chair's statement on this, because this is actually a follow-on from a previous response, and we had a very full response about the equality and human rights implications from both David Rees and John Griffiths—two committees had done work on it—and this was a sort of follow-up letter, wasn't it, clarifying points as a result of changes? I think it's a very important issue and we should have the opportunity to debate it, if possible, in the Senedd. 

I think that's right. I've got a lot of European citizens in my constituency, and if there is no agreement, then there will be no European withdrawal Bill and therefore that reiteration of the rights of EU citizens will simply—.

We are investigating the possibility of a debate being initiated by the two committees and we'll report back as soon as we have some clarification on that.

Paper 3 is a letter from Sir William Cash, chair of the European Scrutiny Committee, and Lord Boswell, chair of the EU Select Committee in the House of Lords, to Dominic Raab MP. It's for our notification.

Paper 4 is correspondence from David Lidington, Minister for the Cabinet Office, to Lord McFall.

Paper 5 is correspondence from Mark Drakeford to this committee, which has already been referred to, I think, by Suzy in questions.

Paper 6 is correspondence from Ken Skates to this committee on trade policy.

Paper 7 is correspondence from Mark Drakeford, Cabinet Secretary for Finance, regarding EU law in Wales, again responding to this committee.

Paper 8 is correspondence from Robin Walker, Parliamentary Under-Secretary of State for Exiting the EU, relating to EU law in Wales, again a reflection of the work of this committee.

Paper 9 is correspondence from the leader of the house to the Chair of the Constitutional and Legislative Affairs Committee.

Paper 10 is correspondence from David Lidington MP, Minister for the Cabinet Office, regarding the arrangements for the Ministerial Forum.

Paper 11 is correspondence from the First Minister on an update on our preparedness paper.

And paper 12 is correspondence from Robin Walker regarding the future relationship with the European Union. And he has agreed in that correspondence to come to a future meeting and we're in discussions with his office for that.

If there's nothing else to raise with those, we'll move on to the next item.

4. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o weddill y cyfarfod
4. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the remainder of the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).

Motion:

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.

Motion moved.

The next item is to resolve to meet in private under Standing Order 17.42 for the remainder of this meeting. Are Members content? Then we'll move into private session for the remainder of this meeting.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 15:34.

Motion agreed.

The public part of the meeting ended at 15:34.

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