National Assembly for Wales

Good afternoon. Can I welcome Members to this afternoon's joint meeting of the External Affairs and Additional Legislation Committee with the Constitutional and Legislative Affairs Committee? We will be looking, in our first session, jointly at the issues relating to the Trade Bill and trade policy.

Before we commence our meeting, can I remind Members that the meeting is bilingual? Headphones are available: simultaneous translation on channel 1, amplification available on channel 0. Can I please remind Members to actually not just turn your mobile phone off, but if you have a mobile phone, put it on aeroplane mode, please, because there is an issue with the Wi-Fi this afternoon? There is no scheduled fire alarm, so, if one does occur, please follow the direction of the ushers, because it's probably a real event.

We have received apologies this afternoon from Steffan Lewis, Jenny Rathbone and Suzy Davies.

Moving on to the next item in the agenda, and that's the session with the Cabinet Secretary for Economy and Transport on the Trade Bill and the trade policy. Can I welcome the Cabinet Secretary for Economy and Infrastructure, Ken Skates? Cabinet Secretary, will you introduce your officials for the record, please?

Thank you, Chair. I have Rachael Clancy, legal expert, and Emma Edworthy, trade expert.

Thank you for that. Obviously, we've got some serious concerns relating to the Trade Bill, the legislative consent motion that will be laid, and the trade policy paper that was published just over 10 days ago now. Perhaps I can start with a simple question. The UK Government had a consultation on the White Paper on the Trade Bill. It concluded on 6 November. The Bill itself was laid on 7 November. Do you, as a Government, think that, actually, that gave adequate time for reflection on the consultation, and therefore does the Bill really reflect the issues that stakeholders would have raised during that consultation period?

That's something of a loaded question, I think, but you're absolutely right. I believe that there were in excess of 8,000 responses to the consultation, so you'd have to work as superwoman and superman to carefully consider all of those responses, and then feed those responses into a document that takes full account of them. So, I don't believe that those responses to the consultation have been carefully considered.

And did the Welsh Government submit to that consultation?

We regularly submit our own—. As part of the consultation, we'll write to a Minister. We won't submit a consultation response in the same format as others; we would write direct to the Secretary of State or the leading Minister on a consultation, so we did that.

And we'll explore whether some of those views were taken into consideration now. Dai Lloyd.

Yes, I think the Bill is necessary first and foremost because we need to offer—UK Government, Welsh Government—business and indeed society as much stability as possible in the short term. But I think it's also required in order to equip us with the powers, should they be necessary, at the point of exit from the EU. Emma, anything to add?

No.

Well, I think there's been quite a bit of coverage regarding the amendments that we wish to see carefully considered and agreed to. First of all, I think the Bill as currently presented condescends. I also think that it introduces some incoherence and I'm not convinced that it deals with some critical proposals in an even-handed way. If I take that latter point first, in terms of the trade remedies authority, I don't think it's right that the Secretary of State should be the person with sole power and influence over the TRA. I think there is a role for Welsh Government and the other devolved administrations. In terms of incoherence, we now see, I think, a mismatch between the European Union (Withdrawal) Bill and the Trade Bill, and, in terms of it being somewhat condescending, I think it gives UK Ministers a free hand to make rules in devolved areas without the consent of devolved Ministers, whereas UK Ministers have wider powers than it gives to devolved Ministers to make those same rules in devolved areas.

Can I come in on that one?

If it's a quick, short one, because we have Michelle Brown next.

Yes, a quick, short one if you don't mind. The First Minister has criticised the UK Government for interfering in devolved matters previously. As trade is not devolved, wouldn't this be seen as a Welsh Government power grab?

No, it's not a power grab in my view at all. I think it's absolutely essential that the powers that are developed as part of the Trade Bill are done so in a way that reflects Welsh needs, and done so in a way that reflects the economy of our country. Now, I think that in some of the amendments you'll be able to see that we're not attempting to grab power. What we're attempting to do is to make sure that those powers are developed in a legitimate way for UK Ministers, but also to ensure that, at the point of exit, we have powers in the appropriate areas where there is policy impact on Wales.

Michelle Brown.

Thank you. Good afternoon. Have you consulted with Welsh stakeholders over the provisions of the Bill? Who were those stakeholders and what kind of response did you get back?

I think it's fair to say that the amendments that we've proposed and also our paper, our trade paper, have been widely welcomed by the business community. Our engagement is conducted through a number of means, principally through our sector teams, the council for economic development and the sub-group, the EU exit working group, which was formed before Christmas. That exit group, as the council for economic development, contains membership of bodies such as the Institute of Directors, the Confederation of British Industry, the Federation of Small Businesses, the chambers of commerce and many other representative bodies. Our statement or policy papers are developed in social partnership with them—and crucially, I think, it's fair to say that we also involve trade unions as well in that process.

I'm convinced that we have developed the trade paper in conjunction with business and with social partners, and I think also we've developed the amendments as well in partnership with those bodies and groups too.

Okay, thank you.

Can I ask you: you've just said the exit group was set up just before Christmas, article 50 was invoked in March 2017, so nine or 10 months before that—what took you so long to actually—?

Sorry, it wasn't just before Christmas. I said before Christmas, but it wasn't just before Christmas. 

If you could clarify the date—

I can get you the dates when we first met, but we were meeting in 2017.

And well before Christmas?

Yes, it was well before Christmas.

There are nine months of gap, you know—

Point taken. I can get you the dates of the meetings, but we were meeting well before Christmas, yes.

