Cynulliad Cenedlaethol Cymru

Yn ôl i Chwilio

Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

External Affairs and Additional Legislation Committee

15/10/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David Melding AC
David Rees AC Cadeirydd y Pwyllgor
Committee Chair
Jane Hutt AC
Mark Reckless AC
Michelle Brown AC
Mike Hedges AC Yn dirprwyo ar ran Joyce Watson
Substitute for Joyce Watson
Vikki Howells AC

Y rhai eraill a oedd yn bresennol

Others in Attendance

George Hollingbery Gweinidog Gwladol dros Bolisi Masnach
Minister of State for Trade Policy
Leonie Lambert Department for International Trade
Department for International Trade
Robin Healey Wales Office
Wales Office

Swyddogion Cynulliad Cenedlaethol Cymru a oedd yn bresennol

National Assembly for Wales Officials in Attendance

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

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 09:45.

The meeting began at 09:45.

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

Good morning, and can I welcome Members to this morning's session of the External Affairs and Additional Legislation Committee? This morning, we have a session with the Minister of State for International Trade at the—

It's very confusing. I've still to learn it myself, properly.

And I'd like to put on record our thanks to him for attending this morning. Before we go into that, can we start with the normal housekeeping business? This is a bilingual session and if you require simultaneous translation from Welsh to English, the headphones are available and they're set to channel 1. So, that is for the translation. If you require amplification, then that's on channel 0.

There is no scheduled fire alarm today, so, if one does take place, please follow the directions of the ushers to ensure that we all leave to a safe place. Can I remind Members to turn your mobile phones either on silent or off, and any other equipment which may interfere with the broadcasting equipment?

We've received apologies this morning from Joyce Watson. Can I welcome Mike Hedges, who's acting as a substitute for Joyce? We've also received apologies from Steffan Lewis and there's no substitute for Steffan.

2. Polisi masnach y DU ar ôl gadael yr Undeb Ewropeaidd—sesiwn dystiolaeth
2. The UK's trade policy after leaving the European Union—evidence session

If we go onto the next item on the agenda, which is the briefing sessions we have with the Minister of State. Can I welcome George Hollingbery to this morning's meeting? Would you like to introduce your officials for the record, please?

Indeed. Leonie Lambert and Robin Healey.

Thank you very much and, just to clarify, Robin is from the Wales Office, and Leonie is from the Department for International Trade.

I do apologise. Thank you.

We will go straight into questions, because, clearly, I appreciate you have a time schedule and you want to get back to Westminster. Perhaps the first question is an easy one for you, and we're going to expand upon it, but, the question—what we're trying to find out—is how the needs of the Welsh economy are being considered in the trade policies of the UK Government.

First of all, Chairman, I'd like to say thank you very much indeed for having us here today. Secondly, just to offer my sympathies for all the difficulties that have been caused over the weekend by the weather, which has clearly been extraordinarily disruptive to Wales. As someone who has been flooded out of his house twice, I genuinely have some empathy with what's going on. So, those thoughts are with you.

How is the economy of Wales being looked after? I would say, first of all, that the Wales Office, plainly, responsible at a UK level, does a great deal of work on that front, and I met with Alun Cairns this last week. In fact, he attended the Prime Minister's African trip to promote a couple of businesses. I think it was Sure Chill and Hydro that came with us on that trip, and he had a particular trip in South Africa with them to promote their businesses. He, of course, also does a great deal of campaigning for trade and, indeed, visiting lots of businesses in Wales as well.

More generally, we consult widely and deeply across the UK with businesses and, of course, with the devolved administrations to ensure that what we're doing suits the various regions and devolved authorities of the UK. Particularly with businesses, you will not be surprised to hear, for example, that we spend a lot of time talking to the Scotch whisky authority, for example. Not germane to Wales of course, but, nevertheless, also on farming in Wales as well and the needs and wants of Welsh lamb.

The Britain is Great campaign is also available across the world through our network of trade advisers to all Welsh businesses, should they need to access it, and indeed they do, and, I note, in some large numbers. At an absolutely top level—and I'll probably repeat this again when we talk further about future trade arrangements—I am absolutely sure and clear that the UK will negotiate better free trade agreements and, indeed, better trading arrangements across the piece if it takes account deeply, properly and widely of the opinions of all the parts of the United Kingdom and particularly through the devolved authorities.

Thank you for that answer. I think you've highlighted a few points we'll probably explore in a bit more detail as we go through the questions. In that case, can I ask Mark to start the questions?

Yes. Minister, how has the thinking of the department developed about the involvement of devolved administrations in assisting with trade policy since the publication of 'Preparing for our future UK trade policy' in November last year?

09:50

Well, the answer is it is still evolving and there's still a lot more to do, but I think we are coming to a series of agreements and perhaps Leonie will illuminate on some of the fine detail. Officials have now met a good many times, talking about how the UK Government will interact with the devolved authorities, and concordats that we will reach and methods and understandings that we will have between us about how interactions will happen at general trade policy level but also in the development of future trade agreements. So, I'll just allow Leonie to develop that in a bit more detail. 

It might be helpful if I outline some of the detail around the two areas that we're working on at the moment. The first is how we engage with officials in the devolved administrations. We held a deep dive in March and, from that, we've evolved a series of policy round-tables, the aim being to bring together officials from the devolved administrations with Whitehall officials to discuss our policy development, the direction we're going in and to get a mutual exchange of information. I think, going to the Chair's opening comments, that's where we would expect to get information about the sorts of information they can bring to the table that we need to take into account in policy making, and we can also update them on the direction of travel.

The second piece of work we're doing is around the arrangements for engagement on future trade agreements at official and ministerial level, where we're looking to reach official-level agreement hopefully in the coming weeks and months. That will set out how we formally engage with the devolved administrations on future trade agreements. 

It's a phrase I've heard increasingly, but I just wonder, when you say deep dive, whether you could perhaps, as an example in this area, say what that involved officials in doing and how that helps develop policy.

