The Chair welcomed European Advisory Group (EAG) members to the videoconference and the 4th meeting to be held remotely during the Covid-19 pandemic.
The videoconference was scheduled instead of the meeting in light of the continuing challenges and pressures resulting from the Coronavirus outbreak.
The Chair also welcomed João Vale de Almeida (EU Ambassador to the United Kingdom (UK)) and his colleague Mr Adebayo Babajide (Head of Political Section, European External Affairs Service), who had been invited to attend the meeting during their visit to Wales.
The Chair provided a short summary of the action points from the EAG meeting held on 9 July 2020 and highlighted that members should have received copies of the letters the Counsel General and Minister for European Transition (CGMET) had written to the Chancellor of the Duchy of Lancaster (CDL) on the Welsh Government’s priorities in respect of services. He also advised the group that Welsh Government officials were awaiting an answer to a point raised on equality impact assessments and that an update would be provided off–line once received.
The Chair outlined the agenda for the meeting. He explained that the meeting would focus on 3 substantive agenda items:
- a discussion with the EU Ambassador to the UK, João Vale de Almeida
- an update on the EU / UK negotiations and preparation for the end of transition period, and
- a discussion on the UK Internal Market Bill.
The Chair also updated the Group on changes to the agenda, advising that the CGMET would not be able to present item three of the agenda, an update on the EU / UK negotiations and preparation for the end of transition period, as he had been called to attend an urgent Cabinet meeting between 14:00 and 15:00. He advised the Group that Des Clifford, Director General, Office of the First Minister in the Welsh Government would present this item on behalf of the CGMET.
2. A discussion with the EU Ambassador to the UK, João Vale de Almeida
The Chair introduced the EU Ambassador to the UK and his colleague Mr Adebayo Babajide and invited the Ambassador to address the group.
The EU Ambassador to the UK spoke to the group and gave a sense of the current relationship between the EU and the UK in respect of the state of play of the EU-UK negotiations; the UK Internal Market Bill as it relates to EU-UK relations and devolution; developments in Welsh politics; Wales and Manufacturing; and Erasmus+.
The overview was well received and the following additional points were made in discussion:
- The need of stakeholders in Wales, in the political sphere and the manufacturing, business, commercial, public and third sectors to continue their deep and wide engagement with EU partners regardless of the EU transition.
- The importance and benefit of the United Kingdom Government (UKG) securing a comprehensive deal with the EU, which would provide a stable foundation for the future UK/EU relationship and also room for it to evolve after 31 December 2020.
- The EU Ambassador to the UK noted the Welsh Government’s interest, which was supported by others in the sector, to have full access to EU programmes, notably Erasmus+ and Horizon Europe and separate arrangements being made for people and organisations in Wales to participate should they choose to, even if the UK as a whole did not.
- Concerns over the UK Internal Market (UKIM) Bill setting a worrying precedent for dis-applying the UK’s international human rights commitments, and the critical need for international agreements already in existence to be respected and upheld.
- A discussion around the future relationship of Wales with the EU. It was noted that whilst it was clear that the UK is leaving the EU, it is not leaving Europe and that Europe, regardless of whether a deal is agreed, will continue its close relationship with Wales.
- The EU Ambassador to the UK noted the Group’s interest in sending representatives from Welsh civil society and / or the Welsh Government to attend and take part in the Conference on the Future of Europe.
- It was highlighted that the current UKIM Bill could pave the way for further deregulation and divergence from existing employment rights, protections and standards currently in place in Wales. Wales had worked in social partnership with business, employers, government and trade unions concerned to ensure trade deals were in the interest of workers as well as business. It was feared that the Bill would undermine this goal as it would make it easier for the UK government to negotiate trade deals that would weaken protections for business and workers, lower standards and could leave public services vulnerable.
- On the issues of standards, it was outlined that the EU would like its progressive framework on standards reflected in all future trade agreements between the EU and the UK. Future trade agreements with the EU would be more ambitious in terms of their values than previous generations of trade agreements. Difficult decisions would have to be made around access to markets, zero tariffs, zero quotas, and fair competition, and the EU’s aim was to agree an ambitious deal which would involve adhering to and respecting high standards.
- A reflection around why the EU had not developed tech companies that were on par with China and USA and on how the EU and Britain could build globally competitive economies going forward. The EU had been asking this question for a long time. The setting up of a functioning internal market by the EU and the design of Horizon had occurred at the same time when in other parts of the world tech companies developed. As a response to Covid and the financial crisis, the EU will finance and drive forward a recovery and resilience plan. It is hoped that the recent announcement of a €1.8 trillion recovery package by the EU over the next 7 years will start this process and help find partners like the UK that would lead Europe to make important progress in areas such as digital resilience.
