Securing Wales' Future - Transition from the European Union to a new relationship with Europe - Gov.Wales
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Securing
Wales’
Future
Transition from
the European Union
to a new relationship
with Europe
Securing Wales’ Future | 1
Contents
1 First Minister’s
Preface
Page 4 2 Preface by the Leader
of Plaid Cymru
Page 5
3 Summary
Page 6 4 The Single Market and
International Trade
Page 9
5 Migration
Page 15 6 Finance and
Investment
Page 19
7 Constitutional and
Devolution issues
Page 26 8 Social and Environmental
Protections and Values
Page 29
9 Transitional
Arrangements
Page 33 10 Conclusion
Page 34
11 Annex A
Page 35 12 Annex B
Page 49
This White Paper been developed jointly by the Welsh Government and Plaid Cymru
email: europeantransition@wales.gsi.gov.uk
© Crown copyright 2017 WG30683 Print ISBN: 978 1 4734 8516 7 Digital ISBN: 978 1 4734 8518 1
Mae’r ddogfen yma hefyd ar gael yn Gymraeg / This document is also available in Welsh
1 First Minister’s Preface
A majority in Wales voted to leave
the European Union (EU) and the
Welsh Government has been clear from the
outset that this democratic decision must be respected.
We are equally clear that the questions. The Council for intention of helping shape a viable
terms of exit must protect Wales’ Economic Renewal provides a and consensual UK negotiating
vital interests and should be particular focus on the economic position. This White Paper sets
capable of bringing together those and business challenges. More out the broad aims of the Welsh
who voted to leave and those who widely, thought about Wales’ Government for those negotiations.
voted to remain. We do not believe future is informed by extensive Throughout, the emphasis is
that people were persuaded to and active debate across sectors on preserving and promoting
vote leave with the intention that such as agriculture, environment, prosperity while recognising the
Wales should become worse off Higher Education, the third majority wish to leave the EU.
as a result, nor do we believe sector, the creative sector,
that this should be an inevitable local government and others. As we face the future many
consequence of leaving the EU. questions remain. The Welsh
Departing the EU in no sense Government must approach its
Decisions taken in the months means that Wales will turn its work in new ways and the UK
ahead will define Wales’ economic back on Europe. Continued full itself must adapt and change.
and social interests for many and unfettered access to the We believe that the UK’s exit
years to come. Exiting the EU Single Market is fundamental from the EU should be conducted
presents clear risks which need to our future. Our friends and through constructive negotiation
to be managed and mitigated neighbours in Europe will based on mutual respect and
and the Welsh Government has continue to be our friends and shared long-term interests
a responsibility to preserve and neighbours, and we need to find among European neighbours.
develop the country’s prosperity. new ways of working together
There will also be opportunities on our common challenges.
to think afresh about our policies Equally, Wales is a world-facing The Welsh
and programmes, about how nation. We have a long record Government is
we work together in a changed of trade and investment with
United Kingdom (UK) outside North America, Japan, the
determined to protect
the EU, and the potential to Middle East and elsewhere. this country’s vital
help businesses explore new We embrace the world and its
markets around the world. horizons, and where new trade
interests and the
opportunities open up, we will future prosperity
Politicians in Wales have no
monopoly on wisdom and our
work with businesses to help of Wales.
our economy prosper.
perspective has been informed
by extensive debate, not just This White Paper outlines Wales’
within the National Assembly key strategic interests and
for Wales but beyond it. Our priorities as the UK prepares to
European Advisory Group draws leave the EU. We are working
on individual specialist expertise with the UK Government,
and the spectrum of political Northern Ireland Executive and Carwyn Jones
opinion as we consider detailed the Scottish Government with the First Minister of Wales
4 | Securing Wales’ Future
2 P
reface by the Leader
of Plaid Cymru
Since the vote to leave the European
Union, Plaid Cymru has advocated that
the priority should be to secure and defend the Welsh
national interest, in particular our economic interests.
Plaid Cymru outlined our desire solidifies the view of the involved that withdrawal from the EU
for a formal Welsh negotiating parties that Wales should be should precipitate a remodelling
position on EU withdrawal; for able to benefit from continued of the governance structures of
parties to collaborate on defining participation in the European the UK, a long-held belief within
and promoting the Welsh national Single Market. There has been our party.
interest; and for Wales to secure movement between the parties
as much common ground as involved in terms of agreeing It also progresses the Party
possible with the other devolved possible forms which this of Wales’ calls for a more
administrations so that there is a continued participation could take, comprehensive international
‘Four Countries’ approach. with agreement being reached policy, as well as our key priority
that this could include EEA and/ of retaining and enhancing vital
Thanks to significant and or EFTA membership, and that it links between Wales and Ireland.
constructive efforts through must avoid tariff barriers.
liaison between Plaid Cymru and Just as Plaid Cymru has worked
the Welsh Government, these The document welcomes the in the name of Welsh national
positions have been advanced, contribution of European workers unity to develop this joint position,
and will now become the policy of and migrants to Welsh society and we are confident that the Welsh
the government, and the position our economy, and challenges the Government will continue to work
of a clear majority of Members of negativity which has been allowed with Scotland, Northern Ireland
the National Assembly. to dominate political discourse. It and other partners, to identify
upholds the principle of freedom common ground, both ahead
For Plaid Cymru, this document of movement and is therefore of and during any negotiations.
reflects our core principle that consistent with full Single Market
Wales has a democratic right to Regardless as to how people
participation. voted in the EU referendum,
shape the kind of EU withdrawal
that takes place. It further sets out a way for Wales there should now be a sense
not to lose out financially when of encouragement that Wales
Wales’ role should be to influence EU funding ends. The document has a clear and articulate
any negotiations which take place, also clarifies that Wales could and position ahead of forthcoming
rather than simply accepting that should continue to benefit from a negotiations. Our national
EU withdrawal can be carried out range of European programmes interests and needs are clearly
without regard to the interests of which are of benefit to our citizens. expressed in this paper, and I
Wales, Scotland and Northern have no hesitation in commending
Ireland. On the issue of environmental, it to people in Wales.
social and workplace regulations,
It is therefore of crucial a strong message is sent to the
importance that the UK UK Government that these must
Government recognises in any not be eroded or discarded in the
negotiations that the UK is a multi- name of deregulation or ideology.
national state, not a single nation.
