Cynulliad Cenedlaethol Cymru

Good afternoon. Can I welcome members of the public and Members to this afternoon's session of the External Affairs and Additional Legislation Committee, in which we'll be taking evidence from the First Minister in relation to issues relating to Brexit? Before we start, can I do our usual housekeeping business? Can I also welcome today—I think we're live, not just on Senedd.tv but on Twitter, so it's the first time we've done that. So, can I welcome all those who are watching us on Twitter? I haven't experienced it myself yet—I'll soon find out. Simon is watching us on Twitter.

So, first of all some housekeeping. If you've got phones, please make sure they're either switched off, or on silent, so they don't interfere with broadcasting equipment, as you would do with other electronic equipment. If you require simultaneous translation from Welsh to English, that's available via the headphones, on channel 1; amplification is available on channel 0. There is no scheduled fire alarm this afternoon, so if one takes place, please follow the directions of the ushers, to leave safely. We have received apologies from Steffan Lewis, Jack Sargeant and Michelle Brown, and we welcome Simon Thomas, who's substituting for Steffan Lewis, and Joyce Watson, who'll be attending, but she's running a bit late, as the replacement for Jack Sargeant.

We'll go to the next item on the agenda, which is the item with the First Minister. First Minister, can I welcome you to this afternoon's session? For the record, would you like to introduce the officials with you, please?

Yes. Hugh.

Hugh Rawlings, director of constitutional affairs and inter-governmental relations.

Piers Bisson, director European transition.

Thank you. We have some areas relating to the progress on Brexit negotiations, the actions of the Welsh Government, the involvement of the Welsh Government, and, perhaps, the vision of the Welsh Government. And we'll also, obviously, be relating to the European Union (Withdrawal) Bill. But we do recognise that there is a debate tomorrow on the legislative consent motion, but there's an opportunity for us to ask some questions today, perhaps.

So, if I start off by looking at the Joint Ministerial Committee, and the role of the JMC, clearly there has been some concern in the past about how it operated. The Cabinet Secretary for Finance has indicated that it is now operating in a better manner, but there are still concerns as to whether it is fit for purpose in the longer term, as was identified by a statement from the inter-parliamentary forum in March. But I understand there was a paper put forward in the last JMC European negotiations meeting, discussing the position and negotiating responsibilities, and the role Welsh Government would have within that. Can you confirm whether any agreement has been reached on the role of the Welsh Government in the negotiations for phase 2 in particular, and if so, what are those issues, and how will it work?

Well, Members will be aware that, on 2 May, we saw the UK Government produce a paper on the role of devolved administrations in developing the UK negotiating position. It was noted at the JMC(EN) that that was the case, rather than formally agreed. Now, what needs to be done, of course, is that these discussions should take place on the basis of the administrations being equals, and nobody being a supplicant. Formal agreement hasn't been reached yet, in terms of how this will proceed. We do think it's important, however, that arrangements are in place before the next European Council on 28 to 29 June. So, there has been some progress, particularly in terms of looking at how the JMC could be expanded, in order to give the devolved administrations a greater role, but there's no formal agreement as yet, but hopefully by next month.

So, no formal agreement is there, therefore there is no, technically, formal position for the Welsh Government in any negotiations for phase 2? As you rightly pointed out, the next Council is June, which is next month. It seems that we won't have an opportunity to have any input into that, formally, before the June Council meeting.

Well, we have a way of having an input. What we need is a structure in the future that allows that input to be more co-ordinated, and that's what I hope to see agreed before the end of next month.

But what will our position be, because I understand there are two or three sessions of negotiations ongoing on phase 2? So, how are we going to influence anything in those two or three sessions before June, when it's recognised that there are some important decisions being made in June?

Yes, I mean, one of the issues that was discussed at the last JMC(EN) was how that structure could be altered in order to make it more effective. There's been no official announcement yet on that, but that will come in the next few days, I trust. Just so that Members are aware, there is a senior officials group that already exists in the form of JMC(EN)(O). That is there to support the work that Ministers do. It's also possible for us to look to influence the UK's position when it comes to our position on issues—well, I've been vocal myself on issues such as Ireland, on issues such as trade—and we've produced White Papers, of course, already that put very clearly the Welsh Government's view on how these issues should be taken forward.

So, we expect to see, perhaps, something in the next few days that we can actually scrutinise and look at as to what the proposal is, or is that simply going to the Government?

There's no reason why that can't be made public and for the Assembly to know.

Okay. That's clearly an important role for us, to ensure that our voice is heard for the nation as much as possible, and we've been deeply concerned up until now on the JMC(EN). You linked it then into trade, in one sense—can you also identify: is there going to be a similar process for involvement with trade negotiations?

Well, formal discussions can't begin, of course, until the UK actually leaves the EU. I have to say, though, so far, we've not been invited to take part in working groups that have been set up. One example I can give is the Australia-UK trade working group. That is something that we regret. We've not been consulted on that body's work, nor has the output from that group been shared with us. We have pushed the UK Government to be more transparent and open in its talks with other countries. Of course, it's an area that isn't devolved, but nevertheless it's an area where we have a very strong need to have an input in particular, for example on the issue—just to give you one example—of free trade agreements with Australia and New Zealand and the effect that might have on Welsh agriculture. 

