With the triggering of Article 50 the formal Brexit talks will get underway, the outcome of which will have far-reaching consequences for Wales and other devolved nations. Dr Jo Hunt takes a look at issues from membership to the Single Market to devolved competencies, and considers the opportunities and threats Brexit present for Wales.
On June 23 2016, the people of Wales voted for the UK to leave the European Union. With its majority Leave vote of 52.5%, Wales has positioned itself apart from the other devolved nations where the vote had been Remain.
The Welsh vote may have come as something of a surprise, after all Wales has long been seen as pro-European, a left-leaning, small nation which, unlike the rest of the UK, is a net beneficiary of EU funding.
Whilst membership of the EU comes with a price tag, the return on that for Wales has been some £3bn during the current funding period (2014-2020), particularly through the structural and investment funds for regional economic development, and through funding to agriculture. But public opinion in Wales was also closer to that in England on critical issues such as immigration, despite Wales having some of the lowest levels of immigration in the UK.
Wales’s vote to leave also put the voting public out of step with the Welsh political establishment which (Welsh Conservative leader aside) overwhelmingly saw Wales’s future as being part of the EU and part of the Single Market.
This Single Market is defined in the EU Treaties as ‘an area without internal frontiers in which the free movement of goods, services, people and capital is guaranteed’. It is designed to replicate across 28 Member States, with its 500 million people, the trading conditions of one country. Trade within the Single Market should be free from tariffs and from protectionism and discrimination. The burden that may be felt by the same product encountering differences in laws across the different member states, is addressed through common EU wide rules, or in the States recognising each others’ rules as equivalent.
In January, the Welsh Government and Plaid Cymru together presented the White Paper ‘Securing Wales’ Future’, which spells out a first priority of retaining access to the Single Market for businesses in Wales. The benefits of tariff free trade and a common regulatory structure is seen as critical for the success of Welsh based industries, such as agri-food, and steel, as well as presenting Wales as an attractive target base for companies outside the EU looking to invest.
But as has been made clear by the Prime Minister, the continued participation in the single market on these terms is not the outcome favoured by the UK Government. The expectation is that the UK will be leaving the Single Market and the customs union – the first because the four elements, free movement of goods, capital, services and people are seen by the EU as an indivisible whole, leaving the UK without the desired degree of control over immigration. Membership of the customs union meanwhile restricts the country’s legal ability to negotiate trade deals unilaterally – preventing the UK from striking its own global trade deals.
Looking North, and like Wales, Scotland favours a ‘soft’ Brexit, rather than the ‘hard’ Brexit currently on the cards. Both Wales and Scotland have stated that they would like to see the UK continue within the single market through membership of the looser European Free Trade Association, and through that, the broader European Economic Area. Scotland has gone further yet, and has called for a differentiated solution for Scotland to be a part of the EEA on its own if the UK leaves. The UK Government position certainly doesn’t foresee any such differentiated settlement with some parts of the UK in the single market, and some parts out. Instead, a whole UK approach is being pursued, with opportunities for the devolved views to be fed in through the intergovernmental Joint Ministerial Committees, though these are centrally driven and not the fora for joint .
Whilst a separate Welsh membership of the single market and customs union is not on the cards, the potential for differentiation – for different rules across the UK in devolved policy areas such as agriculture and environment grows on Brexit. This is because the ongoing process of the devolution of powers away from London to Cardiff, Edinburgh and Belfast has to date taken place in the context of the UKs membership of the EU. EU law has set important parameters for how devolved nations exercise their powers.
The Government of Wales Act makes it clear that Wales cannot introduce any measures which breach EU law, for example, by standing in the way of the achievement of the single market. Additionally, in some heavily Europeanised areas which are also devolved areas, particularly agriculture and environment, Wales has been effectively implementing decisions taken elsewhere. So, the return of these powers from Brussels on Brexit may see an expansion in the policy making powers based in Cardiff. A distinctive Welsh approach to environmental protection may be able to be pursued further, for example, and different choices on agricultural policy taken across the UK.
Of course, unless Wales also gets the financial resources to run these policies, the return of competence to the devolved level may be rather less attractive a proposition that first perceived. Any capacity issues currently being felt across Welsh political life will only be exacerbated by an increase in responsibilities.
Further, there is no guarantee that the powers will indeed come to the devolved level, in accordance with the distribution of powers under the current Wales Act. Attempts may be made to recentralize policy, and return powers to London. The Prime Minister may have foreseen that on Brexit, ‘the right powers are returned to Westminster, and the right powers are passed to the devolved administrations of Scotland, Wales and Northern Ireland’, however, this may carry a narrow reading for what comes back to Wales. And even if all powers are returned, it is clear that there may be new controls over how those powers are exercised, for as the Prime Minister has also said, there are, post Brexit, to be no new barriers created to living and doing business within the United Kingdom. The U.K.’s own economic union, and internal market are currently sustained by the operation of EU law. Take the EU framework away, and the exercise of devolved powers across the UK may result in a patchwork of regulatory responses, making trade across the UK more burdensome and costly than it need be. So it may well be appropriate to restate a national level internal market principle for the UK, which will need to have the institutional machinery to support it.
Some of this may see the use of the institutions which have to date, managed relations across the UK, and which have been called into service in the Brexit negotiation planning process.
The Sewel Convention, which says the Westminster Parliament will not legislate on devolved matters without devolved consent has, following the final decision on the new Wales Act 2017, now been put into legislation. However, it has only limited ability to ‘protect’ Welsh powers, as confirmed by the Supreme Court ruled in the Miller Article 50 case, where it was stated that putting the convention into legislation made absolutely no difference to its enforceability – it has political force alone and cannot be enforced by the Courts.
There was certainly no legal veto for Wales, Scotland or Northern Ireland over the Article 50 trigger, and there will be no veto either for the final deal, or the legislation that will repeal the European Communities Act 1972 that took the UK into the EU, the Great Repeal Bill. All rests in the realm of politics.
This article first appeared in IWA’s the welsh agenda.
This post represents the views of the author and not those of the Welsh Brexit blog, nor Cardiff University.
Dr Jo Hunt is Reader in Law at Cardiff School of Law and Politics and the Wales Governance Centre. She is ESRC Senior Fellow UK In a Changing Europe Initiative.