Following the referendum result one of the major considerations has been the impact of the result on the future of the Union. With Scotland and Northern Ireland voting to remain, it seems inevitable that there will now be a second Scottish independence referendum resulting in a Yes vote. Likewise, with a remain vote in Northern Ireland, the prospect of a unified Ireland has never been more real.
Many will claim that by endorsing the decision to leave the EU, Wales has voted itself into irrelevance. Compared to the Scottish government, what possible political leverage could Wales have? As the Welsh secretary said last week, Wales voted to leave so why should the UK government replace the approximate £650m per year it receives in regional funding, agricultural support and research funding for higher education? The promises made during the referendum to match and improve EU funding have been quickly forgotten.
However, when people voted, the various post-Brexit trade economic options available to the people were not on the ballot paper – and the diverged economic interests of Wales and the UK are about to become a major defining political issue with potential significant constitutional implications.
While Britain has a goods trade deficit of £120 billion, Wales has a trade surplus of over £5 billion. The Welsh economy is a producing economy that needs access to markets for our goods, and hence tariff free access to the European single market is an economic imperative.
The government must now commit to securing quick access to the European Free Trade Area (EFTA) and then European Economic Area Status. Article 50 should be triggered sooner rather than later because those objectives cannot be achieved until the process of leaving the European political union has begun.
Uncertainty is economically toxic. Following the referendum result we have already seen Tata announce their plan to merge their European Steel operations with ThyssenKrupp. This can only mean one thing – the consolidation of their steel operations in Ijmuiden, the Netherlands, and Duisburg, Germany. Wales’ biggest company, Tata Port Talbot, will be an inevitable casualty as the company ditches efforts to sell the asset.
As Fabian Zuleeg, head of the European Policy Centre, has argued when it comes to trade negotiations with the EU in the event of Brexit: “The political realities would not be very accommodating to the UK.” The cavalier attitude of the new government, therefore, is the political equivalent of playing kamikaze poker when your opponent holds all the cards.
Let no one be mistaken, the Brexiteers’ dream was not only to leave the EU as a political union, but also to transform the British State into a low tax, light regulation casino economy with minimal formalised trade links with the single market. Whilst this Wild West scenario may work for the Financial Sector, this would be disastrous for the Welsh economy.
The Welsh situation is made even more critical as we have a more diverse exporting portfolio compared with other parts of the UK. This portfolio is facilitated by the EU’s Common Commercial Policy which offers access to over a hundred free trade agreements across the world. Each one of these will have to be renegotiated once the UK leaves the EU. While we acknowledge it is in no way a perfect solution, EFTA status could mitigate some of the damage as it offers 27 free trade agreements covering 38 countries. Of course, none of this work can begin until Article 50 is triggered.
Furthermore, as we begin the arduous process of reconfiguring our global trade relations there must be an urgent debate about the principles on which the UK negotiating position will be set. Considering the recent key appointments by the new prime minister, it appears we may have an access all areas approach where even our public services could be up for grabs. Bearing this and the devolved context in mind, the UK government’s trade position should not only be ratified by the House of Commons but also by the devolved parliaments, especially considering that competence over public services is largely devolved.
Make no mistake, Wales and Westminster are heading for a head on collision course. For the sake of the people of Wales, my country urgently needs a government willing to protect the Welsh national interest instead of slavishly obliging to its Westminster masters.
This article first appeared in the Times Red Box 25.07.2016