You said you regret not being involved. Does that cause concern for you that, in fact, these negotiations may well be starting and may well be under way and you still haven't had an input, not just on Australia, but other negotiations?

Yes, I do. I think it's sensible for the UK Government to involve the devolved administrations, otherwise we'd be very vocal in opposing what we think is any deal in the future that would be bad for Wales. We'll continue to press the Department for International Trade Ministers about the role of Welsh Government in the future, and I've made the point myself in JMC where I have said it is better for the UK Government to have representatives, Ministers from the Scottish and Welsh Governments, present at negotiations in order for us to advise, in order for us to give a Welsh viewpoint on any issues as they arise. That's a point we'll continue to make to them.

Suzy.

Thank you. Can I just take you back to the structure of the JMC(EN) for a minute? We heard from Chloe Smith recently in evidence here—she confirmed what you were saying that progress was being made towards a better structure. Can you tell us what you saw in the UK Government paper that gives you reassurance that there will be parity of the four nations and that the UK Government is able to wear the two hats of representing England and representing the UK in a way that's satisfactory?

I think we're a long way from that. The JMC is not fit for purpose for the future, in my view. I've said many, many times there needs to be a new body that looks more similar to the Council of Ministers in Europe. It has to be a body that is truly a body of equals and where there is a—we've even suggested a weighted voting system that takes into account England's size, so that decisions can be taken there. The problem with the JMC is that it was set up originally as a kind of sounding board, many years ago, by the UK Government. It's had to move beyond that, and Brexit has sharpened the need to move beyond that.

What does that mean? Well, let's say, for example, there are issues that arise that need the agreement of the different administrations, then a new body, a new place, a new structure, a new council would be the place for those discussions to take place. For example, where there are disputes at the moment between a devolved administration and the UK Government, not only is the dispute resolved by the UK Government but the UK Government also is able to stop a dispute being taken forward because it doesn't agree there is a dispute. So, for example, we raised the issue of the £1 billion payment to Northern Ireland. We wished to raise that as a dispute, as a payment outside of the Barnett formula, and we were told, 'There is no dispute.' Clearly, there needs to be a body that's far more objective and a body that doesn't lead to a situation where, if there are disagreements, they are simply resolved by one party, even though that party might be on the opposite side of the disagreement. 

Was there anything in the UK Government paper that gave you heart? 

There's some progress, but this is work that is going to have to be taken forward in the future. There are two issues for me, first of all. I think we need to have a council of Ministers, which I've said many, many times. There's also going to be a need in the future to deal with the situation that we have at the moment, which is that the UK Parliament will not normally—words that have caused so much controversy, recently—legislate in areas that are devolved without the consent of devolved legislatures. Now, that's what the current devolution settlement says, and it's the same for Scotland, and the words are replicated in the agreement that we have.

Now, I'm not convinced that that is the way things should be in the future. We do need to look at a situation where we have a structure in the UK that moves away—I've said it's radical, but I've said it before—from the idea of parliamentary sovereignty, that there is only one centre of democratic accountability that overrules all the others. That's not an argument I think we should confuse with what needs to be done with Brexit, but it's something that will need to be taken forward in the future. 

What I'm hearing from you is that it's unlikely that there will be some solid agreement before the European Council meeting in June, and, so, I wanted to ask you—. One of the things that is a matter of concern to all of us in Wales, I think, is this potential tax exemption for small businesses on the Northern Ireland border, which potentially disadvantages business in Wales, of course. If there isn't a formal structure in place by, well, the end of June, then, we are going to need some reassurance, I think, that you're able to take a strong argument against having different positions in Wales and Northern Ireland through to the negotiating table. Are you confident that you'll be able to do that? 

We've not been notified formally or officially of any such proposals, but they are out there. I would strongly disagree with those proposals if they were put forward. We can't have one part of the UK that has particular advantages compared to other nations of the UK. As I've said before, we are the most vulnerable in Wales when it comes to losing trade with the Republic. Seventy per cent of trade between GB and Ireland goes through the Welsh ports. If there were to be a more favourable arrangement for Northern Ireland that made it easier to move goods over the land border, we will lose out. I fail to see why there should be an advantage for businesses in Northern Ireland compared with businesses in Wales who use the ferry ports and who export cargo and goods through the ferry ports. 

I suppose my question is: will you be able to head this off at the pass in these next three or four meetings before the European Council meeting? 

I don't have the power to stop it, but I can certainly put my view forward very, very clearly. 

You will raise it.

I'll raise it, and I've said it many, many times. My concern about the debate in Ireland has been that it's been looked at almost exclusively through the lens of the difficulties surrounding the land border when, in fact, the maritime border between Wales and Ireland is hugely important to us, and that's a point I've made to the Prime Minister. 

Yes. Okay, thank you. 

Particularly on that point, do you believe—just to follow on from Suzy—that the June meeting will actually come to a final position on the Ireland-Northern Ireland border? 