That would be helpful for us. Thank you.

Absolutely.

Jane.

Of course you laid your LCM on 7 December. When do you anticipate you will be ready to table an LCM debate on the Trade Bill?

In paragraph 16 of the memorandum, I think we make it pretty clear that whether or not consent is going to be given to the Bill will need to be considered in the context of how our amendments are received and dealt with. I don't think I can give a time for when the motion will be laid in the Assembly because it will be dependent on the outcome of the UK Government's further consideration of our amendments and then, potentially, action at Report Stage as well.

And those amendments—and obviously you laid those out on 18 January as well in your statement—. Have you been able to—or have officials or any other Ministers been able to—have any discussions about those amendments with the UK Government?

Yes, both before and after they were rejected. We shared the amendments with officials and with the Secretary of State in the Department for International Trade. Indeed, I wrote along with my counterpart in Scotland to the Secretary of State. Then, after the amendments were rejected, I followed that up on 4 February with further correspondence, reiterating and reinforcing the Government's position insofar as the amendments are concerned.

Thank you.

Okay, thank you Jane. Dawn.

Thank you, Chair. You made some reference earlier on in response to a question from Dai Lloyd about the EU withdrawal Bill and the analogy, really, with the trade Bill in terms of the paragraph stuff. We heard something over the weekend that seemed to be indicating that the UK Government might be about to change its position on clause 11 in the EU withdrawal Bill. So, (a) I just wondered whether you had any more information on that and, in particular, if that change goes ahead, what the direct impact might well be on the Trade Bill.

Sure. I'll ask Emma to take this point up, if I may.

Well, we know that there are already a couple of amendments that have been made on the withdrawal Bill that feed directly through to the Trade Bill, and, in the correspondence that the Minister has with DIT, we pointed that out to say that we would explicitly like to see that those things that have been agreed to already are replicated in the Trade Bill. So, Rachael's probably better to talk about clause 11 with the withdrawal Bill, but, yes, the things that have changed already—we are trying to seek and ensure that those are then replicated—

There's consistency.

Okay, that's fine. My main question, actually, to you is about whether you could explain why you feel it's appropriate that the consent only of Welsh Ministers be required for the use of concurrent powers as opposed to the whole Assembly.

It's a judgment call at the end of the day, this is. I think there's a strong argument for both, but, ultimately, the decision was made against a backdrop of a clock that is completely out of our control. Speed and time are in short supply, and I didn't feel it would be particularly helpful to introduce another procedure. Therefore, I made the decision that I did, but I do accept that, equally, there is a strong argument in favour of the whole Assembly having a role in this.

So, it wasn't a direct response to the fact that the UK Government was saying that only UK Ministers would be involved. It wasn't a direct response to that.

Not necessarily. Our thinking was informed by many factors including the need to move swiftly in this regard.

Can I just ask how sensitive some of the decisions might be that are made using concurrent powers—for instance, opening up NHS procurement to the private sector might be a consequence of a trade deal? Would that be something that could be driven through just by Ministers in the Assembly?

Well, this needs to be—. First of all, we need to get a stricter and tighter definition from the UK Government concerning trade agreements and trade deals. We'd be very concerned about any agreements that have an impact on healthcare or indeed many other areas of public services.

But it's possible that that is exactly what the concurrent powers would be used for.

It might help if I were to come in here. I might be able to assist the committee with this. The powers under the Trade Bill are there to implement international agreements; they're not there to allow those agreements to be entered into. Those agreements would be entered into under the royal prerogative, which the UK Government already has. So, the amendment that we're seeking in relation to consent is not consent to enter into those arrangements. It's to get the UK Government to seek our consent if they want to implement those agreements once they are made, or to put measures in place to allow those agreements to be adhered to once they are in force.

Now, the explanatory notes to the Trade Bill say, in relation to the Government procurement agreement, that that agreement will be subject to a parliamentary procedure under the Constitutional Reform and Governance Act 2010, and there's a procedure there too so that Parliament gets to vote on the terms of that agreement, and ultimately to authorise the UK Government to enter into it. It's for that reason, in fact, that they say that the negative procedure for the regulations under the Trade Bill is appropriate. There isn't a similar statement, in relation to the international agreements, that the power to implement is given in relation to. The thought there seems to be that the negative procedure would be appropriate for those implementing regulations because the UK Government—or the UK Parliament, I beg your pardon—will have had some role in relation to approving the terms of that agreement previously. But, of course, these international agreements will be entirely new agreements, and so there's a query there about whether Parliament should have an additional role in relation to them, and indeed whether the negative procedure is appropriate.

But, that aside, this Bill is just about implementing agreements that have already been reached. It's not about giving powers to enter into those agreements in the first place.

Could I—? I seek clarification. You talk about implementing agreements. To me, it's actually about putting the laws into place that allow agreements to continue, but not actually to implement them. Because it's up to the third party to decide whether they wish to implement an agreement.

Well, I suppose there's a level of semantics going on there. Perhaps we need a shared understanding indeed of—

It is important, because there's confusion that arises amongst people's minds as to what the actual Bill does and what the agreements are. It's important. Because my interpretation of this Bill is to put into UK law the circumstances that allow the agreement to continue if both parties agree that that is to be continued.