Crucially for Plaid Cymru, the Leanne Wood
In promoting the Welsh national document contains agreement Leader of Plaid Cymru
interest, this White Paper
Securing Wales’ Future | 5
3 Summary
This White Paper sets out the its negotiating position. In so shows that any significant
main issues which we have doing, the UK will be pursuing reduction in access to the Single
identified as vital for Wales as outcomes which we firmly believe Market will be damaging, and
the UK moves to leave the EU. will be beneficial for the UK as a the greater the reduction, the
It has been developed by the whole, as well as for Wales. worse the consequences will be
Welsh Government in conjunction in terms of reduced or negative
with Plaid Cymru through an There are six key areas which we growth. We believe that full and
official Liaison Committee1. The believe need to be addressed unfettered access to the Single
views of the European Advisory in negotiations: the Single Market for goods, services
Group, appointed by the First Market and international and capital – including our key
Minister in summer 20162, trade, migration, finance and agricultural and food products –
have played a helpful role in investment, constitutional and is vital for the forward interests
developing its content. devolution issues, Wales’ social of Wales and the UK as a whole
and environmental protections and we urge the UK Government
The Welsh Government will and values, and transitional to adopt this as the top priority
work constructively with the UK arrangements. for negotiation with the EU.
Government as the UK prepares There are various ways in which
to exit the EU and transition The Single Market and this might be achieved. These
towards a different relationship International Trade might involve UK membership
with our European neighbours. The Welsh economy is closely of the European Free Trade
Together with Plaid Cymru, the integrated into the EU Single Association (EFTA), of which
Welsh Government will speak Market and some two thirds of the UK was a member prior to
for Wales to ensure that the identifiable Welsh exports go to joining the EU, and through this
terms on which the UK leaves EU countries. Wales’ success continuing to form part of the
the EU are not damaging to in attracting foreign direct European Economic Area (EEA);
Wales’ interests. In return, we investment over many decades or through a negotiated bespoke
expect the UK Government to is largely based on access to arrangement unique to the UK.
take full account of the issues the EU market of more than
we have identified as vital to 500 million customers. Analysis
Wales’ interests in forming
(below) Swansea city at dusk
1
In the Paper, “we” should be taken to refer to both the Welsh Government and Plaid Cymru.
2
http://gov.wales/about/cabinet/cabinetstatements/2016-new/euadvisory/?lang=en
Migration is linked to employment. For
We acknowledge that a wish students and researchers, we
to address concerns arising believe continued free mobility
from EU migration was part across Europe is in the best
of what stimulated support interests of Wales and the UK
for leaving the EU and that as a whole. Linking freedom
the UK Government sees of movement to employment
migration as a key focus of should be complemented
the forthcoming negotiations. by rigorous enforcement of
Equally, we recognise the very existing legislation to prevent
positive contribution EU migrants exploitation of workers,
make to our economy and particularly those in low-wage
communities. The rights of EU occupations.
migrants already living in Wales
to remain should be guaranteed Finance and Investment
immediately and all who live
here must be treated with equal In budgetary
respect. We call upon the EU
to give a reciprocal guarantee terms, Wales is a
to Welsh and UK citizens living net beneficiary of (above) European Investment Bank in Luxembourg
in the EU. We believe that
Wales will continue to need
EU membership, current EU funding for regional
economic development in Wales,
migration from EU countries to currently receiving agriculture and the countryside.
help sustain our private sector
economy and public services.
about £680million Significant investment in Wales is
In our view, the key is to ensure in EU funding stimulated by a number of smaller
EU programmes and we strongly
that, apart from students and each year. believe Wales should continue to
those who are able to sustain
benefit from access to them from
themselves independently, Not only is this funding hugely outside the EU. These include:
freedom of movement of people important to Wales in terms Horizon 2020, ERASMUS+,
of driving economic growth Creative Europe and the Wales-
and jobs, it also enables the Ireland Programme. We also set
Welsh Government to leverage out why we believe the UK should
additional resources from both remain a partner in the European
public and private sources. Investment Bank.
While the UK Government has
largely guaranteed funding for Constitutional and
projects agreed prior to 2020, Devolution Issues
it is crucial in the longer term
Withdrawing from the EU is a
that EU funding is replaced
major constitutional turning point
by a revision to the Block
for Wales and the UK as a whole.
Grant. During the referendum
Powers already devolved to Wales
campaign voters in Wales
– agriculture, fisheries, regional
were assured that leaving the
development and environment,
EU would not result in Wales
for example – will in future be
being worse off and it is vital to
exercised here without an EU
public faith in political process
regulatory framework. Similarly,
that this promise is honoured.
reserved powers which would, in
Replacement funding from
UK sources must reflect
Securing Wales’ Future | 7
principle, be exercised at UK level devolved settlement in relation to Transitional Arrangements
(for example, on international the Bill, then we will do so. It seems increasingly likely that
trade or competition) would have negotiating both the terms of
potential to impact adversely on Social and Environmental our withdrawal and a workable,
devolved policies in Wales. Protections and Values detailed future relationship with
The UK has been part of the EU the EU may not be achieved
The current inter-governmental
for more than 40 years and a within the limited timescale set
machinery will no longer be
substantial body of legislation for the Article 50 negotiations.
fit-for-purpose and new ways of
has been developed which Experience from elsewhere
working – based on agreements
protects Wales’ environment suggests that trade negotiation,
freely entered into by the UK
and social well-being. Clean for example, is necessarily
Government and the three
air, water and beaches are all complex and time-consuming.