A sustainable position, I can't see it, because I cannot see any other arrangement that works if the UK is not in a customs union. I think there are two issues here: firstly, the movement of people. That's easier, because Ireland is outside of Schengen. But, in terms of goods, I just cannot see how it works when you have one entity inside the customs union and one entity out with a completely open border. I've seen an example, as I've said before, of a border like the one between Gibraltar and Spain, where Gibraltar and Spain are both within the EU, but Gibraltar's outside the customs union and Spain's inside, and it's a very hard border indeed. So, there, it is an international border that has to be crossed and there are checks on it.

I just can't see how it works if there are no checks on the border between Northern Ireland and the Republic of Ireland and no checks on goods travelling from Northern Ireland to Great Britain, which itself raises a number of political questions that are difficult to resolve. Bluntly, I don't think that the UK have the answer to this. I just cannot see how the UK being outside the customs union can possibly work with an open border on the island of Ireland. 

Simon. 

We've got questions on that coming up afterwards, so we could go back to that.

Jane.

I'm just going back to issues about influence on trade, and, obviously, the Welsh Government launched its trade policy paper earlier this year. I wonder if you've had any formal response from the UK Government. And also, part of that policy positioning was to say that there should be a joint ministerial committee on international trade. It would be helpful to hear whether the UK Government is responding to those calls from the Welsh Government.

Well, I've had a formal response from the Prime Minister; I can't say it was a detailed formal response. From our perspective, it's important that we also seek to strengthen and prioritise links that we have with sub-sovereign states and governments—a bit of a mouthful, but it's the best example that I can give—around Europe, because we'll need to maintain those trading links as well in the future. In terms of where the UK Government goes next, as I said, it's vitally important for them to be able to keep us on board and Scotland on board. I suspect the last thing they would want is to look to announce a free trade agreement in the teeth of opposition from the devolved administrations. That clearly is going to cause difficulties for them, particularly in Parliament.

Obviously, there are some levers there that we can exercise. In terms of EU external trade deals at the moment, are there any that the Welsh Government is particularly interested in that are important to the Welsh economy?

The trade deal that is most important to the Welsh economy is the one we have with Europe. It is our biggest, closest market. The geography will always determine that. If we cannot get the right trading arrangements with the single market, there is no hope for the UK to do it with any other market. Why do I say that? Because we already have significant regulatory alignment with the European single market. I've spoken to those who have been part of free trade negotiations in other countries and they tell me it takes about six or seven years. It takes 18 months, more or less, to work out what you're going to talk about. The list of World Trade Organization tariffs is large. It is as detailed as having tariffs on hats and umbrellas, and these things take a huge amount of time to work through. The idea that the UK can somehow negotiate free trade agreements within weeks is fanciful—impossible, actually. And, for me, the emphasis has always been on, 'Let's get the relationship with Europe right first'. That's our major market. It's across the water as far as we are concerned. That is where the focus should be. It is very much a long-term aim to look at free trade agreements with other countries, because it does take many years to negotiate these things.

Presumably, in the absence of a JMC on international trade, we're dependent, at the moment, on whether the JMC(EN) and possibly a new structure can provide that vehicle for us to have a voice or an influence. But, obviously, international trade and those trade deals do require us to engage more formally with the Department for International Trade.

It does, and there's an interesting question here. What takes precedence: what is agreed as part of a free trade agreement or domestic legislation? Let's say, for example, the UK agreed a free trade agreement with another country but a part of that agreement would infringe on, say, environmental legislation that the Assembly had passed. What takes precedence? So, these things have to be resolved. Other countries don't have this difficulty in the same way—their constitutional structure is quite different—but that's an example of something that would have to be resolved before a free trade agreement can actually be agreed.

You also mentioned the importance of us developing our relationships, which already exist at a sub-national level, regional, basis. We've talked to the Cabinet Secretary for Finance about that. I mean, this going to be a matter of priority, in terms of Welsh Government capacity as well, and where the priority is for the Welsh Government in terms of those relationships that we need to maintain and develop.

We don't have an exhaustive list, but we have been very active over the past year or so, particularly in rolling out more international offices. Back in 2011, the structure wasn't right, I felt. North America has expanded since that time. We've seen the fruits of that. Montreal opened back in March. We're opening offices, of course, as well in Paris, in Düsseldorf and in Berlin. That gives us the opportunity to work with national Governments—state Governments—but it also gives us the opportunity to work with regional Governments across Europe as well. We already have strong links, for example, with Quebec, with Flanders, with Brittany and with Catalonia, and we want to be able to roll out those links in the future.

The Committee of the Regions, if I remember rightly, has passed a resolution emphasising the importance of involving sub-sovereign state Governments—they call it 'regional'; I'm not quite comfortable with that designation—in the future in order for arrangements post Brexit to work.

Well, I think we'd be interested in the priorities and those arrangements and relationships.

Can I clarify, First Minister—? You said that you were focusing on the EU, which I understand, because over 60 per cent of our exports go to the EU, but, clearly, trade agreements with other nations could have an impact upon the Welsh economy. For example, it has a relationship with New Zealand, the EU, and we know that there are quotas involved in that. Therefore, the way in which the UK replaces that relationship is going to be critical to Wales. So, have you done any analysis of the existing relationships that the EU has with other nations, as to which ones, actually, you would want to be involved in as the UK looks to replace those?

The UK Government is proposing that the third-country agreements with the EU should apply to the UK in the same way during the transition period, so we know that's the case until the end of 2020. Beyond that, it's unclear.