Well, the international agreement would be agreed and entered into force as a matter of international law regardless of the powers in the Trade Bill. The question is: are there commitments in those agreements or obligations under those agreements that, if they weren't implemented—? Or if changes to our domestic law weren't made, would we be in immediate breach of that agreement once it came into force? So, for example—and not specifically a trade example—if an agreement said, 'We agree to treat your students no differently than the students in our own country', then implementing regulations would be needed to change our law at the moment. Because, at the moment, here in Wales, we give grants to university students so that their fees are less than elsewhere in the UK. I know that there are changes afoot, but let's take that as the premise. So, implementing regulations would be needed to change that to afford the same equal treatment to nationals of, let's say, China or the USA, or whoever it is that we're entering into an agreement with. If those implementing regulations were not made, and the international agreement became binding, the UK would immediately be in breach of the agreement, and then whatever procedures there are under the agreement for sanctions, and all the rest of it, would engage. So, it's that kind of thing that the implementing agreements [correction: regulations] could do.

And therefore it is possible, with this Bill, that the UK Ministers could make that decision on Welsh areas of devolved competency, because you've just identified one area.

Well, at the moment, the current powers would allow them to do just that. At the moment, there are no restrictions at all on what the UK Government can use those powers for. It's not restricted to cases where the Welsh Government refuse to make implementing regulations. There are no restrictions on implementing their own policy in Wales just because they disagree with Welsh policy, and they're not limited to making regulations where they think that they are needed to comply with international obligations or obligations underneath the agreement itself. It is a blank cheque, I suppose, would be one way to characterise it.

Emma wants to—

Could I come in, just briefly? Just your point on the NHS: it's worth thinking about what these agreements are that are in place—these 40-odd agreements that the UK has and is trying to transition. They're mainly concerned with goods. It's much harder to do a free trade agreement that brings in services. So, a lot of these things that the UK is trying to transition don't have—

It's a huge thing to the Transatlantic Trade and Investment Partnership, though—

Yes, and it was. And that is—

It's hardly an arcane scenario.

And that's the new agreement. So, this Bill is just looking at those agreements the UK already has and is trying to transition. So, it, as far as I'm aware, doesn't give us powers to start adding in looking at the NHS stuff.

Just to clarify that point then, is it possible—? I appreciate what you're saying, that it's about the existing EU agreements—not the UK, but EU agreements—to be transferred over to the UK, effectively. Is it possible that this Bill allows Ministers of the United Kingdom Government to make changes it may wish to see in future now?

Well, I think what the UK Government is telling us and is saying is that they are trying to mimic those agreements as much as they can, but there will ultimately have to be some tweaks along the way, just because of legal systems, and Rachael will know more about that. But they are reassuring us, and as far as I know this Bill doesn't give them the powers to do radical changes to those agreements as is. But also, if you're looking at some of the things we're talking about here—NHS and services—it takes so long to get those things through. And, indeed, agriculture, which is a devolved area, is quite often not part of these agreements because it is so difficult. So, given that the UK Government is telling us that they want to transition this by the end of the transitional period now—so, say three years—they won't have the time, physically, either to renegotiate them.

Would it be helpful if we offered a more detailed note from our lawyers?

Yes, it would be, but I want some clarification, because the UK Government's intention, as you say, is to replicate those deals as far as possible, but the explanatory memorandum to the Bill actually says:

'It may also be necessary to substantively amend the text of the previous EU agreements'.

So, the UK Government is already stating that it may want to substantially change those agreements, so the Bill could allow them to do that.

As a matter of fact, that's correct, that they would be—these agreements that they are talking about implementing are new agreements, entirely new agreements. Although the Bill says that the implementing powers can only be used in relation to agreements with third countries who currently have agreements with the EU, it doesn't put any other restrictions on the nature of the agreements—well, they have to be free trade or mainly related to trade, but what can be contained in those agreements—. But it's very important to be clear that it's not the Bill that allows the UK Government to enter into those agreements; they already have the power to do that regardless of the Bill. The Bill is just there to give powers to make changes to our laws to ensure that the UK can comply with those agreements. One would imagine, or perhaps hope, that systems that the Cabinet Secretary has suggested be put in place to ensure that these agreements and other trade agreements are negotiated and that the Welsh Government has a role leading up to those—the conclusion of those agreements—would mean that there would never be a surprise at the end of all this where the UK Government would need to use those powers to do something that the Welsh Government refused to do, because that would have been ironed out in the process leading up to it. But that's not a legal issue; it's a—

Yes. I think probably what we're doing to some extent is rehearsing some of the arguments that are going to come with trade Bill 2, which in our view should be informed through far more collaborative working via the establishment of a council of Ministers for trade. I think it demonstrates again the need for UK Government, who have made recently positive sounds insofar as listening to the devolved administrations is concerned—. We now need to get that door, which is ajar, pushed right open and have a Joint Ministerial Committee and then a council of Ministers.

I appreciate that that's the Welsh Government position in this trade policy paper, but it's still not a confirmed position at this point. Mick, do you want to raise an issue?

Just by way of clarification, the EU has some 60 or so trade agreements; those trade agreements are with the Government of a particular country but also with the EU. Once we've left the EU or once we've fallen out of membership of the EU or whatever transitional period or whatever, those agreements are no longer binding. We are then no longer a party to that agreement. We have to create something completely new. We have no locus with them because we're not party to that agreement. We've left an organisation that made us a party to that agreement, which means that every single one of them is going to have to be renegotiated in some form, and it's not something that—. I raise it because the transition period—. It is not something that the EU can concede to us in negotiations. We are suddenly in a completely new environment of having to renew. Is that a correct understanding?