So, the deep dive was really about engagement rather than policy itself. The recommendations that came out of that were that we would set up a senior officials group to allow senior officials to engage on these areas. The second recommendation was around the policy round-tables. Now, on policy round-tables, we've had two, so far, two-day events, and they've gone into detail on specific policy areas like trade agreement continuity and disputes, and that's where the teams in trade policy group have been able to set out the work programme and direction of travel that they're going in and get the input from their counterparts, including information on priorities for the administrations. That will then evolve into a series of more technical discussions on a bilateral basis, between the policy teams themselves and their counterparts, and we would expect that to be an ongoing process. So, we've had a few set-piece events to go with the overall work programme, and we would expect that to now evolve into bilateral, technical, ongoing discussions to ensure that we're getting the views all the way through the process. 

And do the set pieces involve people outside Government? When you had these round-tables, does that assist in the transparency that 'Preparing for our future UK trade policy' suggested we would see with the engagement of the devolved administrations and partners? 

It's only officials. We've got a separate set of consultation events that are involving wider businesses and stakeholders, which is aiming to bring the transparency from that perspective. I think these official-level engagements, what they're seeking to do is fulfill the commitment we made to work very closely with the devolved administrations themselves to make sure that the policy we're developing takes account of the needs of the whole UK. 

Can I just add a couple of bits on top of that? So, I shall be going from here to the eleventh round of consultation for the new future trade agreements that have been suggested with the United States, New Zealand, Australia and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership—that's the group of 11 nations around the Pacific rim, which the United States was part of and then withdrew from, just in case others around the table don't know because I certainly didn't before I got involved in this job—and at that, of course, there will be all sorts of potential partner businesses coming to tell us what they want out of those. I will also chair something called the strategic trade advisory group, which will specifically have invitees from Welsh businesses—there'll be one person appointed from each of the devolved areas at that level to make sure we get an input from businesses in Wales. I don't think we should forget the input of the Wales Office, and perhaps Robin would like to develop that a bit further, because the Wales Office also does a lot on looking after Welsh interests and, of course, actually has the final input into Cabinet at that level. 

Thank you, Minister. Yes, our Secretary of State, Alun Cairns, spends a lot of his time engaging with stakeholders across a range of different sectors, including the trade sector, and represents the interests of Wales at the Cabinet table. In addition to that, he has his own expert panel in the context of EU exit where, from time to time, trade issues will come up. So, I think there's also that strand to consider alongside what the Minister has already been talking about. 

09:55

Could I ask—for example, in the area of trade defences and anti-dumping policy—what consideration has been given to Welsh steel and, in particular, the large Port Talbot operation in considering trade policy in that area for the future?

The trade remedies authority, the authorisation for it, sits within the Trade Bill. The technical issues around tariffs and so on and so forth, and the right to deal with those, sat in the customs Bill, which was the sister Bill, which was separated out, as I'm sure all colleagues around the table will know already.

There has been wide consultation around stakeholders who will have concerns about the trade remedies authority and where it may go, and, indeed, levels of sanctions and tariffs that are put in place in anti-dumping cases and so on, and those results are just being received at the moment—about which particular ones should be maintained or not and so on and so forth. So, it is at that level that we have—. It's at a very fine-grained level now about how we're getting involved with British business.

I've also met with the ceramic producers foundation, the Manufacturing Trade Remedies Alliance and many other interests, and a lot has come across my desk petitioning on certain remedies that are in place, such as on bicycles, for example, and such as, again, on ceramics. There's lots and lots of activity going on in this area. Certainly, business is being very deeply petitioned on the remedies framework.

Would those remedies be available if the UK were still to be in a UK-wide customs union backstop?

I think that would depend. I think the TRA—. I will take some advice from officials. It's the absolute timing of exactly when everything comes in, but we will need to have exited the European Union for the TRA to be able to be extant—that is the trigger point. If you look at each of the individual scenarios you might look at—so, 'no deal' and/or implementation period or temporary backstop—you simply have to look at the point at which we exit the European Union formally, and that'll be the moment that the TRA takes over.

Okay. But it would be there formally when we exit the European Union, presumably, if there's an agreement, at the beginning of the transition period, but would it be able to do its work in practice if we were still within a customs union arrangement with the EU?

This is all up for negotiation at the moment, and we still don't know what the formal exit point will be. For that, I can't answer the question, other than to say exactly what I said previously: the moment that is identified as when we have left the European Union will be the moment at which we will have the trade remedies authority, unless, I guess—perhaps officials can advise, as I'm slightly making this up as I go along, but I hypothesise—if we are in a customs union and are, therefore, subject to a common commercial policy, I presume there will be no need for a TRA. I can only be as objective as I can be on this. I make no policy point here—I'm simply observing.

Similarly, and I think finally from me, in dealing with prospective trade partners outside the EU, what impact on those negotiations would having the whole of the UK remaining within a backstop have, if those trade partners don't know a firm date at which that would be ending?

Well, there are so many variables within that question it's nearly impossible to answer. The simple fact is that under what was known as the Chequers agreement, the future economic partnership and so on—

Let us just say that under the arrangement whereby we would have frictionless borders and a certain degree of alignment of goods schedules and so on and so forth would be required, there is a great deal of flexibility still left to negotiate trade deals, on the basis that there's a lot more to trade deals than just goods—there are all sorts of behind-the-border issues and all sorts of other things that one can make a great deal of difference in without necessarily having to worry about the goods side of things. So, I still think there's enormous potential for free trade deals in that sort of arrangement. Perhaps others would like to comment.

No, I think you've summed it up very well there.

In your answers, you highlighted that you might be putting a spokesperson or somebody from business interests in Wales on your panels. Can I just clarify who identifies that type of person? Who would appoint that type of person?

They're appointed by the civil service process. They would apply on their own—the doors are open for those to apply. Perhaps officials can just tell me quickly where we are in recruitment for the strategic trade advisory group. I've not had an update recently.

I think we are nearing the end of the process. 

Okay. So, in short, it looks like they have applied already, but there will be representatives from each of the devolved authorities—. That's not correct, sorry. From each of the devolved areas. There will be a Welsh business, and there will be a Scottish business and a Northern Irish business representative.