In terms of what approach I would take to free trade agreements, Australia and New Zealand are the two that appear to be, in the mind of the UK Government, most advanced. There are two issues that concern me in terms of those countries. First of all, what effect will it have on Welsh agriculture? I think there's more of a threat from Australia than New Zealand, because New Zealand lamb operates in a different market. Only 5 per cent of our lamb goes to the UK market—the rest of it is pretty much exported. We export into a different market. We don't compete with New Zealand—we couldn't do; their costs will always be lower than ours—and we compete in markets where we produce a premium product.

So, it's possible, arguably, that some might argue that the threat to Welsh agriculture wouldn't be as large as is believed—that's a question we don't know the answer to at the moment. But the second issue that troubles me is the suggestion that, somehow, countries like Australia and New Zealand could replace the European single market. They're tiny—New Zealand's not even 5 million people. Of course, New Zealand would be delighted to have free access to the UK market—it's a market of 60 million—but it doesn't work in the other direction.

The second concern I have more generally about free trade agreements is that if you conduct and agree a free trade agreement with the wrong market or country, particularly with a country where wage costs are far lower than in your own, you invite jobs to move—you invite jobs to disappear to other countries without gaining enough in return in order to provide jobs to replace those jobs that are lost. Free trade agreements, to me, work best when they're conducted between markets or countries of a similar level of income, because in those circumstances there's no threat to jobs being lost to the cheaper economy, if I can put it that way.

We saw it at the beginning of the last decade—there were some companies that left Wales to go to eastern Europe because costs were lower. A lot of them came back—you know, people's incomes have risen now in eastern Europe. So, we saw the effect then—the danger is that, if these things are not conducted properly, we'll see that effect magnified with other countries, where it'll simply become easier to shift jobs to those countries and out of Wales.

I fully agree with that, and I fully understand that the trade agreements are a two-way issue and it's not just about exports, it's about the imports. That's why I was wondering as to whether you've done any analysis as to which of those countries may be a threat or an opportunity to the UK as a consequence of that. I just wondered whether that analysis has been done—yes or no. 

Well, Cardiff Business School, of course, have undertaken an analysis of the EU's existing free trade agreements. We know from that that identifiable Welsh goods exports to countries with EU agreements accounted for some 7.1 per cent of exports and some 15 per cent of imports. Now, on that basis, it's quite clear—and we know these figures already—that Europe is by far the biggest market for us. Nothing will replace the European single market as a market for most of our goods, certainly not in the short to medium term, which is why—. Yes, there are opportunities there to look at other markets around the world. The US is cited as an example. Bluntly, I can't see the US being interested in a free trade agreement that is objective, at the moment. We see what the US President says; he is elected on the basis of 'America first'. I can't see how he could concede on issues of trade, given what he was elected to do. But we can't get away from—. Whilst there are opportunities there, potentially, in other countries—Qatar, as an example, given the flights that have started from Cardiff—we cannot lose sight of the fact that, if we don't secure full, unfettered access to the European single market, nothing else will replace it.

Okay, well part of that securing will be, obviously, regulatory alignment. Jenny, do you want to lead on that?

Yes. There's been a lot of concern expressed in the last two or three days that the UK Government is proposing an environment agency for the UK that is only advisory, and that it won't have any teeth, were Government not to comply by the rules that we currently have. So, I wondered what assurances you've received from the UK Government that any decisions on regulatory alignment or divergence after Brexit will only be taken with the consent of the Assembly.

Well, of course, many of these issues are already devolved, so the UK Government won't have a role anyway. For example, if the Assembly wished in future to adopt new EU directives, it could. There's nothing to stop us doing that. It would be entirely a matter for the Assembly as to what to do with environmental regulation, for example. Nor could there be an environmental body that covered the whole of the UK. It's entirely devolved. It's entirely a matter for us to decide what kind of environmental body we have.

Okay. Except that for this two-year period, it is proposed, under what was clause 11 and now clause 15, that there would be a holding-off period of two years to enable the UK Government to put in place regulations that had UK-wide implications.

I'm not quite sure that I understand the point being made. What the withdrawal Bill will do will be to return all EU powers to the Assembly, save for those matters in respect of which temporary restrictions will be imposed by regulations under what is now clause 15.

Well, the quality of the air or clean beaches are—

It depends what's in the regulations. What will be in the regulations will be determined by where it is agreed that common frameworks are required.

Indeed, but, on day 1, almost, of this new arrangement, we seem to have the UK Government actively flying a kite to say we won't have the sort of robust environmental framework that we currently enjoy in Europe.

I think that—. Well, the work that appears to have been done on the environment protection agency was clearly well in train before we reached an agreement on what is now clause 15. What one would be looking for is a much greater degree of co-production of work on this, in the light of the agreement that we've reached.

Indeed, but an environmental protection agency that doesn't have powers to take Governments to court if they are not compliant is merely advisory, and there are plenty of organisations out there who are happy to advise.

But Natural Resources Wales would still be there; that wouldn't change.