- The Ambassador had been impressed with, and moved by, the WG’s and Welsh civil society’s commitment to Europe and that Wales’ interest and commitment to stay in close contact with EU would be conveyed to Brussels.
3. An update on EU / UK negotiations and preparation for the end of transition period
In the absence of CGMET, Des Clifford updated the group on progress on the EU / UK negotiations and preparation for the end of transition period.
As context to this item, Des Clifford highlighted that the Covid situation had worsened across and beyond Europe, that cases had risen overall in Wales and that a deteriorating position beyond Welsh borders could be seen. He explained that, as a result, the Welsh Government had made the difficult decision to introduce localised restrictions to protect the health of Welsh citizens and stabilise Welsh communities and the wider economy.
Other key points in his update included:
- The 8th round of negotiations had taken place without, seemingly, any meaningful progress being made to bridge the fundamental gaps that exist between the EU and UK. The UKG’s proposed UK Internal Market Bill, which breaches the Withdrawal Agreement only agreed last year, had made reaching a deal more difficult.
- It appears that without movement in relation to Fisheries and State aid, any real progress in other areas cannot be made.
- There is one final formal round remaining before the deadline of the October European Council and, with the current pace of progress, it was difficult to see how any compromise could be struck.
- The EU had been clear that they were approaching these negotiations following a policy of ‘parallelism’. This meant that they would not discuss the technical details of future trading arrangements until there was agreement on the fundamental areas of difference. In many areas, it was in the details where many of the significant matters rested.
- If a deal could be reached, it was unlikely to be as comprehensive or ambitious as both parties aimed for at the start of the negotiating process, and far apart from the type of deal the Welsh Government had consistently been calling for.
- The new trading relationship with the EU would be significantly worse than the one currently enjoyed, with substantial new barriers to trade, which would have a serious economic impact, compounding the risk to businesses and jobs arising from the pandemic.
- In relation to preparedness, Welsh Government had known that for the end of transition they would need to be able to implement any deal reached on the future UK/EU relationship, or manage the implications if no such deal was agreed.
- It was still not known what scenario Wales would face at the end of December, so there would be a need to continue to prepare for a range of outcomes.
- The Welsh Government was working on an End of Transition plan, the new and continuing actions that would be needed, and intend on publishing an overview of the plan at some point following the European Council meeting.
- The Welsh Government were unable to insulate Wales from every impact expected at the end of transition and had continued to stress the need for the UK government to work with Devolved Governments on preparedness.
- The Welsh Government had welcomed the slight improvement in the level of engagement made centrally by the UKG but there was concern that it was a case of too little too late.
- The Welsh Government had received from UKG a list of preparedness projects which, in its assessment, impacted on devolved areas. This information had enabled Welsh Government to make contact with lead departments and seek to progress work at an official level on the actions required of all governments of the UK.
- Projects with the highest priority for Wales had been determined. These included: projects relating to the Border Operating Model; preparations for the introduction of ‘SPS’ (animal and plant health) checks; the Shared Prosperity Fund; and emissions trading.
- A deepened and accelerated relationship would now be needed with the UKG given the changes and challenges faced whilst preparing for the end of transition and responding to a global pandemic.
- The Welsh Government was doing everything possible to put into place the necessary preparations, and to support businesses and others in Wales to be ready for the end of the transition period. This included putting in place the necessary legislative corrections to ensure a functioning statute book.
The Chair led group discussion which covered the following points:
- The possibility of securing a deal was discussed. It was felt that in order for there to be a fully worked out comprehensive deal, there would need to be a shift in goodwill on both sides. It was hoped that further progress would be made on the key issues at the European Council meeting on 15 October.
- It was unclear as to what would happen if a deal was not reached following the European Council meeting in October.
- The importance of showing how it had sought to engage with the UKG, and outlining why and what form of a deal could still be achieved.
- Concerns around a limited deal not including the option for devolved administrations to continue to have full access to and participate in EU programmes, notably Erasmus+ and Horizon Europe.
- The importance of Welsh Government continuing to explain its vision of its aspirations related to EU exit , what was important to Wales in terms of its values, long term future and its short term critical needs, and for this position to be communicated not only to the Welsh or British public but to the European public.
- It was highlighted that in the event of a deal being reached, it may not reflect to any real extent the ambition of the Welsh Government.
- There was a discussion around the Welsh Government’s preparedness work. It was highlighted that the Welsh Government had an obligation to be as fully prepared as possible in order to cope with the situation that would apply from 1 of January onwards, whether there was a deal or not a deal, by engaging with Civil Society in Wales. The real concern was that in order for this to be successful the Welsh Government would need to work closely with the UKG.