10:00

What I was trying to work out there is who has been involved in promoting that and trying to identify a suitable stakeholder to represent, in a sense, Wales's interest in this group.

So, as I understand it, it was open to applications to be part of the strategic trade advisory group, and then there's been an internal process of examining those applications.

It will have been DIT, internally. If I tell you that 10,000 businesses a week get in touch with the Department for International Trade, you'll understand we have a lot of sectoral expertise and we will know people in each of those individual markets. I should be very surprised if the Wales Office wasn't consulted about which businesses they thought might be appropriate. We're looking for people with experience of trade, obviously, and particularly of international trade, and therefore we will have petitioned widely and deeply, given the department's wide knowledge. There are, I think, now 3,500 people working for the department, of whom 2,500 work out in the field and deal with companies from the UK all the time. I'm quite confident that if we put a notice out to people saying, 'Might there be some interest?', they will have gone to the right places.

Can you confirm whether the Wales Office actually did get involved?

Yes. We have regular discussions with DIT officials about this and other matters in this sphere.

Sorry, I beg your pardon.

I would have to check; I'm sorry, I don't know.

It might be helpful to add that we have discussed with bodies like the Confederation of British Industry Wales as well, on this area, to build that view from Whitehall about who the appropriate members might be.

What assessment has the UK Government made of the impact of non-tariff barriers to trade on the Welsh economy, should a 'no deal' scenario occur?

I think I would be stretching credibility if I said we'd made a specific examination of the individual effect on Wales, and perhaps—. I don't know if officials know any different. 

At the moment, as you'll have seen from the technical notice we published on Friday, we've set out as much information as we can at the moment to businesses as it stands, which is that we will be reverting to World Trade Organization rules. I don't think we've done a specific regional assessment or a Welsh assessment.

Can I ask about one specific Welsh industry, the Welsh shellfish industry, which depends on getting shellfish into continental Europe within 24 hours, otherwise they need to take it to the tip? We also know that without free trade, there's the ability of the receiving country to slow it down without actually breaking any rules, to check it. Have you given any consideration to the effect that might have on that industry? Because, if they can't get it there in 24 hours—.

Let us be absolutely plain that all these issues have been very carefully examined, but not by the Department for International Trade. This is a matter for the Department for Environment, Food and Rural Affairs, who are in charge of that particular brief, and also of course, DExEU. But what I can tell you is that the arrangement that the Prime Minister is currently trying to negotiate has, at its heart, the understanding that there are all sorts of businesses out there that rely on just-in-time. Now, that, in most people's minds, is about very, very short supply chains, for the likes of the automotive industry, and so on and so forth, which are well known to Wales, but it is also the case that those affect perishable goods, and therefore phytosanitary and sanitary checks at the border are an extremely important part of that, and indeed have been the focus of some very, very deep negotiation with the European Union. I don't think we can speculate as to exactly how those will turn out. That's the province of a different department, which has been doing those negotiations, but I think I can say with confidence that all those issues have been at the heart of why we are trying to negotiate an arrangement that gives us frictionless trade across the borders.

My last question. It's my understanding—perhaps you can tell me if I'm wrong—that under the World Trade Organization, the receiving country can set limits on the amount it receives of any one goods. Is that your understanding, and if so, how will that affect Welsh exports?

Well, it is the case that you can have what are called 'tariff-rate quotas', such that if there is a favourable tariff negotiated between the two partners, a certain amount in terms of goods—whatever it is, shellfish or otherwise—can be imported at the reduced tariff, but no more. After that, there is no limit to what can be imported, but there will be a tariff applied, and that will be negotiated with the partner country. So, that is how it works. You can have TRQs, as they're known colloquially. Tariff-rate quotas do exactly what you explain.

10:05

Can I ask a question on that particular point and then I'll come back to another point? The TRQs clearly exist with lamb at the moment with New Zealand, and there's an allocation of that quota with the EU and a proportion to the UK. I appreciate your comment earlier that that's a different department in one sense, but, clearly, for international trade and for your discussions on a free trade agreement, you must have a good relationship with that department to be able to ensure that you can deliver on something that they can actually deliver on. Then, in that sense, the TRQs we're talking about—and you mentioned earlier on today going into consultations, and New Zealand was mentioned in that list—have you got an indication as to how much of that TRQ you would be prepared to accept, and how that's going to influence your FTA discussions with countries like New Zealand?

I think we need to be very careful, Chairman. The UK's a good European citizen, and we are currently bound by the common commercial policy, and we have given an absolute undertaking that we are not negotiating with any third parties and will not do so until we've left the European Union. Therefore, any discussions at the moment about TRQs and that level of detail are simply not appropriate and have not happened. What we are doing at the moment is scoping with each other—there's four bilateral cases, but, actually, mostly three; we're not yet in formal negotiation with the CPTPP or formal discussion—and these working groups seek to talk with each other about the aspects of their economy that might benefit from free trade and find information out on both sides. I would be very surprised if, shall we say, conversations around those issues have not taken place around lamb, around how it will be dealt with and so on and so forth, but any deep down detail about what would be an appropriate level of TRQ is not something that would be proper at this stage.

I appreciate that we are good Europeans. I would like to have seen us stay good Europeans, and I appreciate it. But I suppose the question I'm asking—and I think you've answered it—is that there is an understanding between the departments as to what implications TRQs will have on the negotiation and trade agreements that we will come to at some point in the future.

Of course, Chair. No Minister in the Department for International Trade would approach a trade agreement with New Zealand, and indeed with Australia, but particularly with New Zealand, without having a clear understanding of TRQs, lamb, and the effect of a free trade deal on Wales particularly. This is, I think, what I was talking about earlier on. Clearly, we do have an understanding, certainly at gross level at the moment and perhaps a bit more than that, about the potential effect on Wales. We will not enter into negotiations with New Zealand on issues of this sort without deeply consulting the devolved authority and having a real understanding of what's going on, and, plainly, we'll also consult colleagues in DEFRA to ensure that what we're doing is also in line with what they need and understand that the country needs. 