devolved administrations and
underpinned by this legislation. The scale of work required to
subject to independent arbitration
A range of rights and protections adapt our legal, constitutional
– must be developed. The scale
for workers limiting exploitation and institutional structures is
of change demands that the UK
in the workplace, including, equally complex and likely to
itself be remodelled to energise a
for example, the Working Time require significant development
dynamic and decentralised future
Directive, have resulted in safer time. We therefore believe the
based on co-operation, common
working environments and UK Government should seek
purpose, solidarity and workable,
better conditions for employees. agreement, as a matter of high
more federal, structures. We see
The safety of products sold in priority within the Article 50
preparation for departure from
our shops and a range of wider negotiations, on a transitional
the EU as the starting point for a
consumer protections have phase, after our formal exit
detailed debate about reform and
accrued from EU legislation. from the EU, to avoid the chaos
change within the UK. We need
In the short term, the so-called and uncertainty which would
sight of detail on the ‘Great
Great Repeal Bill will preserve arise from a sudden ‘cliff edge’
Repeal Bill,’ proposed by the
existing legislation in domestic departure. Leaving the EU does
UK Government before we can
law. In leaving the EU, we need not mean leaving Europe and we
develop an informed position
to be vigilant and insistent that believe negotiations should be
on its implication for devolution
protections and standards which based on good faith and mutual
in Wales. If, after analysis, it is
benefit our citizens and the well- neighbourly interest.
necessary to legislate ourselves,
being of society as a whole are
in the National Assembly for
not eroded.
Wales, in order to protect our
(below) Three Cliffs Bay, Gower
8 | Securing Wales’ Future
4 The Single Market and International Trade
Economic impact of
leaving the EU
The Welsh and UK economies
benefit substantially from
participation in the European
Union Single Market. The
latest HMRC figures show that
exports to the EU account for
around two thirds of all goods
exported directly from Wales to
destinations outside the UK. The
attraction of foreign investment
into Wales, a key economic
driver since the 1970s, has
been driven to a large extent (above) Ferry unloading, Dover
by the fact that the UK offers
a favourable cultural and • the scale of the negative to trade have been overcome
regulatory environment within the impact is expected to be by regulatory convergence, this
Single Market. For this reason, directly related to the degree convergence should remain
we believe that continuing of access to the Single in place. It is for those who
full and unfettered access to Market that is retained believe we should move from
Europe’s Single Market is vital after leaving the EU. current trading arrangements to
to Wales’ forward economic a worse position, for example,
There is strong consensus WTO rules, to justify why they
interests: throughout this White
among mainstream economic think this is good for business
Paper we refer to that access
forecasters that replacing Single in Wales and the UK as a whole.
as ‘Single Market participation’.
Market participation with World
The imposition of tariffs, Trade Organisation (WTO) rules The case for continuing
and non-tariff barriers such could result in a UK economy up Single Market participation
as product certification and to 8 – 10% smaller than would is overwhelming and we can
company registration, between otherwise have been the case agree to no other position.
the UK and the EU could only and would devastate trade in There are various ways in which
be damaging to business in certain key sectors, notably food, this might be achieved. These
Wales and the UK (see Annex the UK’s largest manufacturing might involve UK membership
A). No argument to the contrary sector, and the automotive of the European Free Trade
exists. Indeed, the only serious sector. This would have both Association (EFTA), of which
point of discussion is the extent immediate and long-term the UK was a member prior
of the economic damage to consequential impact on living to joining the EU, and through
Wales if this outcome were to standards and poverty in Wales. this continuing to form part of
materialise. Independent expert the European Economic Area
We believe it is imperative to (EEA); or through a negotiated
analysis of the impacts of exiting
retain full Single Market access, bespoke arrangement unique
the EU on the UK as a whole
without tariffs and non-tariff to the UK. Continued Single
share common findings:
technical barriers, for trade and Market participation means, of
• the overall economic impact investment. Where no tariffs are
is expected to be negative course, that the UK would have
applied to goods and services a continuing need to ensure
and significant now, none should be applied in that the domestic regulatory
future. Where technical barriers regime for goods and services
Securing Wales’ Future | 9
Economic links are not confined
to a few specific sectors. Direct
exports from Wales to the EU
are significant across a wide
range of goods sectors including
agriculture, steel, automotive,
chemicals, electronics, aerospace,
pharmaceutical, transport
equipment and petroleum. Steel
is a massive strategic Welsh and
UK industry operating in a hugely
competitive international market,
and closely linked to EU markets
and policy. Suggestions by some
that individual sector by sector
(above) Airbus Beluga on runway at Deeside deals could provide the certainty,
breadth or simplicity essential for
within the UK are compatible with links with the rest of the UK.
businesses across Wales, and
those of the EU and that suitable For this reason, we believe it is
indeed the UK, are ill-evidenced
dispute resolution arrangements essential that the whole of the
and could be deeply damaging.
are in place. We firmly believe UK should retain Single Market
The importance of primary
that this is a price worth paying participation. Continuing to
production and manufacturing,
for the economic benefits which align our standards with those
and not just services, needs to
can only be secured by strong of the Single Market will not
be taken into account in defining
continued participation in only protect our economic
appropriate Single Market
the Single Market. interests but safeguard the UK
access. Account must also be
internal market as well. This
In many ways the economy taken of indirect exports (goods
issue is explored further in
in Wales is closely integrated supplied to English firms which
chapter seven.
with the wider UK economy. are subsequently exported),
Unsurprisingly, in view of the Our principal argument for services and imports.
importance of geographical Single Market participation is
It is also important to recognise
proximity and a largely common to prevent the haemorrhaging
that Wales is potentially more
institutional framework, Wales of investment and jobs which
vulnerable to economic shocks
trades much more with the would flow from a radical
than some other parts of the
rest of the UK than with other deterioration of the basis on
UK due to factors such as
countries. The value of trade which Wales and the rest of
relatively low household income
flows between Wales and the rest the UK trade with our key
and a greater reliance on
of the UK, particularly England, European markets. In addition,
manufacturing. An economic
is perhaps four times greater the imposition of barriers to
downturn impacting on the UK
than the value of direct Welsh imports from the EU would
as a result of EU exit could have
international exports3. Welsh also produce negative effects
a disproportionately high impact
goods sent to the rest of the including an increase in
on the Welsh economy.