Okay. Well, so long as the UK doesn't set a framework across these 24 areas—

It can't. It can't without our consent. So, the current situation would remain. NRW would remain; its powers would remain as an arm's-length body. What the UK Government does is a matter for it. How we can have a UK-wide—. And it's not clear whether they've said that or not. How we can have a UK-wide environmental body—it can't take any decisions, clearly, but it would operate in areas that are devolved and will always be devolved. So, there's no question of NRW losing its powers or Government not being able to operate in the same way. And, as I say, in the future, there's nothing to stop us adopting environmental regulations that come from the Commission in any event.

Okay. So, as far as you're concerned, there will be no attempt to water down the environmental protections that we currently enjoy through our membership in Europe.

That will be a matter for us. It would be entirely a matter for the Welsh Government and the National Assembly to decide what it wished to do, particularly whether it wished to adopt any new environmental regulations coming from Europe. There's nothing to stop us doing that.

Okay. But I think—. I'm still concerned that, given that we've now agreed to withdraw the Law Derived from the European Union (Wales) Bill—otherwise known as the continuity Bill—following the arrangements that have been put in place following negotiations by the Cabinet Secretary for Finance—. Could you just outline the mechanisms that Welsh Ministers will have to ensure that Wales maintains alignment with EU regulations post Brexit?

Those powers are devolved: if we wish to do it, we can continue to do it. In terms of whether there would be any changes, legislative changes, the UK Government's already said they will not introduce any legislative changes without consent, which is why there's such a pressure on all Governments to agree frameworks as quickly as possible so those powers that are frozen now for all of us—not just ourselves and the Scots, which was the case before—can be taken out of the freezer, larder—whichever way you want to describe it—as quickly as possible and we then are in a position where we can legislate, subject to those frameworks. But there's no question of us losing control of the environment or losing the powers that we currently have. We'll always have NRW and we'll be able to, to my mind, set environmental regulations as we would want within a UK framework that we would agree, but also, of course, there's nothing to stop us, is there, to my mind, from adopting whatever regulations we wish to in the future.

Okay. So, as far as you're concerned, the UK Government is just as bound by putting all the regulations in the freezer until such time as we—

Yes, that's the agreement.

Okay.

That was the point I was making: the difference now is, whereas powers were frozen for Scotland and Wales as it is at the moment under the previous clause 11, the powers are now frozen for everybody, and so everybody—. It's in everyone's interest to unfreeze those powers as quickly as possible.

Okay, so the anxieties being expressed by environmental agencies are misplaced at this time.

I don't think they've got anything to fear.

Okay. Thank you very much. Just moving on—

Can I bring Simon Thomas in, because he wanted to just ask on this point?

I'm not quite so sanguine with the responses there. If you look at the areas taken, of the 24 areas that we know are definitely going to be subject to UK frameworks, there's a wide range of environmental areas there: environmental quality, chemicals, ozone, pesticides, food compositional standards as well, hazardous substance planning. There's no doubt that Michael Gove is proposing a UK-wide body, and that was no doubt in our minds when the environment committee went to London two weeks ago and met with Michael Gove and other committees there. So, although you say that we have nothing to fear from the fact that a UK framework is proposed in these areas, you did just earlier tell this committee that, in fact, a bad trade deal could impinge on Welsh environmental standards, which shows the danger that is lurking out there. These powers are put in the freezer and are unlocked at the same time, but, not to argue too much about the things that we'll be arguing about even more tomorrow, 'not used normally' is the wording in the agreement. If there is a UK-wide body that's looking at these areas and decides it wants a particular approach following the transition period—to have a different approach in the UK—what safeguards are there to say that we can actually not only hold our EU standards, but, in fact, improve, potentially, as you've suggested, on those EU standards? And wouldn't it be better, in fact, that the UK body that's being proposed by Michael Gove is one that is co-owned and co-financed by all the constituent nations of the United Kingdom?

I don't think there should be a UK-wide body. I see no reason why there should be a UK-wide body when we already have NRW, the Environmental Agency, the Scottish Environment Protection Agency, and Northern Ireland, who do it in-house. It sounds to me like a quango that's been set up, but it's obviously a quango with no powers—no powers, and there's no reason why we would want to buy into it. Yes, there are some areas, and the Food Standards Agency is an example—. We effectively buy in to the Food Standards Agency and we use the expertise that they have. If we wanted to, we could set up our own, but we chose not to do that.

Coming back to the point I made earlier, nobody can change anything until such time as the powers are out of the freezer. Now, it's in our interest for there to be UK frameworks for the environment, because obviously if we end up in a situation where England has far lower standards than Wales it's bound to affect us, because we share river courses with England and share river boundaries with England. So, clearly, we need to make sure that England is in the same place as we are in terms of environmental regulation, so it's actually in our interest to have that framework agreed and in place before, for example with some environmental issues, those powers are taken out of the freezer to stop—to save England from itself.

Okay. Sorry, Jenny. 

That's okay. I wanted to move on to our relationship with European agencies and those that we'll be able to be members of if we were to leave the single market. Robin Walker, when he came to see us two weeks ago, mentioned the European Medicines Agency, the European Chemicals Agency, the European Aviation Safety Agency and Euratom as ones that the UK Government was interested in. Which would be your top list of agencies you hope we could still be members of? Or how, if we can't be members, are we going to move forward on something as important as the European Medicines Agency, which determines what new medicines are made available to the people of Wales?