And in your answer to Mike Hedges's first question, you talked about the publication of the 'no deal' technical notices—the fourth round—last week. Could you clarify as to what discussions you have with DExEU on those, because, clearly, they are an indication as to what might happen if there's a 'no deal'? Some of those technical notices don't tell us what you will do about them because they are very bland; some of them will impact upon the opportunities for international trade. So, what discussions do you have with DExEU—because they're the ones that publish them—in relation to the production of them and, perhaps, the actions that need to be taken as a consequence of them? 

So, yes, they're DExEU publications, but they're joint endeavors. So, the majority of the substance within a technical notice that relates to a particular department's policy areas would primarily be driven by that department. So, the notice on trade agreement continuity will have—broadly, the main content of it—been driven by Trade Policy Group in consultation with DExEU, who set the overarching framework for, 'What's the question?', and, 'What are we trying to answer for businesses?' and then the detail will be provided by colleagues in Trade Policy Group. 

Thank you, Chair. The Trade Bill gives the devolved administrations a role on implementation, but not on negotiation. This differs sharply from current practice when the UK participates in developing EU trade policy, when there's much broader involvement of the devolved administrations from agreeing the speaking note to even having members of the Welsh and Scottish Governments on the Council of Ministers, or the British delegation. Why have you gone for a much, much more narrow approach to the involvement of the devolved administrations? 

I think, first of all, Chairman, we probably have to recognise that the EU is absolutely drifting away from the model that the gentleman, Mr Melding, talks about. We're now going to a position where the Commission—. We have Commission-only competency for the vast majority of trade agreements, future trade agreements. The European Court, as I'm sure you will know, decided that investor-state dispute mechanisms were not Commission competent, or EU competent—of EU competence—they were nation-state competencies, but everything else was a Commission, an EU, competence. So, in fact, the amount of input that even the sovereign states, let alone devolved administrations, are having now on free trade policy in the EU is narrowing down enormously. Yes, there is chance to shape, yes, there is chance to input, but, in the end, whether or not a deal is struck and the shape of it is actually now a matter for the Commission—or rather for the EU—rather than for sovereign Governments.

As to the UK, when we look at the structure here in the UK, we're not a federation; we are a nation with devolved authorities, and trade and trade negotiation is a retained competence for the UK Government. And there has to be one body doing this because we have a single UK market, and we cannot have a situation whereby one part of the United Kingdom gets to veto what is otherwise a very good deal for everybody else. That has been retained for a reason, and it's entirely logical that it should be so. Does that mean we will not be consulting the devolved administrations and ensuring that any offensive or defensive—in the parlance of trade negotiations—asks are not taken on board and understood? Whether they are accepted every single time is a moot point, and I think practice will show whether that is the case, but I cannot see a position where—. I just cannot see it is tenable that we have a position where there is any kind of veto available to devolved authorities at what is a UK single market level. If the UK Government is prepared to sit and listen and take account of what those devolved authorities think they need and want—defensively and offensively—in trade negotiations and that is properly put forward and dealt with through concordats and understandings about how that works, that seems to me to be the right level at which to work this.

10:10

Okay. Well, we raced through compromise and discussion and negotiation to veto pretty quickly there.

Well, I think—. It is surely right, Chairman, if I anticipate a potential objection, and I can't talk about a system where—. That is the logical conclusion of why we are doing it; so I leave out an essential part of my explanation, surely.

Well, you know, you started by reminding us of where the EU is going in terms of how it determines its trade policy, and the lack of participation, which I completely share, is troubling to our citizens, but at least formerly they did have a more open process. Presumably independent British trade policies offer us a chance to shape things in a very fundamental and different way, and it's a decision you've made not to have the devolved administrations more involved in that.

You talk repeatedly about consultation, which I've no doubt you will do, but that is not participation, and I think you need to justify that fundamental decision, given we live in, not a federal state, strictly speaking, but in a constitution that is now devolved.

Well, certainly, you describe—. I think we're playing semantics here: you call it consultation, I call it participation; it is the same thing.

Well, I believe it is. If we have got ourselves to a point where we've agreed concordats about how we will interact with each other, and how the UK Government will listen to the devolved authorities and ensure, absolutely, that it takes on board the specific concerns of the devolved authorities, and it helps to shape the negotiating mandate, I'm not sure that we aren't just quibbling over the meaning of a word. Perhaps—. Leonie's clearly—

Sorry, if I may—. I think it's important to separate out the Trade Bill and future trade agreements. So, the Trade Bill is concerned with the continuity of existing agreements—so, the agreements we're already signed up to, where we're going to do a technical roll-over. I think your question is about involvement in future trade agreements, and, as I outlined earlier, that's exactly the piece of work we are doing now to put in place the structures that will allow that to happen. I wouldn't say we have taken a different position—

It's not in the Trade Bill, is it? The role is for a role in—. The proposal is a role in implementation, which we clearly need, because of devolved competences at the moment, but not in negotiation. The House of Lords Constitution Committee in their report, published this morning, points that out and says it doesn't go deep enough and you need something analogous to the Joint Ministerial Committee approach, which is also the Welsh Government's view—that you need some sort of structure like that.

And they're the sorts of issues that we're considering in the piece of work around future trade agreements. The Trade Bill is purely concerned with continuity agreements, where I'd say there is limited negotiation, because what we're aiming to do is a technical roll-over of agreements that we've already signed up to.

10:15

I'm sorry if I misunderstood that. I do apologise if I've moved straight on to free trade agreements without talking about the Trade Bill itself, where, Leonie is absolutely right, of course there's very little room for new negotiations. The whole idea of the programme is to vary these agreements as little as possible. So, I do apologise if I've misunderstood the thrust of your original question.

Whereas, on future trade agreements, those are the discussions we're having now, and we're aware of the Welsh Government's position on a joint ministerial trade committee, and those are the sorts of proposals that we are considering and discussing with them actively at the moment.

Okay. So, that's under active consideration by the Government at the moment.