Yes, absolutely.

Okay. Mandy.

Yes. Can you set out whether the Welsh Government has discussed with the UK Government if it intends to proceed with the Bill should the Assembly refuse consent?

I'd be amazed if Parliament decided to depart from the Sewel convention. I think they need to think very carefully as to whether they would do that. I think it would be an astonishing course of action to take, personally. I very much doubt that they would do that, and therefore I am of the belief that our amendments, either by virtue of the Government accepting them or by virtue of the Report Stage delivering them, will be taken on board in this legislation. I can't imagine that UK Government will proceed with the vote if we don't table and pass an LCM.

But the question from Mandy was: have you had discussions with the UK Government as to the options that are on the table?

We are still pressing at the moment for the amendments to be accepted. That has to be our position, I believe. 

Based upon—

We cannot concede over amendments that we think are in our best interests.

Based upon the experience of the EU withdrawal Bill amendments—we're now in the Lords committee stage, and I appreciate there's work going on to discuss again possible amendments to clause 11, but the long, hard process up to this point, where we haven't had success on those amendments, although the ones mentioned earlier, I appreciate, have a knock-on effect, how do you see those amendments that have been accepted? Actually, are they really relevant to this Bill? Because most of this Bill is actually focused on clause 11, with linkages in, and we haven't had movement on clause 11. So, how do you see the amendments on the EU withdrawal Bill, which will come very late in the day, if they come, affecting this Bill? Because if we don't get the same amendments, as you say, consistency doesn't exist. Where do we stand?

Well, it's not for me to justify the UK Government's position as it is at the moment. We've argued that there must be consistency across the two pieces of legislation, and the amendments that we've proposed would deliver just that.

So, I'm assuming, from that answer, that, if the amendments in this Bill are not consistent with amendments in the EU withdrawal Bill, you would not be advising consent to the Bill through the LCM.

That would be our position. I don't think it's helpful, either, to have UK law that's inconsistent with other pieces of legislation from UK Government.

No, I totally agree with you, but it is important to understand the implications of the two sets of amendments, which are very similar but could actually take different paths if we're not careful.

Yes.

Okay. Thank you. We move on now to perhaps questions specifically on clause 1 of the Bill. David.

The bodies that have to be consulted on in terms of, say, agreements on Government procurement, that are listed for Wales, are fewer than the numbers listed for the UK in general. Is there a reason for that?

It predates devolution. I don't know what the reason is for it, but I think it goes back to about 1994, I believe.

Yes.FootnoteLink

Okay, but when an accountant tells me something's presented for historical reasons, it usually means there's no rational explanation to it. So, what's the policy benefit of doing it that way, compared to what happens in the rest of the UK?

Well, it's an international agreement, first of all, so it's not—

So, we're talking about the list of bodies in Wales that appear in the annexFootnoteLink to the Government procurement agreement. I think the fact is we don't know why the list is so short. It was inserted a long time ago. We're looking into that. In relation to what effect the Trade Bill could have on that list, the list could be changed. There's a procedure in the agreement itself for changing the list and changing the annexes, and there's a process of consultation and the like. So, the list will be changed as a matter of international law under procedures in the agreement. The implications for the Trade Bill are that if, for example, bodies were added to the list for Wales, like the museum or whatever, then the implementing powers could be used to require the museum, or other body, to advertise its procurement in accordance with whatever the requirements are.

So, we'd be wise to keep quiet. Is that the position? Or are you going to make law in this area fairly consistent in relation to what we said previously to the Chair in terms of discussions?

We had a short discussion along these lines earlier, actually, about—call it staying quiet; what's in our best interest. I think that might be a fair position to hold.

Okay. Well, it's a very pragmatic answer, and I don't think I want to probe further because we do have an interest.

The use of the negative procedure for regulations here under clause 1, why is that appropriate? Because procurement is fairly sensitive, for instance, and I would have perhaps thought affirmative would be where you'd start.

And I would agree. I'd agree.

Gosh. I'm starting to enjoy this session. In CLAC we don't always get such co-operation [Laughter.]

We've put forward a cross-party amendment.

I'm not knocking it; long may it continue. Well, anyway, I do think—

You're floored now, are you, David? He's been floored.

Sorry.

My final question was just to probe if you weren't forthcoming on that answer, so that's fine.

In a sense, if we go on to the negative agreement concept—you've mentioned the negative agreement a lot in some of your answers, or negative process—is that really appropriate, because when is Parliament, or this Assembly actually, going to have an opportunity to have a say on some of these decisions that could actually be very influential in Welsh public policy and the way in which businesses that are not public sector bodies actually operate? So, why is it negative? Why are we not pushing for a far more affirmative approach to specific issues that really do affect us?

Well, first of all, it's not our Bill, so it's not for us to explain why it's negative. I've already said that I think there are fundamental arguments—

But are you pushing for an affirmative approach?

Yes, but I think it's fair to say we need to focus our attention on those areas where we are most likely to get success, and the areas that we prioritise have been outlined in the amendments. That said, I've already stated that I think there are very strong and compelling arguments against the use of the negative procedure.

I appreciate that you're very focused upon the areas in which you think you can actually be successful, but, surely, it's also our job to highlight all areas of deficiency in this Bill, and, if there's a deficiency, we want to make sure that they're aware of that deficiency. Even though we may think we can't change it, we want to highlight that deficiency.

We've made UK Government aware of that. I think it's important this committee does as well, if that's the collective decision of the committee.