We should still be members. I see no reason why, having taken the decision to leave the EU, we have to leave everything with the word 'European' in it. I never understood the reason to leave Euratom and why we'd want to leave Europe-wide agencies that provide protection for people across Europe for no particular gain as far as the UK is concerned. It makes no sense to me. So, I think it's hugely important that we remain within those European agencies that are already there. They're there for a reason; we're members for a reason.

If the UK Government decided to pull out of those agencies—. Well, if you look at medicines, medicines aren't devolved; aviation safety isn't devolved; chemicals, partially, might be devolved, which then creates problems within the UK itself. So, for me, I can't see any reason why we wouldn't want to adopt common standards with our European partners even as we are outside of the EU.

But will we be empowered to do that? When we went to Brussels recently and saw the Bulgarian delegate, as Bulgaria are holding the presidency at the moment, they pointed out to us that these agencies are mainly to pull together the strengths of the single market, and if you're out of the single market then you won't be allowed to be a full member.

I think there can be some flexibility around that. I think what the UK Government needs to indicate very clearly is that it wants to remain part of these bodies. There have been suggestions, for example, that the UK wants to pull out of Euratom, for what possible sensible reason I can't begin to imagine. To my mind, it's important that leaving the EU doesn't mean leaving every European body. Clearly, there are some that it makes perfect sense to remain members of.

Indeed, but have you had any discussions with the UK Government on how we are going to be able to negotiate to maintain that relationship in these key bodies?

They are part of the ongoing discussions that have been taking place over the past few months. One of the examples that we have recently been told the UK Government is considering is whether to extend the scope of the Competition and Markets Authority in terms of the regulation of state aid. Now, I've made the point before that, with state-aid rules, it's hugely important that an arm's-length body regulates state aid and, secondly, that there is an appeal mechanism to a court, which is what happens within the European single market. So, that's an interesting suggestion; we're going to have to see more detail on it and, obviously, there would have to be some way of appealing a decision of that authority. 

Clearly, in the absence of our being members of the European Court of Justice, that would force us to create another body.

There would need to be another court—probably the Supreme Court, to my mind—that would act as the ECJ equivalent within the UK when it came to state aid. There's another question as to what state aid might look like, of course. Whether we would simply reflect the state-aid regime that exists in the single market is one question, or, if not, if there's going to be a state-aid regime within the UK, who draws it up? It clearly can't be the UK Government; it has to be done with the agreement of the other administrations.

To my mind, it's better to keep what we are already familiar with. But what we could not have is a situation where the UK Government drew up the rules on state aid, and the UK Government basically controlled access to dispute resolution when it came to state aid. There's a clear conflict of interest there that can't be resolved.

Can I ask a question? Clearly, you've already indicated that agencies are important, and that you're trying to do as much as you can to continue operating with those agencies, but it does depend on the UK Government coming to an agreement with the EU on those agencies. If they fail to, because as we were told, sometimes, they are linked into the single market, has the Welsh Government put into plans anything that it needs to do to ensure that it can continue to operate, either with those agencies, or with the regulations that those agencies require?

I don't think we can be members ourselves of those agencies. There are any number of issues that surround that. Aviation safety is not devolved, medicines are not devolved. If the question is 'Could we put in place equivalent regulations?' the answer to that probably is 'no' because these are areas that aren't devolved. So, there'll be a need for the UK to consider its position on aviation safety, for example, and medicines, to make sure that any equivalent regime in the UK will be seen as at least as robust and has a sense of equivalence to the European regime so there is mutual recognition. If there's no mutual recognition, the UK will suffer.

For example, if you're a pharmaceutical company and you have the UK market and the European market, which one will you choose to look at first? The European market is far, far bigger, so there is a danger that the UK market will be seen as second in line for any new pharmaceutical developments, and that's obviously a concern as well. So, I think it's massively important. To my mind, it's best to stay in the existing regime, if that can be done, but if that can't be done, that the UK regimes, in any of these areas, simply reflect, and are equivalent to, the EU regimes and that there's mutual recognition.

Simon, a quick one.

I wish to move on to the EU withdrawal Bill issues. I know we have a debate on it tomorrow afternoon when we discuss the legislative consent motion, but there are a couple of points we'd like to clarify with you, First Minister, and I'm not convinced we can do it in 10 minutes. Have you got an extra five minutes or so afterwards?

Sorry—?

Have you got an extra five minutes just in case we go on a little bit?

Yes, that's fine.

Thank you. Perhaps we'll start with some of the simpler questions, because you've already answered some points this afternoon. The Bill itself did not indicate within it, and the agreement hasn't indicated within it, any responsibilities of the Government to the Assembly, particularly in relation to the laying of reports or laying of regulations that are to be discussed by the Assembly within that 40-day period, for which it'll have to consent. Can you give an undertaking today, perhaps, that the Welsh Government will ensure that it will lay all documentation—whether that's regulations, reports or whatever—that it receives from the UK Government in relation to those matters to the Assembly within 24 hours of you receiving it?

Yes, I think that's a reasonable—. Well, 24 working hours.

I appreciate that. Working hours, yes.