UK will often form components consumer prices in many goods
in other goods that are eventually and increasing the cost-base of Moreover, in general terms, the
exported, although no reliable goods and services dependent lower levels of output in the UK
data is available for this. on imports. For example, more economy as a result of a ‘hard
than 81% of our timber is Brexit’ would be expected to
The largest impact on imported, as is the majority of translate into lower tax revenue
Wales from any new trading agricultural feed and fertiliser and greater pressure on the public
arrangements that limit access (which has a direct impact on finances, an analysis confirmed
to the Single Market would be felt food prices) and, of course, by the Chancellor’s Autumn
indirectly through Wales’ trading food itself. Statement. A departure from
3
T he true multiple may be considerably larger, given the low domestic value added in several major categories of Welsh exports,
such as petroleum products (see below).
the EU which does not provide road haulage services, have The EU has also led the
Single Market participation will supported the efficient operation liberalisation of air transport
almost certainly lead to even of the Single Market for goods across Europe. This has created
more significant cuts to public and produce. a number of ‘freedoms’ for
services in Wales, or to tax rises, EU-registered airlines which
or both, than would otherwise State aid and procurement have allowed them to have a
be the case. This underlines rules are particularly important base in one EU Member State
the need to ensure that Wales for transport, providing both and operate services between
is compensated in full for a framework and a constraint other Member States. This has
the loss of European funding for government intervention. increased passenger choice
(see chapter 6). Transitional measures in these and reduced the costs of travel
areas must be workable in order significantly, and we wish to
Transport for the benefits of transport retain these benefits after
schemes to continue for the leaving the EU.
Transport is crucial to an people of Wales. The UK has
effective local and global led the discussion about EU Rail routes in Wales that are
economy. EU policy development transport liberalisation and we currently part of the core Trans-
over recent decades has been would not want any transport European Transport Network
focussed in key transport policy undertakings based in Wales to (TEN-T) are set to achieve
areas such as safer skies, seas be restricted from entering the European standards by 2030,
and roads; more transport EU transport market place. including electrification and train
choices for travellers; passenger length accommodation. The core
rights for air travel, rail, ships Over years the EU has routes comprise of the South
and buses or coaches; and developed a framework for Wales mainline to Milford Haven
technological progress towards enhanced passenger rights and and the North Wales mainline to
cleaner transport and the compensation covering rail, bus Holyhead. EU rail interoperability
reduction of harmful emissions and coach, air and sea (ferries is key for Welsh regions if they
into the environment. In addition, and cruise ships). We wish to are not to suffer disadvantages
common standards for vehicles, ensure that these benefits and of peripherality, including
driver licensing and driving tests reciprocal rights for passengers unsustainable reliance on the
for both professional and private are maintained for Welsh and UK road network as the only realistic
drivers, and market opening for citizens after leaving the EU. means of connectivity.
(below) Second Severn Crossing
Securing Wales’ Future | 11We wish to maintain rail congestion due to the additional
passenger accessibility time required and additional Over the last three
for people with reduced
mobility, maintain technical
costs. Should the land border
between Northern Ireland and
full financial years,
interoperability with the Ireland be treated differently there have been a
European Rail area to maintain from movement between EU total of 277 foreign
or improve Wales’ manufacturing Member States and the rest
base, and maintain freedom of the UK, this could impact direct investments
for reciprocal EU and UK on trade patterns and freight by companies
arrangements to allow movement between UK and
participation in tender processes Ireland. If importers / exporters from 34 individual
for franchises. choose to move their products countries.
via Northern Ireland, this could
The Single Market creates disproportionately affect Wales, These investments have created
free movement rights for both as proportionally more traffic to or safeguarded more than
people and goods. Leaving Welsh ports comes from Ireland 27,000 jobs. Two thirds of these
the Single Market would mean compared to the rest of Great projects were from countries
policing new restrictions on the Britain. outside the EU and many were
movement of people and goods, attracted to Wales because of
meaning checks on passengers Continued overseas our access to the Single Market.
and goods could be more investment in Wales
onerous and resource intensive. Since the referendum, the Welsh
Wales has a strong record of Government has stepped up
This would impact on ports
attracting inward investment its international engagement,
and airports as commercial
from around the world. with missions to the USA led by
entities, which would face
the First Minister and to Japan
(below) Ringing the bell at New York Stock Exchange
12 | Securing Wales’ Futureled by the Cabinet Secretary
for Economy and Infrastructure.
In future, we believe it will
be essential for the Welsh
Government to invest even more
resource and energy into efforts
to promote Wales’ commercial
and wider interests abroad, not
least to signal that Wales remains
an open, internationally-engaged
country. We call upon the UK
Government and its international
bodies – such as the Foreign
and Commonwealth Office, the
Department for International
Trade and the British Council,
to support us pro-actively in
these efforts. (above) Vehicle queue at border control in Calais port
However, without Single Market A customs union is characterised An additional significant
participation, it will become by two main features. It allows benefit of the EU Customs
increasingly difficult to convince free trade in manufactured goods Union is that it accommodates
potential investors interested within the customs union and complications around Rules
in more than the UK market to members agree to a common of Origin requirements, which
locate new projects in Wales. external tariff on imports from the would significantly reduce cost
Potential inward investment rest of the world. Membership of and bureaucratic hurdles to UK
projects have been cancelled the EU Customs Union4 prohibits exports which would otherwise
or put on hold pending greater countries from negotiating other apply once the UK has left the
clarity about the terms of bilateral trade deals. EU. Inside the EU Customs
the UK exit from the EU. The Union businesses benefit from
Welsh Government urges the The main advantage of the EU avoiding bureaucratic costs
UK Government to end this Customs Union is that it provides and delays and through the
uncertainty by committing to free trade in goods with the 56 hidden benefit of not being
Single Market participation as countries with which the EU has deterred from trading by
a key negotiation outcome. agreements (plus, most recently, customs barriers.