The FTA negotiation?

That either it may go to the joint ministerial committee or a new committee—a joint ministerial committee on trade.

It is absolutely under consideration. I met with Ken Skates last Thursday. Thursday? Wednesday?

Thursday. We talked about this and we talked about the way forward with it, and he and I are absolutely clear that there is a way forward through this that the Welsh Government will be content with. We are not there yet; there is still negotiation to do.

I just—. Having been perhaps a little overly aggressive earlier, for which I apologise if I was, it is only because I do profoundly believe in bringing Wales into this conversation and making sure that we genuinely really understand what Wales wants and, where appropriate, react to it. I cannot see many times and places where we will not react positively to what Wales wants. It's not an absolute guarantee—I mean, who knows what politics holds in the future? But I cannot see that, if Wales brings particular issues in particular ways about its own interests that are not, at that moment, understood or appreciated in the UK position, that the UK position will not modify.

Okay. Well, I'm pleased that you're softening your tone. [Laughter.]

I'm sorry. It's not my normal style, I have to say.

But you're still not saying whether you think there should be some form of joint ministerial committee, which is a fairly fundamental upstream decision, I would say, that ought to shape all the detail in terms of what'll come later.

You talk about concordats; the Welsh Government would prefer, in addition or separately, a memorandum of understanding that sets out the broad principles about trade and engaging with the devolved administrations. Do you see a role for that type of approach, where you do commit to some fundamental principles?

I would say that we should all wait and see what the two parties agree between themselves. I mean, it is a rather bland statement, but nevertheless true that, if we can agree what works for the two of us and we can agree that between us, then that will be adequate for all. And whether it's called a memorandum or whether it's called a concordat—I understand that there is a legal nicety, but, nevertheless, I have no particular outcome in mind in structure or, indeed, in content; I just want to find something that we can all agree on.

And so if I can take you on, then, to the future and when we're developing trade policy and entering trade negotiations, what role do you envisage for the trading mandate or negotiating mandate that the UK Government will be pursing? In forming that, what role would the devolved administrations have?

So, the mandate with whom?

Well, when, you know, you're going off to the far east or wherever it is to negotiate a trade position or policy with them, in the preparation of that policy objective, how will you be involving the devolved administrations in forming that?

I hate to come back to it—it's sort of groundhog day—but that's what these talks are all about. We are trying to find that structure to make sure, at the stages in the process that we need to have the input from the devolved authorities, we will have those inputs. So, I apologise for repeating myself, but they are very much the same thing. Unless—.

No, no, that's—. Just to elaborate slightly, the reason we are not replicating what has gone on in the past is because we are determined to find something that works for this set of circumstances we find ourselves in, which is relatively new to us—negotiating international trade agreements. So, we're not just lifting and shifting what's been done before on international relations; we are actually engaging with all of the devolved administrations, at official level first—and, obviously, we'll need political views. But the aim is to design something that works for this set of circumstances—for the pace of international trade negotiations, for the way they run, for the structures that they have around them, which could be quite different to the structures around other types of international agreements.

Okay. I understand all that. Do you envisage a consultation model or a participation model? That, perhaps, is the easiest way to cut through a lot of this. What is your vision?

10:20

Okay. That's a perfectly reasonable way of putting it. I do not envisage a direct participation model in the actual negotiations themselves. The interlocutors need to know with whom they are negotiating, and there has to be an established position that that person negotiates with the other side and, indeed, there have been examples in the past where other third nations—not in our trade agreements, because we haven't negotiated any forever—have actually refused to sit down and negotiate because of the lack of certainty as to with whom they were negotiating. And so I am absolutely clear that we need to have one person on point who has the agreed position and then negotiates. Can others observe that process? Personally, I can see no particular issue with that, but that is not yet decided and we would need to take wider views than just mine to come to that position. Is it the case that the Welsh Government will be able to shape what is in the mandate that is given to the person in the room? Absolutely. I'm absolutely certain. That is what we have to achieve. Somehow, through this process of coming together with a memorandum, a concordat, or whatever it is, we have to get to a position where the Welsh Government is happy that they can have their views and will have their views taken into account to shape that mandate.   

Okay. I appreciate your candour; I think we've made progress there, even if we have a different view. You've not looked at more radical options from your point of view, then, say, the Canadian model where there is, for certain trade negotiations at least, direct involvement from the provinces, particularly a province that may be affected by an aspect of trade; in our case— 

I have asked officials to look at the Canadian model quite carefully, and, working their way through it, I am led to believe—and I've not had the written report yet—that it's perhaps not quite as plain as it looks on the outside. I think what we have established, certainly anecdotally—whether it's formally yet, I don't know—is that what happened in the last round would, shall we say, not be repeated. 

Oh yes, and I've asked officials to look at it deeply just to make sure and find out what the actual facts on the ground were and, indeed, how the negotiators themselves felt about the structure that was in place. What we've discovered, I think—I would want to confirm this another time in another form, if possible—is that there wasn't a structure, which was one of the problems. 

Yes, well, I mean, interesting—we've also been asking what kind of influence is being held by the Canadian provinces and territories. Clearly, we want to know, so we are asking, on behalf of the Assembly and this committee. We are looking for the best way forward in terms of influence for the Welsh Government in terms of those future agreements. I'm interested—right back to the early points that you made about the fact that there's quite a lot of engagement at official level, and the engagement, the deep dive, into trade policy areas, and, of course, there are the round-tables—. But I think you said, Minister, that you'd met with Ken Skates last week. He certainly has said to the committee in past times that he recognises the Welsh Government engagement in trade policy round-tables, but it's very high level. He certainly has reported to us that he would like more detailed and meaningful engagement. So, was that on your agenda last week?  