What I don't want is that we receive documentation at 5 o'clock on a Friday—. Then, clearly, it would be Monday that Members would know about it. Firstly, it wouldn't be appropriate for the withdrawal Bill to specify what Welsh Ministers should do—that's a matter for the Assembly to specify, looking at Standing Orders. But I can give the assurance that, whenever documentation is received by us that is designed for public consumption, it will be shared with the Assembly as soon as possible.

Obviously, you reflected there on Standing Orders, but will there be any legislative introduction to talk about the processes and procedures that should be followed by the Welsh Government?

I don't think we need legislation. Certainly, I am open to the idea that Standing Orders should be looked at to see how they can be used in order to provide a structure to something that we're happy to give an assurance on anyway.

And that will also relate to those things that are going to be revoked or repealed, because the Bill clearly indicates that they want to repeal certain restrictions and unfreeze them, as you say, as quickly as possible.

Yes. Well, clearly, as soon as those scenarios arise, we will inform the Assembly as soon as possible afterwards.

Thank you for that. When we're asked to make a consent decision, will you be laying a memorandum for us to ensure that we understand it fully?

Yes. That is the plan, to do that. Clearly, it's in our interests as well that Members are as fully informed as possible before taking decisions.

Thank you. Jane.

Obviously, Welsh Government will be preparing for legislation in terms of EU laws once the restrictions on competence have been lifted. This is going to be a real pressure point, probably, not just for the Welsh Government but for the Assembly as well. How confident do you feel about the capacity of the Welsh Government to be able to respond to that? Because it also might be coming together, in a kind of legislative rush, in terms of the demands.

I don't anticipate a legislative rush, because I think the assumption is that we get to seven years and everything is released at that point—I would expect that most things would've been dealt with by then and the powers will have been unfrozen in any event. Does there need to be a rush to legislation? Not necessarily. There are issues, obviously, for the Assembly to consider. In terms of the approach that I've asked officials to take in Government, my normal approach is where there is legislation, whether it's regulations or secondary legislation, the assumption is that it should be made on a Wales-only basis. In the environmental field, there are lots of England-and-Wales regulations, historically, and I've been keen to move away from that template as being the default template. But I have said to officials that when it comes to a lot of the uncontroversial, technical regulations that may surround Brexit, actually, there may well be scope for that to be done by Parliament and by Whitehall, rather than by us, because their capacity is much bigger than ours, unless there is a political or policy reason why we should take the decision that, actually—. A lot of the technical stuff we would expect to be dealt with, with our consent, by the Whitehall departments.

First Minister, in November, when you came before a joint meeting of this committee and the Constitutional and Legislative Affairs Committee, you clearly stated that you did not believe that a sunset clause would be appropriate and that it would not be something you could support. This committee has also agreed with that position. We also believe that we should not have a sunset clause, particularly in relation to the fact that it could be amended, and therefore we could have an infinite sunset clause. This new agreement has a sunset clause of five years, for those things put into the freezer, as we keep saying. But of course that's also a period of two years in which those regulations can be introduced as well. Can you just give us reassurances, perhaps, as to why you now think that that sunset clause is acceptable?

Two reasons. First of all, all Governments are now in the same position. The issue before, as I've mentioned several times this afternoon, is that there was a freedom that existed in Whitehall that didn't exist in Scotland, Wales and Northern Ireland. And, secondly, the sunset clause can't be extended by Ministers; on the face of the Bill, that can't happen. So, the only way in which the sunset clause could be extended would be by way of primary legislation in Westminster, which would actually need our consent. So, that safeguard has been built in since we last touched on this issue back in November.

There is a possibility of them moving ahead without our consent, as has been done elsewhere.

No, I can't see that being an issue. Hugh, you wanted to come in.

Well, only in the sense that what would be required to extend the sunset clause would be new primary legislation. If the Assembly refused to give consent to the primary legislation, then, in exactly the same way that any other piece of parliamentary legislation applies, Parliament could ignore the Sewel convention and proceed to legislate, notwithstanding the absence of consent. But that has not been the practice ever, previously.

And that would have to go through both Houses, in Parliament?

Indeed.

Thanks for the clarification on that. Simon.

I understand the Bill has to go forward for assent, for us to repeal the Bill.

Yes. The powers to repeal the Bill are contained in the Bill itself. So, the powers can't come into existence until the Bill becomes law.

Is it possible—for clarification for my purposes—for the Bill to remain in force, but not enacted?

Well, the Bill at the moment is awaiting Royal Assent, and it will get Royal Assent if and when the Attorney-General withdraws the reference to the court.

But when the Cabinet Secretary for Finance came before the committee, he indicated that there'll be areas they may wish to use the Bill on, and areas that they will not use the Bill on, and therefore refer back to the EU withdrawal Bill. So, is it possible, therefore, to have the Bill still as an Act, but not use it because you're referring back always to the withdrawal Bill? Is that a possibility?

I'd have to go back and look at the terms of the Bill, Chair.

The current plan is, once the Attorney-General removes his objection, that is then freed, as it were, back to the Assembly. The Bill will then proceed to Royal Assent, and then within the Bill itself, of course, is the mechanism for repealing the Bill.

So, that's part of the agreement, effectively.

Sorry?

That's part of the agreement, effectively.

Yes.