Parliament might change this, anyway, because of their sifting mechanism, and it is likely to pick this up and we would then replicate it.

Yes.

On clause 2, the words 'as appropriate' are often used. Having seen the EU withdrawal Bill, this committee actually suggested amendments that were far more focused on making it 'essential'—even stronger than 'necessary', which other amendments put in. But 'as appropriate' seems to be, I don't know, vague; it gives a bit more freedom and less tightness on the reasons as to why something is done. Have you got a view on whether 'as appropriate' should be changed to make it more strict?

It should be 'as necessary'. 'Appropriate' is too vague, I think. I would agree with you, Chair.

And, in a sense, you talk about international agreements. Again, in the Bill, it talks about free trade agreements and then international agreements, basically, of other types that may include trade and so on. Have you got a far more clear picture of the definition of those international agreements? Because it seems to us that it's, again, very woolly and could cover near enough anything.

Yes, I think that's fair to say. I said earlier that we need a tighter definition because it is too all-encompassing and too vague, too woolly.

Have you had discussions with the UK Government about that?

Discussions have taken place on that front as well. Again, I would hope that this will be dealt with by UK Government responding to our concerns. I know that concerns have been expressed by us. I'm pretty sure that those concerns were captured within the 8,000 responses to the consultation. I think it is important that proper definition is utilised—one that is far tighter and clearer.

Okay. On clause 2, obviously, as we've already highlighted this afternoon, it's about implementing the existing EU agreements. As I said to you, it all depends on both parties agreeing to that point. Have you had discussions with the UK Government as to what processes they will be following to try and get both parties to agree? Because we can all put the laws on one side, but if the other side don't like it and they want to change things and see something more to their advantage, they will look at the negotiation process. So, what discussions have you had with the UK Government as to the processes they will have put in place to ensure that we can get those transfers of agreement, and, if those transfers fail, what fall-backs exist?

I'll hand over to you, Rachael, on the discussions—

I think that's probably for Emma.

We have been in discussions with the UK Government. They tell us that the negotiations are in hand, but we've seen recently that a couple of countries have come out and said that they would like to make changes as part of those transitional agreements. So, I think, from our point of view, we've said in the trade policy paper how we would like to work with the UK Government to make sure that devolved voices are heard, and, for us, that's what we're really pushing for with the UK Government. But those negotiations are in train.

For us, it is important. I think it's about 7 per cent of our exports that go to those 40-odd countries, and about 15 per cent of our imports come from those 40-odd countries, so it's very key that we don't see that cliff edge. So, we're doing the best we can to work with the UK Government and ensure that we are working with them and getting Wales's voice heard.

I think it was Chile, one of the countries that—

Yes.

I'll come back to trade policy in a minute, because the trade policy mentions the involvement of the devolved nations in future trade agreements. But, on these trade agreements, have you had any consultation with the UK Government as to what involvement devolved nations will have in those discussions on these agreements?

Yes. For instance, if we're thinking of the Department for Environment, Food and Rural Affairs, they've given us a number of key countries that are the biggest that they're concerned about, so we are working with them to look through those agreements and find any red lines that might exist for Wales—where are our issues? So, very much so, we are working with the UK Government to make sure that we're pulling out all the key areas that are relevant for Wales and are not missed. 

So, you are at this point in time working with the UK Government to identify those sectors and those industries that these agreements may impact upon in Wales to ensure that any future agreements are to the benefit of Wales, not to the disadvantage of Wales.

Yes. We are doing our own analysis to support what the UK Government is doing.

Can I make a point here? It's really important, Chair, I think, to recognise the scale of the challenge that we face and the challenge, in particular, that the incredibly committed and dedicated group of officials are carrying out. This is the biggest change in our lives insofar as policy and insofar as politics are concerned in the UK, and, against that landscape, we're having to operate—

How big is the team?

Not big enough. That was going to be my point. In terms of capacity, we've not had the consequential from UK Government that we would wish for, and even UK Government is, I think, stretched. Some departments in particular are really struggling. And I'm not entirely convinced that we have the resource at UK Government level and at other levels as well to deal with the change that's going to come. And I don't say that to cause alarm; I'm just saying that we need to be realistic in terms of how we prioritise the work that we do.

So, reflecting again, Chair, on the points you made about how hard we are pushing, for example, on other points within the trade Bill, well, we're targeting our resources at those areas where we're most likely to achieve success, but where, also, they're of the greatest value to the economy here in Wales. I just wanted to put that health warning forward.

I can assure you that this committee has raised concerns about capacity for quite some time.

And I do appreciate it, yes.

Mick.

I'll just ask a few questions, then, about the trade remedies authority. I think Government's view is that this isn't an area that requires legislative consent. Is that an absolute position or is it one where there is an area of doubt and you've just decided to opt one way or the other? Or do you think that there might be an argument in terms of legislative consent?

The thought was that it was outside competence.

But, that said, broadcasting is non-devolved, but we get to appoint to the board of the BBC, so I think there is a role there for our—

I understand the point in terms of reserved powers and so on, although, of course, this will flow into all sorts of areas that are very specifically devolved, which, I suppose, is where the concern is. Is it the case that leaving the EU, and this Trade Bill, will effectively result in actually a loss of Welsh sovereignty, in the sense that, at the moment, for example, in areas of procurement and so on, we have direct representation, so we can deal directly, for example, with the European Union? We're not the member state, but we have certain sub-national engagement. Under this Trade Bill, as it stands at the moment, we don't have any of that.