Absolutely, and we talked at some length, and I think we're very comfortable with the attitude that each of us brought to the table in that he wanted to do more, and I was happy to do more. I basically said to him, 'Look, rather than waiting for another meeting to come up when one of is in either Cardiff or London, you should feel free on any matter of policy or any issue that is worrying you, to pick up the phone to me at any stage—I will always take the call.' So, I am absolutely clear that more engagement is required at a ministerial level, and I'm very happy to tell the committee today that that will occur. I've only been officially in post, as in non-recess in post, for seven weeks, and in that time I have been to the Scottish Parliament twice, and I have had a further—. Well, I did two select committees in the Scottish Parliament and met with Derek Mackay. I saw Ivan McKee almost—. My very first trip was up to see the Scottish Government, and, as soon as my schedule allowed, I came down here and we, of course, have done not only the round-table on the FTAs up in Scotland, but also doing that here today. It is absolutely essential. We will only get the best free trade agreements if we all agree on what it is that we want out of them. We will find a mechanism to make that happen, and, if that needs more ministerial engagement at a higher level, then that is what will happen. 

I think, yes, the high level, and you've acknowledged that you've had that meeting with Ken Skates—it's about the more detailed and meaningful engagement that you're seeking, and that we're seeking in terms of scrutiny of the Welsh Government. I think the point about the difference between consultation and participation—participation is about ongoing dialogue, and it needs a structure, otherwise we're knocking on doors, and you're all very busy, in terms of UK Government ministerial responsibility. That's why you need to have a structure for ongoing dialogue—I would certainly agree with the point made by—

10:25

And that's where—you know, obviously there are options for a joint ministerial committee and a memorandum of understanding. That would certainly help you, as well as us in Wales, because, otherwise, we're knocking on doors, you're waiting to hear from us, it's not meaningful, and it's not ongoing.

And your point on a ministerial meeting forum of some sort is well taken, and we are discussing options on that front. I think it's worth saying, at this stage, that I am concerned about the agility of set-piece meetings, particularly in regard to trade, where things can move extremely quickly. And whilst I am not set on any particular solution, I would want to try and find some sort of solution to this that allowed engagement to happen rapidly, as and when required. So, all of these things are in consideration. But please don't think that we don't understand the desire for a ministerial forum of some sort around trade—we do. Those points have been made forcibly by officials at official level, and those conversations, of course, have come up to Ministers as well, and we do understand exactly—we understand the desire, and we will find a solution to them.

So, just in terms of the National Assembly, and our role, what role do you think that the National Assembly for Wales can play in the development and scrutiny of UK trade policy?

I would have thought, Mr Chairman, and as a novitiate in ministerial post, it's kind of difficult for me to say this with any certainty, but that's really a matter for the Welsh Government. If the Welsh Government is to engage with the UK Government, and to be informed by the needs, desires and wants of the Welsh Assembly, I would have thought it's the Parliament and the Assembly itself and perhaps the Government's role to initiate those conversations within the Assembly, such that the administration is informed in its relationships with the United Kingdom.

Well, obviously, if we had more of a structured means, through inter-governmental committee and memorandum of understanding, then it also helps us in terms of scrutiny of the Welsh Government, but also enables us to scrutinise the UK Government as well.

Thank you, Chair, and good morning. The First Minister expressed the view that, although he's largely in agreement with the amendments to be made to the Trade Bill, one thing that concerned him was about the independence of the trade remedies authority. What measures are you going to put in place to ensure that that trade remedies authority is actually independent and can actually act fairly and impartially?

Okay. So, it's interesting that you put it that way round, because my understanding has always been that the devolved administrations want representation on—

What he has said, okay. And our position is exactly the one that you take, which is that the trade remedies authority should be entirely independent—of sector, of region, of anything. Now, can I just be quite clear that, if the eight or nine candidates that we require and we select all came from Wales, and they were all qualified in the right way, for what needs to be done to take an independent view of how trade remedies should be applied, I'd be very happy to have every last one of them from Wales. That is not the issue. The issue is nothing to do with—. It is entirely about independence—just that. It's about being able to take a transparently fair and completely wide view, in any particular dispute that occurs, and has been dealt with by the TRA, such that no sectoral interest and no regional interest could ever turn around and say that there was any bias built into the system.

So, the only thing that I believe matters in this situation is that all the people who will rely upon the trade remedies authority, to come to a completely independent view of all the circumstances—. As long as all those people can come together—sectoral interest and everybody else—and can take a view of the decision and say, 'That was reached on the basis of the facts and the facts alone, with no emotional commitments and no, indeed, cerebral commitments to the rights and wrongs of a particular sector, because they happen to represent them, or a particular region—'. That is the structure, I believe, that we should pursue. It matters not to me one jot where those people come from. They could be all Welsh—it really matters not at all. What matters is that those decisions are seen to be entirely independent for confidence in the entire system.

10:30

How will the members of the authority actually be appointed? Who will make the decision as to who is actually appointed on to that authority?

So, that's a combination—I want to get this absolutely right, because it's a very particular question. I can't remember if the Secretary of State finally approves—. So, it's a combination of the chief executive officer and the chairman, who will do the initial work on finding the right people, and then those proposals are put to the department and to the Secretary of State.

You've said that the Prime Minister has to find the right people, but who will develop the criteria as to who those right people are?

Because the TRA—. Oh, sorry, I do apologise.

Okay. Because the country hasn't done this for the last 40 years, we went out and talked to a number of practitioners in this area. I think we talked to the Australians and we talked to the United States, and we were told, 'First of all, what you need is full independence. You need to make sure that the person or persons'—because I think Australia only has one person. I think that's correct—

I'm afraid I don't know.

I think it's Australia that has only one person who gets involved in this, but there are many different models. You need people who have an expertise in the area of trade policy, who have worked and lived cerebrally in that area for a long time and who have an understanding of the impartiality—a demonstrable understanding of working in an impartial environment, quasi-judicially, if at all possible.

So, please correct me if I've misunderstood, but the scenario you seem to be describing is that the UK Government will run the process: the application process, the interview process, the search and assessment process. The UK Government will make the final decision. Where are the devolved nations in this?

Well, the answer is: they're not. Indeed, neither is the UK Government's particular sectoral or trade interests. This is an arm's-length body set up independently to look after itself. It runs the process to find these people. It will set all the rules and regulations and it is all in accordance with the civil service process for setting up these sorts of bodies. So, any of the bodies that work UK-wide will have been set up using this similar sort of process.