Okay. Mark, do you want a question?

Yes, thank you very much. Just moving down our suggestions. What measures will the Welsh Government introduce to ensure that Welsh Ministers will lay the three-monthly UK reports in connection with retained EU law before the Assembly?

I've got no difficulty in doing that, and giving that assurance.

And would that be, in your view, although it may or may not be within your personal remit, legislative or procedural measures?

In terms of what?

Legislative measures or procedural measures.

Notifying the Assembly?

Yes.

I think that can be done procedurally.

Okay. How do you anticipate the Welsh Government informing the Assembly that restrictions on legislative competence have been repealed or revoked?

I think I would probably shout that from the rooftops. So, I'm sure that we'd want to inform the Assembly as quickly as possible that any restrictions had been removed.

In Chamber or a written statement?

Both. It depends, of course. There'll be some aspects that will be quite technical, there'll be some that will be more important. It's a question of our own judgment as to whether an oral or written statement is used.

What preparation is the Welsh Government making for how it will proceed once restrictions on competence have been lifted in the context of legislation that might then follow, and how might that be constrained or guided by whatever frameworks have been agreed to maintain the integrity of a UK framework?

That's a difficult question to answer, given the fact that there are lots of issues there that are not yet known. Clearly, if we've agreed a framework, then we'll need to legislate within that framework, or there may not be a need to legislate. We might quite simply say, 'Well, let's carry on with what already exists that's been bequeathed to us by European rules and regulations.' It would be a matter then for any Government at that stage to take a decision as to how it would want to implement the powers that it has within that framework in the future.

And would you anticipate a high volume of legislation, a rush, or more of a pragmatic and measured implementation of new legislation?

The view we always take is that legislation is something we consider last because it takes time. There are some issues that are so important, they require legislation. Of course, they do. But where there are other ways of achieving a particular aim, then we would look to do that first before looking at legislation. I wouldn't anticipate a legislative rush, but clearly it would be a matter for any future Government to look at what it wished to do.

And again, given your reference earlier to the establishment of a new body, or transfer of powers to the Supreme Court, for example, to adjudicate, if it was deemed that a member of the UK might be acting in breach of framework, would that be something that might be applied in these circumstances to ensure that the integrity of the frameworks are maintained?

I think that's a hugely important debate to be had within any new inter-governmental structure. The two things run together. It is important to put in place the council of Ministers as soon as possible, certainly before 2020, to my mind; but also, as part of that debate, it's hugely important to put in place—I think it's quite simple to do it, actually—the mechanism for how state aids will be interpreted, and the appeal mechanism for the future. What they look like is more complicated, but I can't see there being a particularly difficult issue to say, 'Right, that's the body. That's the arm's-length body that will regulate, and there's the court that will act as the ECJ—the appeals court.' I think that's fairly simple. The difficult bit, of course, comes in terms of what will state-aid rules look like. There are some that I've come across in politics who don't believe that there should be any state-aid rules at all. I don't share that perspective. So, I'm sure there will be a debate as to whether there's a need for state-aid rules. I think there have to be. In order for any market to operate, there have to be, but of course, secondly, what they look like. They have to be drawn up jointly, but what they look like—well, that's a matter for the future.

Can I ask one final question on this? I'm conscious of the time now. We have gone beyond our limited slot. The agreement is between the UK Government and the Welsh Government—very much so—and we've always argued, as a committee, that there should be greater involvement of the legislature, in that sense, the Assembly. Will you therefore again give assurances that when the UK Government comes to ask for the consent of Welsh Ministers with an explanatory memorandum, that that will be laid before the Assembly for discussion and scrutiny of that to ensure that the Welsh Assembly is also involved in the consenting process, not just purely Welsh Ministers?

We do have the separation between the Executive and the legislature, so I can't go that far, but at this stage what I can say of course, though, is we'd seek to involve the Assembly as much as possible. It's clearly in everyone's interest that Members are as informed as they can be about developments as they occur. 

Thank you. Can I thank you for this afternoon, First Minister? We've come to the end of our time with a little bit extra. There are several questions we would like to perhaps explore a little bit further. We may write to you with some questions. But clearly, tomorrow afternoon, we also have the debate on the European Union (Withdrawal) Bill and aspects of that. So, thank you very much for your evidence. You will receive a copy of the transcript for any factual inaccuracies. Please let us know as soon as possible if you identify any. Thank you.  

Thanks.

Can I ask Members to move on to the next item on the agenda, which is papers to note? Paper 1: correspondence from the Cabinet Secretary for Energy, Planning and Rural Affairs relating to the UK Government's agriculture command paper. And we do have a session focused on policy next week in this area. Paper 2: correspondence from the Cabinet Secretary for Finance to the Llywydd in relation to the questions we asked him when he presented to us. He did say he felt it was a responsibility of the Assembly, and he would therefore ask the Llywydd whether she would undertake that task, or he would do it otherwise. And paper 3: correspondence from Chloe Smith MP, Minister for the Constitution, regarding questions we did not reach in the session we had with them on 30 April. Are Members content to note those items? Members are, so thank you very much. 

Under Standing Order 17.42(vi) I now suggest that we move into private for the remainder of this meeting. Are Members content? You're content, therefore we move into private session.