Yes.

Have you given consideration, then, to the actual structure of the trade remedies authority, because within it there is no issue of representation of the devolved nations on that? So, any areas that come to it that raise areas—and there inevitably will be areas of conflict of interest—we actually have no voice within that, as it appears, at the moment.

That's a very serious concern that I have. I believe that UK Government Ministers have argued that there can't be vested interests on the TRA. I don't believe that somebody appointed to the TRA who recognises the challenges of the Welsh economy will necessarily be operating in a way akin to having vested interests. I think it's essential that the TRA has individuals who are knowledgeable about the whole of the UK economy, and that could require people, or should require people, who are appointed by Welsh Ministers. As I said earlier, that's the case with the BBC board. I don't see, necessarily, why this would be such a radical departure.

Obviously, this is partly about preparing us for World Trade Organization standards, and, of course, the issue of sovereignty has been very much featured in all the debates to do with the EU, but the reality is that the trade remedies authority is a body that will attempt to deal with resolution of disputes, but, ultimately, the disputes procedure is the WTO council itself. So, we are, effectively, now subjugating ourselves to a WTO organisation, whereas, previously, we were subjugated—if that's the correct word—to a European structure, but at least we had a voice within it.

I was at the WTO in Geneva in October, and we will be negotiating our own position, our entry into the WTO, but the fact of the matter at the moment is that there are 30 or so trade remedy agreements that concern steel, and they're of primary concern to Wales. That's more than a third, I think, of all of the agreements. So, it's absolutely essential that the TRA should be composed of people who appreciate and understand what the challenges of the Welsh economy are.

Can I ask how, constitutionally, then, it's going to fit in? I know, with many of these things, because there are so many unknowns within these whole processes at the moment—one of the topics, of course, has been the issue of the reform of the Joint Ministerial Committee itself and the creation of sub-bodies and so on that would deal with things like common areas for trade and so on, that that would be a constitutionally necessary area in order to ensure that Wales does have a voice and does have some constitutional status within this whole process. Have there been discussions around that or—

Absolutely. We've not had any detailed feedback yet to our recommendation for the establishment of a JMC moving into a council of Ministers for trade longer term, but I think it is going to be absolutely vital that that happens ahead of the Trade Bill mark 2, when we look at delivering free trade agreements that have to work for the whole of the UK. Now, I think we are going to have to address some of the weaknesses within the current structure that, I'm afraid, unless amended, the Trade Bill will exacerbate.

Of course, there'll be further legislation and regulation in respect of the cross-border legislation that makes this piece of legislation actually seem like a miniscule piece of legislation—the several hundred pages. Perhaps it's an unfair question, but have you had a chance to give any consideration to whether there are any consequences within that that we should be concerned about?

This has been my primary concern of late, but I know that officials across other departments have been looking very carefully at that piece of work. Perhaps Emma would be able to give you an outline of the considerations that have taken place to date.

We have been taking a look at that Bill, even though we don't believe it needs an LCM, but, certainly around the TRA, for instance, though, the economic interest test, the proposals around that and how that would work, for instance in the steel industry. So, we have definitely been in discussions with Whitehall officials about how that will work, because the EU structure of how this works at the moment does work under WTO rules, and the concerns are, especially from a steel perspective, whether those rules will be weakened when it comes back to a TRA just for the UK. So, we're definitely working with Whitehall colleagues on what it actually means and what the detail means.

Can I just ask one particular question? I'll bring David in then. Because obviously I'm parochial—steel is an interest in my constituency. Are we aware, once the TRA is established, and the customs Bill—well, it's a customs Bill, but it's the Taxation (Cross-border Trade) Bill; that's it's official title—which implements the operations of the TRA—? Are we aware as to whether the intention is to transfer existing EU trade mechanisms into the TRA or will they be established from scratch? In other words, will we be starting with a blank slate, or will there be some being transferred over? So, again, for example with steel, there are 30 mechanisms for steel already there. Do we know that?

What we do know is that there's been a call for evidence from the UK Government, and that has asked UK stakeholders to tell the UK Government which of these remedies right now that the EU has, the 90-odd, are of interest. If UK stakeholders don't tell them they're of interest, they will not be rolled over. So they could just disappear.

They could be, but it is important—. This came up at the last EU exit working group and we've been encouraging businesses and business organisations, representative organisations, to respond to that call from the UK Government. It is essential that businesses do so. I think the steel sector in particular has a very, very big concern in this area.

Mick raised sovereignty, which always makes me wobble a bit, and then essential Welsh interests. My understanding of the Welsh Government's position is that a trade Bill is required and it can be amended to protect Welsh interests sufficiently, and then at Stage 2 you will want to look at a JMC so that future trade agreements reflect Welsh interests in the way that JMCE used to operate and agree the negotiating note at Brussels. So, presumably this is all fixable as far as the Welsh Government is concerned. Otherwise you would not be working to get into a position to say, 'We can pass an LCM'. Is that not correct?

I think it's fair to say that, yes, because we've already said that a Bill is needed, I think it shows that it is fixable, and we've offered the solutions in the form of amendments.

But the crux of it is the engagement of the devolved nations within this—not having a voice, not having a say within that process, and being effectively bypassed.

At will, yes.

I think we're jumping ahead. I don't think any of us want us to be bypassed, effectively or otherwise. These things have worked in the previous regime and they should work in the future one.