Canada). This represents a
The Customs Union substantial base of favourable Against these advantages,
While the case for ensuring Single trading relationships around the remaining part of the EU
Market participation is, in our world for Welsh and UK exports. Customs Union while no longer
view, overwhelming, the issue Studies show that the direct an EU member might require
of whether or not the UK should benefits of membership of the the UK to introduce tariff free
seek to remain part of the EU EU Customs Union are worth access to the UK market for
Customs Union is more complex. at least one percent of Gross countries concluding new free
While countries such as Norway Domestic Product (GDP), with trade agreements with the
and Iceland, which form part of indirect benefits significantly EU, without being immediately
the European Economic Area, are higher than that. For Wales to able to secure reciprocal
not part of the Customs Union benefit fully from remaining in advantages for UK exports.
(EEA), a bespoke agreement for the EU Customs Union, it would In principle, any possible
the UK might potentially include be vital that primary agricultural disadvantage here should be
this. Arguments for and against and fisheries products were strictly short-term.
remaining inside the disciplines included within an agreement on
of the EU Customs Union may be the UK’s continuation in the EU
marshalled in different ways. Customs Union.
4
T he EU Customs Union consists of all members of the EU and some of its neighbouring countries: Turkey and a number of EU micro states including
Andorra, Monaco and San Marino. The EU has slightly different arrangements with each of the countries that form the EU Customs Union. For
instance, the agreement with San Marino includes agriculture whereas the agreements with Turkey and Andorra exclude agricultural products.It is argued that trade At this point, we are
agreements with the largest unconvinced that the Policy Summary
global economies – the United possible benefits of
The vital importance of EU
States, China, India and others withdrawing from the EU
trade to Welsh businesses
– have proven problematic for Customs Union outweigh
the EU, partly as a result of the costs. Participation and to the wider economy,
competitive scale. It is further to the Single Market is a underpinning the living
suggested that the UK outside critical requirement – all the standards of everyone
the EU might in theory be better available evidence suggests who lives in our nation is
placed than the EU to negotiate that countries generally clear. We cannot support
bi-lateral trade deals with these trade more intensively with an EU exit agreement that
kinds of larger countries. geographic neighbours and would leave the UK without
similarly developed countries continued Single Market
Of course, it cannot be known – and participation in the EU
with any certainty at this stage participation. The EU
Customs Union is a natural,
whether the UK would in fact Customs Union delivers
though not essential, corollary
be able to negotiate such benefits for Welsh business
of this. The EU Customs Union
favourable bi-lateral deals with currently offers coherent export and the case for an
large countries. For us to support arrangements to many partner alternative strategy has
this view, compelling evidence countries around the world and not so far been advanced
would need to be presented that complications around Rules with sufficient credibility or
such potential benefits would of Origin can only be viewed evidence. We believe at this
outweigh the actual and current as disadvantageous. Where stage that remaining part
benefits of trading within the there is currently convergence of the EU Customs Union,
EU Customs Union. in arrangements which help including for primary
businesses export, we should agricultural and fisheries
aim to retain that convergence. products, remains the best
position for Welsh and UK
business.
14 | Securing Wales’ Future5 Migration
Wales has benefited from legitimate rights of residence • The food and drink sector in
inward migration from the EU should be used as ‘bargaining Wales reflects the overall UK
and many other parts of the chips’ in negotiations on the figures with over 25% of the
world. We believe that migrants UK’s exit from the EU. labour force that is non-UK.
make a positive contribution to • Nearly 50% of veterinary
Wales’ economy and to society Many sectors of the Welsh
economy are dependent on the surgeons registering in the UK
more widely. We regret and qualified elsewhere in the EU6.
condemn the rise in xenophobia skills of migrants from the EU,
for example: Within meat hygiene services,
and racism exacerbated by the it is estimated that more than
immoderate tone of debate • Some 1360 academic staff in 80% of the veterinary workforce
in some parts of the political Welsh Universities came from is made up of non-British
community. EU countries as at December EU citizens7.
2014; any restrictions to the
We stand in full solidarity with free movement of workers would • The creative sector’s ability to
all our people, irrespective severely impact Wales’ ability tour and operate in EU countries
of their country of origin and to access academic talent without regulatory cost barriers
believe that the UK Government and to engage in cross-border drives significant revenue in this
should already have made collaboration. important industry; recruitment
clear that everyone legally and retention of staff from EU
resident in the UK will have • The life sciences sector and countries is vital to the sector’s
their rights guaranteed after the pharmaceutical industry sustainability.
we leave the EU. We call upon are significantly dependent
on EU citizens. • In the health and social care
the UK Government to make a sector, as of September 2015
clear declaration along these • The construction sector is around 1,140 EU nationals
lines to provide reassurance heavily dependent on migrant were employed in NHS Wales,
to EU citizens5 living in Wales workers, with serious skills with 6% of our doctors having
and elsewhere in the UK. We shortages reported; the UK trained in other parts of the EU.
call upon the EU to make a National Infrastructure Plan
similar declaration in respect (September 2015) estimated • Current figures suggest that
of Welsh and UK citizens living that at least an additional the tourism industry in Wales
throughout the EU. We reject 100,000 construction workers employs around 11% of migrant
completely any inference that would be needed by 2020. workers, half of which are from
the status of citizens with EU countries.
