Regulatory Divergence from the EU

3. What assessment he has made of the potential effect on the Welsh economy of regulatory divergence from the EU.

4. What discussions he has had with Cabinet colleagues on the potential merits for Welsh businesses of regulatory divergence from the EU.

Far from lowering standards, the UK already exceeds the EU minimum requirements in several areas, including on workers’ rights and environmental targets. We will continue in that vein, with an independent trade policy, and in so doing, unleash the enormous potential of the UK and Welsh economies.

Over 60% of Welsh exports are destined for the EU and dominated by key industries vulnerable to divergence related to trade barriers—agricultural machinery and transport equipment, to name but two. So instead of actively trying to circumvent the Prime Minister’s own withdrawal agreement, why are not the Government pursuing the regulatory alignment that is crucial for Welsh businesses and exporters?

We of course voted to leave the European Union, and that meant voting to leave the customs union and voting to leave the single market. I am quite surprised by the hon. Gentleman’s question, because I should have thought that he would be the first to agree with me that a nation that leaves a union will want full control of its regulatory and trade policy. That is a matter of principle, which I would have expected him and his colleagues to be in full agreement with.

I share the Minister’s enthusiasm that we can now exceed EU regulations—that is, have better regulations than those set by the EU. Does he agree, though, that the Government’s agenda is proof of our commitment to maintaining the existing high standards that are independent of EU law, and that it is not only businesses that could benefit from that regulatory divergence?

I fully agree with my hon. Friend. Outside the European Union, we are looking forward to exercising the freedom to set some of the highest standards in the world on animal welfare, health and safety and workers’ rights, thus making Britain one of the best places in the world in which to live, work and invest.

Tomorrow, the Government will publish their position on the EU trade negotiations. That is of particular importance to the automotive sector in Wales. Just to give the Minister an example, if there were to be 5% tariffs on import/exports and 2.5% on components, it could add £1,000 to the costs of production on a car and put jobs at risk. So can he confirm that the Government are seeking tariff-free access for the automotive sector to the single market and that, if that is not obtained, the Government will have a contingency plan in place to support jobs in that sector in Wales?

The hon. Gentleman is right to raise the importance of the automotive sector to south Wales and he is correct in saying that the Government are seeking a full free trade arrangement that will allow full access to the European market. If for any reason the EU does not realise that that is in its interests—it exports more cars and automotive parts to us than we do to the EU—I cannot absolutely say what will happen, but it will be at the forefront of my mind and the minds of all my colleagues that we would want to support the automotive industry in south Wales.