Okay, let's move on, because I'm conscious of time and we've got a few questions left for the Cabinet Secretary. So, I'll move on to Mandy. I think it's more related now to perhaps the trade policy paper that was published.

Has the Welsh Government received any response to its call to the UK Government for evidence of the benefits of staying in the customs union versus the benefits of adopting a stand-alone UK trading policy?

Not yet, but we are still hopeful that we will get a positive response and we'll get the evidence that we've been told is out there.

Thank you.

What does 'hopeful' mean?

Okay, I'll rephrase it. The UK Government still needs to respond positively to the call.

Have you had any initial acknowledgement, at least, of the request? Any indicative timelines for response, or—?

I think the response could, with a bit a bit of determination, have been provided by now, but it hasn't—we just haven't had the evidence. I'd repeat my call for it.

Would you acknowledge—or is there a precedent for acknowledging—that, outside the EU but within the customs union, we would not be party to EU trade negotiations that would apply to us, other than in early consultation?

I think what would be best would be for the UK Government to respond to, at the moment, speculation and reports in the media by publishing information that we've called for. We've done just that. We've published the Cardiff Business School report. We've published data that we've been able to gather that's informed our trade paper. I think it would be really helpful if the UK Government could put to bed some of the starker and scarier warnings of what might happen in various scenarios by publishing evidence. I think many UK Government Ministers have said that life outside of the EU is all rosy and will lead us to the land of milk and honey. The fact of the matter is that many people believe, based on the reports so far, that the Welsh economy is going to fall or shrink by between 1.5 per cent and 9 per cent.    

Yes, but that's speculative. 

And that's why I've said that the UK Government should give us, as we've called for, the evidence of, if you like, all of the benefits and otherwise of staying in the customs union or leaving the customs union. 

It's in the Government's paper, surely. I went to read it on Friday and it does set out the various scenarios. They're fairly clear, are they not? 

There are 313 workstreams—is that right? 

Yes, there are 313 readiness workstreams that the UK Government hasn't shared with us. 

But the fundamental paper projecting what will happen under the various scenarios of, you know, world trade, free trade agreements, or remaining in the single market and some form of customs union, they have been set out, and—

Versus adopting a stand-alone UK trading policy? I don't think they have, not to us direct—

Before we go into discussions on this, if I am right, they are not being made public. These papers are not in the public domain—

I don't believe they're public. 

I think the ones that we've been contacted about by the UK Government—we're able to view them in a room if we have permission and seek appointments, and we can't take any record of them away with us other than make some notes.  

I've got my notes here. Perhaps the camera is focusing on them now and I should desperately cover them up, but it was just going over to Caspian Point, being sat down, offered a cup of coffee and reading the paper. I'm not quite sure it was hideously difficult.

Well, why not publish them? 

And that's the question. I think the question that's being asked here has been asked by the Presiding Officer. I think it is proper, therefore, that we leave that situation with her to position that. But just for the record, they are not public at this point in time.  

No. 

Okay. Mark. 

The transition period. What is the Welsh Government's position on a transition period, and have you discussed this with the UK Government?  

Yes. We've been consistent in calling for a transition period. The position of the UK Government, I'm pleased to say, has changed. I think probably it should have been recognised right at the outset immediately after the referendum result that a transition period would be desirable and, indeed, needed, but I don't think that we should put an arbitrary date on how long or when that transition period should end or a time limit on it. In the discussions that I've had with many, many businesses there are different views about the length of time that's required for a safe transition. Some businesses say two years, others three years. Many businesses have said up to five years. I think what's important is that we move forward with the transition period and that we take the time that's required in order to avoid a cliff edge, not just for one sector, but for the whole of the UK economy. 

Again, though, how do you respond to concerns or statements that whether we went for the two years to March 2021 that the UK Government proposed, or December 2020 to match the financial years that the EU has proposed, or a longer period, the proposition to a large extent is going to be determined by matters we don't yet know, such as would the UK still be required to make a financial contribution if we stayed beyond 2020, would we be prevented from negotiating trade agreements outside the EU whilst we were still within an extended transition period, and so on? Until we have those answers, it's a bit problematic.  

Yes, that's fair. Absolutely, yes. 

Mick, do you want to come in? 

And the fact of the matter is we don't actually yet have an agreed transition period, do we? 

No. 

Can I just ask something on the strategic point here? I can see why the Welsh Government, whether I agree with it or not, want to remain in the customs union, because you've already set the capacity of your own team to identify essential interests in terms of trading agreements that Wales would require. You know, it's a tough call. If we're not in the customs union, which seems to be the most likely scenario whatever form Brexit takes, will you then be taking measures so that, as future trade agreements get negotiated, there's capacity in the Welsh Government to be able to respond to the UK and however the UK trading position is agreed, with the necessary analysis and power of advocacy, so that we do see essential Welsh interests reflected in the UK's trading position?

Yes. We'll be seeking to do that. And I think it's equally fair to say that if we're outside of the single market, outside of the customs union, no amount of mitigation by Welsh Government would offset the damage that would be caused to the economy. I've had businesses come to me already. I can't, clearly, disclose—

The UK Government's paper does outline that, obviously, if we leave the customs union and the single market, we are going to suffer more friction and probably less trade with our most immediate market. They're quite clear about that. 

And especially in those sectors that are—

But we still have to make the best of where we are. 

I agree. So, yes, we will be seeking, and we already are. I think it's clear through the amendments that we are proposing that we are determined to make sure that Welsh interests are reflected in UK legislation, but overcoming a scenario that sees us outside the customs union and the single market would be incredibly difficult. It would be incredibly difficult to offset the damage caused to the economy in that circumstance. 