(below) Morvus Technology, Abergavenny
5
eferences in this chapter to EU citizens should be taken to mean EU or EEA citizens;
R
and EU countries to mean EU or EEA countries
6
Royal College of Veterinary Surgeons
7
Veterinary Public Health Association Securing Wales’ Future | 15It is vital that different sectors tourists, students and ordinary this country are not in work or
in the economy are able to meet business travellers from European are reliant on benefits.
their recruitment needs where countries. Equally, the Welsh
it has been demonstrated that Government would regret and Indeed, one clear impact of
the domestic labour market oppose the erection of barriers migration has been to increase
is insufficient. inhibiting ordinary travel by the overall scale of the UK
Welsh and other UK citizens in economy and therefore to
Direct employment is a major, Europe. The retention, in this increase tax revenues. Migrants
but not the only, concern sense, of freedom of movement will, of course, also add to the
related to migration. The of people is good for business demand for, and hence cost
ports of Holyhead, Fishguard among neighbouring countries of, public services. However,
and Pembroke Dock are the with shared interests and any the evidence suggests that the
key arterial and logistics suggestion of visas for ordinary economic growth effect is larger
routes between the UK and travel between Europe should be than the increase in cost, due in
Ireland. These ports also firmly resisted as a backward step. part to the average age-profile
form important terminals on of migrants. While we support
the Trans European Network, The Welsh Government recognises the reintroduction of appropriate
connecting Ireland with Europe that concern about the extent funding mechanisms to support
beyond Great Britain. Ireland is and speed of immigration from areas affected by increasing
consistently one of Wales’ top the EU was a key concern in the strain on public services
export destinations, as well as referendum for many who voted as a result of high levels of
a major investor into the Welsh to leave. Concern has also been in-migration, a ‘hard Brexit’
economy, and our businesses expressed about ‘benefit tourism’ with drastic curtailing of EU
and tourists, in both directions, by EU migrants. As the research at migration would not only reduce
depend on these routes. Annex B demonstrates, the scale employers’ access to skills but
of EU migration into Wales is, in also reduce economic prosperity
Any changes to migration and/ fact, relatively modest and only a and public spending over and
or customs rules would have an small minority of EU migrants to above the negative impact
immediate and major impact
at the Welsh ports. Cost, time,
(below) Higher Education students © Renzo Mazzolini
inconvenience and regulation
would be added with negative
consequences for both private
and public sectors, and citizens.
The ports could become
less attractive commercially
and businesses and tourists
may be stimulated to seek
other routes, driving negative
economic consequences for
the port hinterland regions
more generally – in both
Wales and Ireland.
Freedom of movement of
people, the right of citizens to
travel freely and without visas
among European countries,
essentially as tourists and
for short-term visits, is surely
a benefit worth preserving.
This would be the case even
if the EU did not exist. It can
serve no positive purpose to
impose needless barriers to
16 | Securing Wales’ Futureflowing from lost access to the Government to devise such
Single Market. a system which is broadly International
We believe that any future UK
compatible with the principle of students and their
freedom of movement of people,
system for regulating reciprocal and in line with the practice visitors generated
freedom of movement of people
between the UK and the EU/
of other EU and EEA member £530 million of
states.
EEA should be fair, transparent, export earnings
non-exploitative and rules-based. Migration within the EU is not,
In our view, the key to addressing of course, one-way traffic. Many
in 2014, which is
concerns is to ensure that, for thousands of Welsh and UK equivalent to 4% of
those who are neither studying citizens choose to live, work
nor have independent means, or study in EU nations under
all Welsh exports.
freedom of movement for new the protection of reciprocal This created 7,600
migrants from the EU/EEA into arrangements. This includes jobs and generated
Wales is linked to employment. many retirees who have made
This might involve the prior offer a lifestyle choice in favour of £400million of Gross
of a job or the ability to secure an European countries. In our Value Added over the
offer within a short time of arrival view, individuals over retirement
in the country. Such a managed age with sufficient resources same period8.
employment-based approach to live on (either from their
We advocate the retention of
would restore faith in migration pension entitlement from their
reciprocal arrangements which
policy and enable the UK to home country or from their own
enable EU students to study at
assert domestic control over resources) should continue to
UK institutions, and vice-versa,
migration while also retaining be free to settle in Wales, and,
when the UK is outside the EU.
mobility of labour within Europe similarly, UK nationals should be
We do not believe that students
as an underpinning principle of free to settle in EU countries on
should be counted as ‘migrants’
the Single Market. We believe the same basis.
for the purposes of national
it would be possible for the UK
Students have benefitted statistics.
through ERASMUS + and other
In all cases, we believe that, as
programmes which have created
part of such arrangements, EU
opportunities for them to study
countries should fully protect the
or undertake placements in
rights of Welsh/UK citizens in EU
European countries.
countries and that the UK should
guarantee the same protections
In 2014/15 there to EU citizens legitimately living,
working or studying here.
were 5,425 EU
students and We believe an intelligently
devised migration approach
18,805 other should be underpinned by a
overseas students strong culture of enforcement
of legislation to prevent the
studying at Welsh exploitation of workers by
Universities, with unscrupulous employers seeking
to undercut locally established
international wage rates and appropriate
students as a industry regulation. All workers
in Wales and the UK, whatever
whole accounting their country of origin, must
for 18.2% of the be treated equally and fairly
according to law. We believe that
total student an approach to migration along
body in Wales.
8
All figures; Universities Wales, 2015 Securing Wales’ Future | 17these lines both recognises
the concerns of Welsh Policy Summary EU migrants make a
voters while protecting the
We recognise that there valued contribution to our
economy. We further believe
are concerns around economy, public services
that linking migration to work,
under a transparent rules- aspects of inward and communities and must
based domestic system, is in migration. We believe be treated with respect and
keeping with the spirit of free there is scope to address equality.
movement of people in the these concerns through a
We are clear, too, that
Single Market and provides a twin-track approach that
any changes to migration
sound basis for negotiation. maintains the benefits of
policy should not harm
migration for businesses
We believe it is also relevant businesses, higher
to negotiations to note that and communities:
education or public services
Wales and the rest of the • ensuring a stronger link in Wales. We believe
UK were open to migration between employment students are not migrants
from ‘accession countries’ and the right to remain and should not count
immediately following the for new EU migrants
major expansion of the EU towards national migration
who are neither statistics. Full mobility for
from 15 to 25 Members
studying nor have students and researchers
in 2004, while other EU
independent means, across Europe should be
countries (except Sweden
and Ireland) remained closed an approach which retained.
to migration for a number we believe is broadly
of years after this date. compatible with the The ports of Holyhead,
This represented a strong principles of freedom Fishguard and Pembroke
demonstration of economic of movement of people Dock are key economic
solidarity between the UK and arterial routes and the
• much stronger
the then accession countries particular interests of those
enforcement to protect
and forms a significant communities should be
low paid workers from
backdrop to negotiations. taken into account and
exploitation.
