Eluned Morgan MS, Minister for International Relations and the Welsh Language
On 17 June the UK Government published a series of documents relating to the UK’s trade negotiations with Australia and New Zealand. I am writing to provide an update on the Welsh Government’s view on these trade negotiations, and on the recently launched negotiations with Japan.
Overall, the Welsh Government believes free trade has a vital role to play in supporting Wales’ economy and our economic recovery from the COVID-19 pandemic. Before the pandemic, the latest data, from 2018, shows goods exports contributed 23% to Welsh GDP. The Welsh Government has consistently argued that new Free Trade Agreements (FTAs) should not be seen as a substitute to an FTA with the EU, but should instead be a complement to it. Even in a best case scenario, FTAs with Japan, Australia and New Zealand would only provide a fraction of the economic growth we will lose if we fail to strike a comprehensive FTA with the EU.
On the 9th June UKG launched negotiations with Japan. The negotiations aim to build on the existing EU-Japan deal, seeking to ensure continuity for businesses already benefitting from the EU-Japan deal. Wales has had close economic links with Japan for decades and trade with Japan in the year ending March 2020 was worth £854m (2.4% of Welsh goods trade). It is essential that we can consolidate and build on those links, so we welcome the start of negotiation on a new trade agreement between the UK and Japan.
Trade gravity helps explain why Welsh trade with Australia and New Zealand is currently relatively limited – data for the year ending March 2020 shows that goods exports to Australia were just 0.8% and New Zealand just 0.2% of total Welsh goods exports.
Although the outline cases for Australia and New Zealand are a reasonable starting point for negotiations and highlight the opportunities that exists, Welsh Government is alive to the potential damage that could be done to our agri-food sector if the deal is not negotiated to the benefit of the whole of the UK. It is essential that Welsh Government is fully involved in negotiations to ensure Welsh interests are protected.