So, what would your comment be to the preferred approach of the First Minister that—and I don't actually make any comment about whether he's right or wrong on this; it's just a question—the authority should be jointly agreed between the devolved nations and the UK?

I would say that trade policy is not a devolved matter, and this is absolutely the apogee of trade policy—it is the independent body that sits and adjudicates over whether something is or is not dumping; whether something is or is not something that needs to be prevented from injuring parties in the UK. And, therefore, its absolute independence is incredibly important. I would say that if the devolve authorities are to be involved, it would be—lower down is not the right way of painting it—where it is most germane for the devolved authorities to be involved, and that is down at the level of each and every consultation that is entered into, to make sure that the voice of the devolved authorities is heard. At the moment, that is not an absolute within the structure, as it's currently put together, but it's part of our thinking about what ought to be done. Again, it's an area—.

I'm afraid the reality is that we're all new to this, and we can't rush into all of these things, to make all of these decisions, but we do hear the voice that says that, whilst there should not be a specific channel through which the devolved authorities should input on every single, particular issue that comes before the trade remedies authority, there should be an absolute understanding that the devolved authorities need a voice of some sort, somehow, into that mechanism, and those thoughts are being developed. So, I think it's perfectly right and proper that we have that independent mind, as a forming principle of the trade remedies board and the way it sits, but I think we need perhaps to do a little more thinking about how the devolved authorities will feed into the process of each and every inquiry.

If I might, Minister, just to take it to a potential example of the kind of issue we might be talking about—. The key thing for the UK Government is to take into account the interests of Wales where an issue particularly affects Wales. One of the committee mentioned the issue of steel earlier—that's the kind of issue where you might envisage that a trade remedies authority might have a view in the future. It's the kind of issue also where the UK Government has taken the interests of the Welsh steel industry incredibly seriously, and it's also an issue on which the UK Government and the Welsh Government have worked very closely together and have also taken into account the interests of stakeholders in Wales. I think that's just a bit of additional context that's worth mentioning. 

10:35

There's also something that's worth laying on top of that, which is the economic interest test, which I'm sure colleagues will be familiar with. Once a dumping is found or measures are required, there is something called—there is a step after that, which is the presumption in favour of measures, which is petitioned for by some parties. We, having again looked around various authorities around the world, believe that if you have this thing called economic interest test that sits on top of the very carefully thought through process underneath, which then looks at the outcome of that process and what it will mean for the country when these measures are put in place—that test sits there to make sure that there aren't any perverse outcomes from this that you might not have anticipated. So, if there is a particular geographic reliance on a good that is affected by this particular measure that is about to be undertaken, and even though it is a very small part of the UK in terms of its actual turnover or the percentage of the market it represents—if it was to have a very severe effect on one particular part of the UK, the economic interest test is there to be applied to make sure that that is taken into account on whether you actually apply the measures as well. So, there are all sorts of checks and balances in at every stage. There's also, then, a final reference up to the Secretary of State who can look at it in a similar way but not the same as an economic interest test. 

Thank you. In relation to the Trade Bill itself, clearly there's a lot of subordinate legislation that will be coming through. Have you yet identified the amount that will be coming through and perhaps how much of that will actually be needed in reference to Wales?

So, I suppose the majority of what will come through will be any necessary statutory instruments to allow a transition trade agreement to function in a UK context. Would that be right, Leonie? That's probably where most of it's going to come from. 

The Government procurement agreement changes should be once and once only, other than amending schedules in the future if they happened to change, so that if participants in the GPA changed then it will change those, but that, I think, is sporadic at very best. So, nearly all—no, let's just say a large majority of what will be done using powers within the Trade Bill will be on the transitioning of continuity agreements. Now, how much will that require? That depends on how much the agreement being brought on board has changed, because any new primary legislation that is required is likely to be there as a result of changes to the agreement, and since we're trying to keep that at an absolute minimum if we can that should, and hopefully will, minimise that. Otherwise, any primary legislation that is required to run a continuity agreement, if it hasn't changed, will already by definition be on the statute books as directly retained EU law through the EU withdrawal Act. So, will there be loads and loads and loads? I hope not. Will there be next to nothing? No, there will be some. And do I need to go through, Chairman, what was changed at Report Stage? 

No, we understand the changes that linked in to the EU withdrawal Bill, which were subsequently changed and replicated in this—

If I may very quickly, just very quickly—there was a desire to change the clause 2 powers from negative to affirmative, which we agreed to, but we did more than that. This is germane to what we were talking about. We agreed that prior to ratification the Government would produce a document explaining what had changed in this continuity transition, and we further agreed that, when the SIs came to Parliament, the explanatory memorandum would point in that—point out in the explanatory memorandum exactly what it was the SI was changing in relationship to what we said would be changed by the report, so that colleagues can get a very much better idea, very quickly, as to what it is that is being changed, and in what way and to what degree, in a general rather than a very particular description like you get in an SI, which are often unfathomable unless you go and talk to a clerk.

And do you intend to use the regulation-making powers available under the Trade Bill to actually amend the Government of Wales Act 2006? 

As I understand it, from advice we took, we read the report that was produced by the constitution and—

10:40

Constitutional affairs committee. We looked at it very carefully and we are absolutely clear and will, I think, be writing to to you in reply at some stage. There is nothing in the Bill that can change the Act. 

Minister, I know much of this reflects how trade policy is conducted around the world and the language of offence and defence, but you've spoken quite a lot this morning about all these mechanisms for ensuring different business interests and sectoral interests are all taken into account and reflected in the negotiating position, but isn't there also an opportunity for the UK to act as a voice for free trade and try and push global discussions in that direction? And will you ensure, through your processes, that you put sufficient emphasis on the interests of the consumer in having lower tariffs and greater competition?

Well, thank you. And the answer to that is we are heavily engaged in the WTO, via the EU currently, obviously, but also applying for our own schedules, about how international trade is carried forward, and arguing, very much, for the rule of law to be applied to trade.