Competence for migration protected in respect of
policy rests with the UK It is morally and any changes to border
Government but, as part of economically vital arrangements.
our forward arrangements, to protect the rights
the needs of public services of citizens from EU
and business sectors in countries who currently
Wales must be taken into live and work in Wales.
account. Any rules must be We firmly believe
based on clear principles and that all who live and
be accessible transparently
work in Wales must be
to employers and public
protected by law on an
services. We are keen to work
on proposals in greater detail equal basis. We wholly
with the UK Government and reject any attempt to
we call on them to act in the exploit migrant labour
best interests of Welsh and on inferior terms to
UK business and society as domestic workers.
a whole.
18 | Securing Wales’ Future6 Finance and Investment
for example) but these
would require only modest
contributions while the benefits
to the Welsh and UK economy
are significant.
Regional economic
development
Regional economic development
is a devolved competence
to Wales and is significantly
underpinned by EU legislation.
ESIF amounting to some £370
million annually are invested
into Wales alongside the Welsh
Government’s own resources
In total Wales receives around EU would be not a penny worse and other funding sources,
£680 million in EU funding off than it would otherwise have including private investment.
annually. The bulk of this funding been within the EU.
comprises receipts under the
Common Agricultural Policy (CAP) The baseline of the Block Grant The overall
payment for Wales must be re-
and Structural Funds with the
adjusted, at the point of exit from figures comprise
balance made up from Horizon
2020 and other smaller, but the EU, to reflect the real loss £295 million
of funds in Wales arising from
economically significant, pots of
leaving the EU and taking into
annually for
funding such as Creative Europe.
account funding which Wales Structural Funds,
would have otherwise reasonably £80 million for the
Unlike the UK as a expected from EU sources.
Rural Development
whole, Wales is a We recognise that continuing
Plan and £2 million
net beneficiary of participation in the Single
Market would require a financial from the Maritime
EU funding. contribution from the UK. Given
the evidence on the extent of and Fisheries Fund.
This means that the funding the benefits of trading freely in
received in Wales is greater than These resources are vital
the Single Market we believe to Wales. Since 2000, the
the amount contributed by Welsh that an appropriate negotiated
taxpayers via the UK’s payments investment of EU funds has
contribution would be clearly helped to arrest the decline in
into the EU budget. EU funding offset by the wider economic
benefits Wales by addressing Wales’ economic performance
benefits to business and the and laid foundations for more
need through a transparent and Welsh and UK economy as a
rules-based formula. We believe sustainable prosperity, especially
whole. The UK will no longer in the targeted West Wales
these principles must underpin participate in the CAP and
the approach to replacement and Valleys region. Among the
the main European Structural benefits we have seen are:
funding for Wales from within and Investment Funds (ESIF)
UK resources when the UK has programmes. We wish to • growth in employment in the
left the EU. In recognising the remain eligible for smaller West Wales and the Valleys
referendum result in June 2016 EU programmes as outlined region from 64.6% in 2000 to
we made clear our determination elsewhere in this White Paper 70.7% in June 2016
to hold to account the campaign (Horizon 2020 and ERASMUS+,
promises that Wales outside the
Securing Wales’ Future | 19• falling levels of unemployment The current ESIF programmes support 5,000 people a year into
and economic inactivity (from are worth more than £2.4 work and help around 21,500
30.8% to 25.2% in West Wales billion to Wales over the people annually gain qualifications.
and the Valleys) period 2014-2020, with the The success of regional economic
larger share allocated to West development is achieved most
• increasing skill levels across Wales and the Valleys and the strongly at a micro-level in
Wales; between 2014 and balance to East Wales. These communities and we acknowledge
2015 the proportion of resources are hugely important the powerful contribution, through
working age adults with no to Wales in terms of driving partnership, made by employers,
qualifications has fallen from economic growth and jobs. The local authorities and the third
17% to 9.5% and programmes are investing over sector across Wales.
• investment in research and £1.1 billion towards boosting
development has more than research and innovation, The European Agricultural Fund for
doubled since 2000, from business competitiveness, Rural Development (EAFRD) covers
£351m to £716m, driven increasing renewable energy over 600,000 ha of land and
by increased private sector and energy efficiency, and benefits some 1.3 million people
investment, and keeping pace improving connectivity and across rural Wales. Investments
with UK averages. urban development. This include training for around 10,000
includes investments in major people and the creation of 860
transformational projects such jobs in rural areas. Our coastal
communities benefit directly from
Since 2007, EU as the South Wales Metro which
EU funding in aquaculture and
will help deliver a wider package
funded projects of proposals and generate other competitiveness measures.
The Welsh Government will
have helped support further investment under the
continue to work with farmers, the
Cardiff City Region and City Deal
nearly 73,000 proposals. rural communities and the fishing
industry to map a dynamic future.
people into work and In addition, around £800 million Policy in Wales is complemented
234,000 people to European Social Fund(ESF) and underpinned by pioneering
gain qualifications. will be invested in measures legislation in the ‘Well-being of
to help tackle poverty and Future Generations (Wales) Act’
They have helped to increase social inclusion by which requires future investments
create nearly 12,000 supporting people into work in Wales to integrate policy
and increasing skills (including objectives and adopt long- term
businesses and some among young people and the sustainable outcomes.
37,000 jobs. most disadvantaged). The funds
20 | Securing Wales’ FutureThe terms of EU exit negotiated
by the UK Government could have
a major impact on delivery of
current EU programmes in Wales
which may extend until 2023.
The Welsh Government needs
to be especially closely involved
in this aspect of negotiation to
ensure that it makes best use of
EU funds and avoids sending any
funds back.