Dawn, do you want to come in?

I think you may have answered it, actually, Ken, but I was just going to ask you: Michel Barnier, just a couple of weeks ago, said that we can't assume a transition period; what's your understanding of the circumstance in which we either will or won't get an agreement on the transition period?

My understanding of the circumstances in which we will or will not are probably as good as yours, given various reports, the speculation and the position that's pretty publicly outlined by UK Government Ministers. I think it's absolutely essential that we do get clarity on transition arrangements, because the closer we get to March of next year, the more decisions are going to be put on hold, some more decisions are going to be cancelled, and the more that we will see investment decisions go elsewhere. And already I've been made aware by a number of businesses of decisions that are being made that will see investment go away from the UK. That's something that could be avoided if the transition period could be guaranteed. 

Can I ask—? Will you be having discussions with the Cabinet Secretary for Finance? Because, obviously, we think the next JMC(EN) is next week, and I would hope that this type of discussion will be taking place at that. So, will you be having discussions with him prior to his attendance?

Yes. And, actually, I attended his last European advisory group to discuss concerns such as these as part of the work that we've been doing on trade. 

Mick. 

Just a final point. You mentioned a few bits about the proposals around the joint ministerial council a bit earlier. There's one point I forgot to ask you about. In terms of Welsh Government thinking on that post-Brexit constitutional restructuring, have there been discussions around that with Scotland, and what is their thinking on it? To what extent is there commonality of thought around the post-Brexit constitutional reforms?

That's an important point. Discussions have taken place with the Scottish Government. They have broadly supported our position concerning the suggestion for a council of Ministers and, in the meantime, a constitutional JMC in order to deal with issues that are just as important to them as they are to us. 

Dawn.

Just very quickly, Ken, on that one, when we had the First Minister in giving evidence some months ago now, we flagged this up with him then, about the future of a council of Ministers if we were to get an agreement on that. Given that we will be outside of the EU in that scenario, have there been discussions and considerations made about whether that council of Ministers would also include, for instance, Ministers of the Channel Islands or the Isle of Man, so that it wouldn't just be the Ministers of Great Britain, if you like?

That would be for the First Minister, I think, to answer in full. A council of Ministers could include those representatives of the areas that you outline. But my concern would be, first and foremost, to have the four nations represented at a council of Ministers. 

Okay. Thank you. 

I'm going to take the privilege of the last question, Cabinet Secretary. Your document was very informative, based upon Cardiff Business School's paper. Cardiff Business School highlighted not just sectors, but, actually, businesses within sectors that would be greatly affected, and those in particular being what they call 'branches of globalised organisations', but obviously also the ones that would actually add value to Wales more than some that don't add value in Wales. As a Government now, what are you going to be doing to try and put yourself in a position to protect those businesses, and the supply chains that work with those businesses, to ensure that any impact on the economy is minimised?

Well, it's often about supporting, if you like, the roots. And, insofar as some of the businesses are concerned that I think we could all point to, and name, if you have the foundations of a strong and vibrant supply chain established, you're more likely then to retain the tier 1 companies that are so dependent on those supply chains.

So, as an example of this, we're already—and it was announced many months ago—proceeding with the Advanced Manufacturing Research Institute, to make sure that we drive the roots of the aerospace industry still deeper into Welsh soil, so that, in so doing, we retain the likes of Airbus and Raytheon, and other aerospace businesses in Wales. We're going to be doing that right across the sectors as well. There are some sectors where that's more easily achieved than others, but, if you can guarantee stability, if you can guarantee a pipeline of projects and a pipeline of opportunities, if you've got the right skilled workers to accommodate the jobs in that particular sector, then you stand in very good stead to capture more work. That said, if we face a cliff edge on 19 March, no matter how much preparatory work you do, that cliff edge will lead to a negative net impact.

I appreciate that and, obviously, we don't want the negative impact, we want to try and ensure that doesn't happen. My concern is: what plans are you putting into place, and when will we be able to get an indication of those plans, to ensure that those businesses, those organisations, those supply chains are protected to the best of their advantage? Because I totally agree with your view that, no, you can't militate against the worst excesses, but you can plan for it, and you can prepare for it, so you can talk about how you can help businesses that you have now identified as the ones most vulnerable to it.

And, largely, the economic action plan was framed by Brexit. The economic action plan looks at how and proposes how we can strengthen the supply chains, how we can boost the availability of people with the right skills, how we can ensure that, even in the toughest of times, we can deploy automatic stabilisers to protect against shock. The economic action plan provides, if you like, the strategy for coping with what could come. But, in addition to that, we're putting in place things such as the AMRI, M-SParc and other initiatives, the automotive tech park, and also the work of Business Wales, with the online diagnostic tool to enable businesses to be directed to the right degree of support. We are already preparing businesses for life beyond the EU. Still, I would again warn Members not to believe that, in the event of a 'no deal', this Government, or this Government working with UK Government, will be able to militate against all of the consequences of what could come.

I'm conscious of the time, and so I'll bring this session to an end. Thank you, Cabinet Secretary, and your officials, for this afternoon. You will have a copy of the transcript sent to you to check for any factual inaccuracies; please let us know if there are any, so we can get them corrected as soon as possible. So, once again, thank you for your attendance today.

Thank you.

I now recommend we break for 10 minutes and reconvene at 15:10. Are Members content? Thank you.