4. A discussion on the UK Internal Market Bill
Des Clifford, speaking further on behalf of the CGMET, updated the group on the UK Internal Market Bill.
Key points included:
- The UKG had published its Internal Market Bill on 9 September without any meaningful consultation with Welsh Ministers, 8 weeks after first publishing their proposals for legislation via a White Paper. This was considered by Welsh Ministers to be a serious assault on the devolution settlement and the powers of the Senedd and the Welsh Government.
- The Bill was considered to be a heavy-handed piece of legislation which severely undermined three years of collaboration via the Common Frameworks programme. It was explained that the Bill proposed that UKG Ministers would be able to fund projects and infrastructure in Wales, covering almost all devolved areas and going far wider than the areas currently covered by EU Structural Funds.
- The Welsh Government had concerns around the Bill enforcing the principles of mutual recognition and non-discrimination in the case of almost all goods and services which originated or were legally imported to any part of the United Kingdom. It was explained that whilst the Bill did not prevent the Senedd from exercising its powers in areas such as the prevention of single use plastic, it would render them effectively meaningless.
- The CGMET had written to the UKG on 7 July setting out the Welsh Government’s proposals for a structure which would enable the effective functioning of the UK Internal Market, while also respecting the devolved settlements. This structure uses the Common Frameworks programme as its foundation, harnessing rather than undermining years of collaboration and cooperation across the UK.
- The Welsh Government could not recommend that the Senedd gives legislative consent to the Bill as currently drafted. It was explained that they will seek to amend the Bill, both via further discussions with the UKG and also via engagement with the House of Lords.
- Des Clifford expressed the CGMET’s gratitude for the interest shown by colleagues in the Lords in relation to the Internal Market Bill, in particular EAG members Baroness Finlay and Lord Thomas.
- At the JMC(EN) in July, Ministers from the UKG and the Devolved Governments endorsed recent progress made on the Intergovernmental Relations Review (IGRR), particularly on Dispute Avoidance and Resolution (DAR). The CGMET had called for the details to be finalised swiftly so that it could be put into operation, and for efforts on IGRR machinery proposals to be redoubled.
- It remained clear that in the context of the UK’s exit from the EU and Covid-19 pandemic, a collaborative approach across the governments within the UK based on shared governance would be required.
The Chair led a group discussion, in which points made included:
- It was highlighted that to those in commerce and industry, the Bill was seen as a hugely important but complex piece of legislation, which was difficult to understand. Given its complexity, there was a need for it to be broken down into key elements and its impact on Wales. Specifically, what this would mean for businesses and for the people of Wales.
- The WG had made the point to the UKG that the Bill was complex and difficult to understand and had asked to see the responses they had received from businesses on the White Paper. It was explained that the UKG had declined to publish the consultation responses they had received and this made it difficult to ascertain the assertions they had made around business being very supportive of the Bill.
- The messaging the WG had received from certain business groups was that there was a lot of concern around the Bill and what this meant for business and their industry. These concerns included a lack of a guarantee around the setting of standards and uncertainty around deregulation.
- WG lawyers were currently studying the Bill to try and establish the impact it would have, both short- and long-term, on the people of Wales; and Welsh Ministers had been asked to establish the impacts that the Bill would create on their portfolio areas.
- The WG were in the process of preparing ‘model amendments’ to the Bill which would be presented to the Lord Speaker and to the leaders of the political groups in the House of Lords to urge their support for these set of amendments. These will be distributed to members after it is released.
- Regarding the position of the other Devolved Governments in relation to the Bill, it was expected that the Scottish Government would refuse consent but that the situation in Northern Ireland was more complicated due to its political situation.
- The impact of Part 6 of the Bill on funding in Wales was discussed. There were concerns around the UKG’s proposal to take spending powers itself and to spend on infrastructure and other projects in Wales without any reference to WG, Senedd and Civil Society in Wales.
- The establishment of successor arrangements to Structural Funds were no closer to being agreed since the EAG was established in September 2016. This meant that the WG, as well as local authorities, were unable to plan effectively and as such were unable to make offers to business. There was a need for clarity from UKG as to how replacement EU funding would be shared out across the nations.
- The need for WG and businesses in Wales to work together to foster a new way of thinking, new ideas and a new way forward for economic development and resilience to combat the combined realities of Covid-19 and Brexit.
Any other business
The Chair entered the CGMET’s personal apology for not being able to return to and participate in the meeting.
The Chair thanked Des Clifford for standing in and presenting the CGMET’s agenda items to the group on his behalf.
The Chair confirmed the next EAG meeting / conference call was scheduled for late November, but that this would be kept under review.