Despite the successes of
regional development policy, it is
important that Wales’ long-term
challenges and disadvantages
continue to be recognised (above) Cockle Pickers, Gower
as requiring dedicated and
additional investment – with UK these funding instruments will and other partners to create
allocations to Wales reflecting cease to apply. dynamic, forward-looking
the loss of EU funds – at levels Welsh agriculture and fisheries
equivalent to what Wales would Wales’ receipts from the CAP are policies. Food production is a
have otherwise received through significantly above the ‘Barnett major competitive advantage
the EU. Regional economic share’ of UK receipts, reflecting for Wales and it is vital that
development is a devolved the high proportion of Least it retains and builds on its
area of policy and only the Favoured Areas (LFAs) and the competitiveness, with a strong
Welsh Government, working in marginal nature and low incomes emphasis on export.
partnership with local authorities, of much Welsh farming. Many
businesses and the third sector, farms are dependent on the Securing resources is not only
has the strategic capacity support they receive to maintain about supporting farming. With
to deliver micro economic viable businesses. While the 83% of Wales’ land surface
development at community or work already underway with being managed for farming and
regional levels. We will reject agriculture and environment 14% for forestry, a separation
firmly any attempt by the UK stakeholders has started to between the management
Government to infringe this area identify ways in which the sector regimes for ‘environment’ and
of devolved competence. can respond to the challenges ‘agriculture’ is at best artificial.
and opportunities created by A crisis in Welsh farming would
Agriculture and Fisheries EU withdrawal, including by pose huge risks for maintaining
strengthening supply chains the environmental resources
Welsh food and farming is and increasing added value, of Wales. The countryside
directly threatened by any this re-orientation will take and coastline are essential
disruption to Wales’ Single Market time and require resources. to the heart of Wales and an
participation, given the high level It is therefore essential that asset for all our people. Our
of the EU’s Common External equivalent or greater resources languages, our culture and
Tariff on agricultural products. to those Wales would have many of our traditions as a
Moreover, Welsh farmers and received from the CAP and CFP country are sustained in the
landowners currently benefit from are provided from the UK to countryside and it is here
around £274 million each year in Wales to support Welsh farming that EU withdrawal may be
direct subsidies under the CAP, and fisheries. Within Wales, most dramatically and quickly
while the fishing industry and the Welsh Government needs apparent. It is vital that rural
Welsh coastal areas benefit from to address the substantial interests are protected and
more limited funding from the challenges of exiting the CAP feature strongly as Wales
Common Fisheries Policy (CFP). and CFP through working closely works towards a future
When the UK leaves the EU, with industry, communities outside the EU.
Securing Wales’ Future | 21Regional Aid– accompanied by transparent and
Competition Policy fair competition policies in order We strongly
Outside the EU new to avoid ‘a race to the bottom’
among competing regions. A good
advocate that the
arrangements will need to be
drawn up for managing the deal of work remains to be done UK should remain
competition/state aid rules in this area and we call upon the a shareholding
currently applied through the EU. UK Government to involve Wales
closely from the outset. partner in the EIB
The Welsh Government must and that Wales
have the opportunity to exert real European Investment
influence on the development of Bank (EIB) should continue
any new framework so that it can The EIB is an active investor in the to gain from our
command respect and be seen
to work fairly in the economic
Welsh economy. Over the decades direct relationship
of EU membership hundreds of
interests of Wales and all parts millions of pounds of EIB loans with the Bank.
of the UK. have been pumped into Wales.
The ability to provide regional There is no equivalent body in Partnerships, Networks and
aid is vital if Wales is to remain the UK providing the same sort Territorial Cooperation
competitive as an investment of investment funds at equivalent Wales is an outward facing,
location. cost. While most of the EIB’s work globally trading nation and has
is in Europe, it also supports attracted investments from across
projects across the globe, building the world. Our universities and
In 2014, for up infrastructure and capacity for innovators work with partners
improved economic development.
example, large throughout Europe and beyond. We
want Welsh students to continue to
organisations The UK, as a member of the EU,
have the opportunity to experience
is a 16% shareholder in the EIB.
accounted for Under current rules, only EU education in Europe (ERASMUS+
and Europass) and we want
just 0.1% of all Member States can own a share
Welsh researchers to continue to
in the EIB. We believe the UK
enterprises in Wales, should negotiate to continue as collaborate in European research
and innovation networks (Horizon
but provided 55.8% a subscribing partner of the EIB.
2020).
The EIB brings direct benefits to
of all turnover our economy as well as improving Wales has a particularly close
and 41% of all economic capacity elsewhere, co-operation with the Irish
employment. thus helping the global trading
environment which we support.
Republic, our maritime neighbour,
through the European Territorial
Regional aid both supports The UK’s financial contribution to Cooperation (ETC) Programmes
investment by indigenous the EIB is loan capital and repaid, and we wish to maintain access to
companies and helps thus neutral in its impact on this joint working after the UK has
secure inward investments9. UK budgets. left the EU. When the UK leaves
Diversification of the Welsh There are additional benefits to the EU this form of co-operation
economy has been hugely Wales and the UK through access will become, if anything, even more
assisted by inward investment: to the significant commercial important and, in particular, we are
in 2015/16, 96 investment expertise within the EIB. The committed to strengthening the
projects were recorded from South Wales Metro project, for relationship between Wales and
23 countries around the world, example, benefits from the EIB’s Ireland. Wales especially needs
collectively worth circa £660 commercial expertise informing to build prosperity around our key
million to the Welsh economy. the procurement process, while ports – Holyhead, Fishguard and
previous investments in Wales Pembroke Dock – and protect
Equally, we recognise that their roles as the main arteries to
intelligent and rational have, similarly, benefited from
expertise and best practice and from Ireland and Wales (and,
regional aid policies must be indeed, the UK as a whole).
offered by the EIB.
European Commission: Ex-Post evaluation of the Regional Aid Guidelines 2007-2013. Luxembourg: Publications Office of the European Union,
9
2013 – 194 pp. – 21.0 x 29.7 cm ISBN 978-92-79-28199-0 doi: 10.2763/32114You can also read