Now, I think, as we all know, we are in difficult times in trade. The Appellate Body is almost down to being non-quorate and, therefore, the actual mechanism by which disputes are arbitrated within the body has fallen to pieces, and that we know there are political interests in many areas, particularly in one area on that stem of work. There is no doubt that the WTO needs reforming and that there are all sorts of things within it that really need some urgent attention.

And, actually, the EU paper that was published last week by Cecilia Malmström on behalf of the Commission, on the changes that need to happen, was extremely informative and very sensible, and talked about all the issues that, I think, most of us would agree with around this table. It is basically about trying to get the rules-based order back online again, to make sure that the WTO is finally able to agree things and change things, that it looks at issues that currently aren't looked at properly, such as data and data concordats about how we deal with data in the future, and in other areas too. And dispute settlement. 

And all this goes to ensuring that consumers see lower tariffs because we have more preferential trade agreements between more nations, such that we can all trade, as far as possible, with each other on full access, low tariffs, and that benefits all of us, as has been admirably demonstrated, time and again, across the world.

Minister, the Office for Budget Responsibility produced a report last week on Brexit and the economy, or OBR forecasts, clearly indicating that there's some concern about the scope of the trade deals with non-EU countries to offset decreased economic output as a result of leaving the EU. Wales has a larger proportion of its exports to the EU than perhaps any other devolved area or region within the UK, and I suppose what we're trying to find out is: what's the UK Government's position in ensuring that the Welsh economy does grow and the impact of the Welsh economy on any FTA that the UK Government may want to put forward?

I think the only thing I can say, Chairman, is that, plainly, we're trying to negotiate these continuity agreements. That makes no judgement about whether future trade agreements will compensate for any potential loss of trade or loss of profitability or loss of gross domestic product that might occur because of Brexit. I take no particular view of that. My job is to try and facilitate the best possible trade deals we can.

As we do that, as I think I hope I've made clear today, I have a real, heartfelt desire to make sure that Wales's views are taken into account in that, and some sectoral interests will be extremely important—steel being an absolutely clear one—within that. But that's where my view sits.

It has been down to the country to vote to leave the European Union. That is something that we now need to try to put on the statute books and get through, and then move into a different trading environment in which we trade around the world, outward looking, making sure that we understand we're global citizens around the world, rules-based order on trade. But, as we go out there, we must look at our devolved authorities' interests and make sure that they are represented when we're doing these deals.

Thank you for that, and I do appreciate your personal position. You've spoken this morning, quite strongly, of your desire to actually be inclusive, as much as possible.

Indeed. Can I make apologies to Mr Melding once more for being a little overly enthusiastic?

Ministers are Ministers, that's right. I understand that. But it is important for us to also understand that, whilst international trade is a reserved matter, the implications deals have upon competences that are devolved—it's important for us to establish and identify. And, therefore, the issue of the OBR report—. I suppose I'm asking the question: has your department done an analysis based upon that? Or are you doing an analysis, based upon that OBR report, on the impact on the Welsh economy and perhaps even other regional economies, to ensure that, as you move forward, the trade deals you will come to or the policies you will set up do not have an adverse impact upon, in our case, the Welsh economy?

10:45

I'm afraid I just repeat my earlier answer.

I do, 100 per cent, absolutely understand your concerns. We must bear in mind that there are potential downsides to trade deals as well as upsides—I understand that. And if what you're saying to me is that you can have a fantastic trade deal that's brilliant for the country and leads to an enormous increase in GDP, but at the same time might well mean that certain industries and certain parts of the country are run down because there's now international competition that wasn't there before—I understand what you're saying.

Thank you for that. Again, Ministers—I'm sorry to say this, but they come and go, and it's important to ensure that the Government's position is basically reflecting your own personal view in that sense, so that we are able to have confidence that if you're promoted, shall we say, then your successor and your department will still follow that same policy, and that's what we're trying to achieve.

I think I can say this, Chairman: your assessment is exactly right. The chance of me sitting here in front of you in two years' time in the same role is very small indeed, and it is more likely to be down than it is up. So, we'll just leave that where it sits, and therefore I completely understand the point that you make. I'm afraid the honest answer is that I cannot possibly guarantee the policy positions of my successors, but I do believe that, certainly under the Secretary of State whom I work for and whose policies I implement and form with him—he is of a similar mind—we have to take very real account of the devolved administrations' needs, wants and desires—and, indeed, the needs and wants and desires of their populations and businesses.

Thank you. And just for the record, you mentioned steel—. I don't expect an answer to this one. You've mentioned steel a lot today. I represent the constituency in which Port Talbot sits, and therefore steel has a great interest for me, and the future of steel making, and therefore the trade remedies authority and other agendas that have been discussed, I clearly have the deepest personal interest in. 

Our time is up. Can I thank you for your attendance today? You will receive a copy of the transcript for any factual inaccuracies. Please can you let the clerking teams know as soon as possible if they are identified, so we can get them corrected? And, once again, thank you for your time today.

Thank you, sir. Thank you very much indeed to all colleagues for attending today.

3. Papurau i'w nodi
3. Papers to note

Whilst the Minister is leaving, can we move on to the next item on the agenda, please, which is the papers to note? We have several papers to note on this occasion. They are correspondence from the Chair of the Constitutional and Legislative Affairs Committee regarding the inter-institutional relations agreement between the National Assembly for Wales and the Welsh Government, and correspondence from the Chair of the same committee to the Cabinet Secretary for Economy and Transport regarding the scrutiny of regulations made under the Trade Bill—we might wish to discuss that in our private session. We also have a paper from the Freight Transport Association. Are Members content to note those papers at this point? 

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

Cynnig:

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

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

The next item on the agenda is a motion under Standing Order 17.42(vi) to resolve to exclude the public for the remainder of today's meeting. Are Members content to do so? 

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 10:48.

Motion agreed.

The public part of the meeting ended at 10:48.

Archwilio Cynulliad Cenedlaethol Cymru