Cofnod y Trafodion
The Record of Proceedings

Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol

The External Affairs and Additional Legislation Committee

10/10/2016

Agenda’r Cyfarfod
Meeting Agenda

Trawsgrifiadau’r Pwyllgor
Committee Transcripts

Cynnwys
Contents

4        Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau
Introductions, Apologies, Substitutions and Declarations of Interest

5        Gadael yr Undeb Ewropeaidd: y Goblygiadau i Gymru—Amaethyddiaeth a Physgodfeydd

          Leaving the European Union: Implications for Wales— Agriculture and Fisheries

34      Gadael yr Undeb Ewropeaidd: Goblygiadau i Gymru—Amaethyddiaeth a Physgodfeydd

Leaving the European Union: Implications for Wales—Agriculture and Fisheries

59      Papurau i’w Nodi

Papers to Note

59      Cynnig o dan Reol Sefydlog 17.42(vi) i Benderfynu Gwahardd y Cyhoedd o Weddill y Cyfarfod

Motion under Standing Order 17.42(vi) to Resolve to Exclude the Public for the Remainder of the Meeting

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle y mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Aelodau’r pwyllgor yn bresennol Committee members in attendance
Dawn Bowden Bywgraffiad|Biography	Llafur Labour
Michelle Brown Bywgraffiad|Biography	UKIP Cymru UKIP Wales
Suzy Davies Bywgraffiad|Biography	Ceidwadwyr Cymreig Welsh Conservatives
Mark Isherwood Bywgraffiad|Biography	Ceidwadwyr Cymreig Welsh Conservatives
Steffan Lewis Bywgraffiad|Biography	Plaid Cymru The Party of Wales
Jeremy Miles Bywgraffiad|Biography	Llafur Labour
David Rees Bywgraffiad|Biography	Llafur (Cadeirydd y Pwyllgor) Labour (Committee Chair)
Eraill yn bresennol Others in attendance
Yr Athro/Professor Richard Barnes	Prifysgol Hull University of Hull
Griffin Carpenter	New Economics Foundation New Economics Foundation
Yr Athro/Professor Janet Dwyer	Prifysgol Swydd Gaerloyw University of Gloucester
Professor Wyn Grant	Prifysgol Warwick Warwick University
Dr Nerys Llewelyn Jones	Cyfreithwyr AgriAdvisor AgriAdvisor Solicitors
Yr Athro/Professor Peter Midmore	Prifysgol Aberystwyth Aberystwyth University
Swyddogion Cynulliad Cenedlaethol Cymru yn bresennol National Assembly for Wales officials in attendance
Alun Davidson	Clerc Clerk
Gwyn Griffiths	Cynghorydd Cyfreithiol Legal Adviser
Elfyn Henderson	Y Gwasanaeth Ymchwil Research Service
Rhys Morgan	Dirprwy Glerc Deputy Clerk

Dechreuodd y cyfarfod am 13:32. The meeting began at 13:32.
Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau Introductions, Apologies, Substitutions and Declarations of Interest
[1] David Rees: Good afternoon. Can I welcome members of the public and Members to this afternoon’s session of the External Affairs and Additional Legislation Committee? This afternoon, we’re continuing our evidence gathering into aspects of the decision of the people of the UK to leave the EU. Could I welcome our guests? I’ll come back to that in a minute. Can I remind everyone, please, for mobile phones to be turned off or to be switched on silent so that it doesn’t interfere with the broadcasting equipment? There is no fire alarm scheduled today, so, if one does takes place, please follow the directions of the ushers. We do operate a bilingual system, so we have simultaneous translation from Welsh to English on the headphones, and that will be on channel 1. However, if you prefer amplification, then that’s available on channel 2 using the headphones.
[2] We’ve received apologies from Eluned Morgan. We have no substitute today. So, we’ll go straight into it in that case.
13:33
Gadael yr Undeb Ewropeaidd: Goblygiadau i Gymru—Amaethyddiaeth a Physgodfeydd Leaving the European Union: Implications for Wales—Agriculture and Fisheries
[3] David Rees: Can I remind Members that today’s session is focusing on agriculture and fisheries? We’ve had evidence before on trade and we’ve had evidence on other aspects, but this is focusing on agriculture and fisheries, and the first session is on agriculture specifically. Can I welcome Professor Midmore, Professor Wyn Grant, Janet Dwyer and Nerys Llewelyn? Would you like to introduce who you represent, or your views, in a sense, please?
[4] Professor Midmore: Thanks, Chair. I’m Peter Midmore. I’m the professor of economics at Aberystwyth University. My background is in agricultural economics, but I’ve broadened that a bit to cover spatial economics and regional development. But my core interest is still agriculture.
[5] Professor Grant: Wyn Grant, professor of politics at the University of Warwick. I’ve been working on the common agricultural policy for about 40 years.
[6] Professor Dwyer: Good afternoon. Janet Dwyer, professor of rural policy at the Countryside and Community Research Institute at the University of Gloucestershire. Like Pete, I was trained as an agricultural economist, although my first degree was in biology. But my work has been very much on European policies for agriculture, for environment also and for rural development. I would say, these days, I work a lot on rural development, which is, as you might know, the second pillar of the common agricultural policy—so, that includes the agri-environment schemes, as well as all the schemes for local development, economic development, LEADER and community action.
[7] Dr Jones: My name’s Nerys Llewelyn Jones. I’m a solicitor and head of a rural practice called AgriAdvisor Solicitors, which is based in Pumsaint in Carmarthenshire. And before I qualified as a solicitor, I also carried out a PhD in relation to sustainable development and the common agricultural policy and its implementation and enforcement in Wales. So, that’s my background in terms of that.
[8] David Rees: Thank you very much for that, and it’s quite clear that we have some experience in CAP. And, in that light, perhaps, we can look at the very first question on exit. As you say, the CAP is actually pillar 1 and pillar 2. Is there an importance to keep the two pillars in the CAP concept post Brexit, or should we be looking at actually how we can develop them perhaps in a separate environment?
[9] Professor Grant: I think the time might have come to move beyond that two pillars concept. I think the view that’s generally taken is that policy after Brexit should focus much more on sustainability issues, but possibly much more broadly conceived than they are in pillar 2, and better implemented than they are in pillar 2. I don’t think that pillar 1 payments in their present form would continue, and indeed those payments have been particularly beneficial to large scale arable farmers in East Anglia.
[10] David Rees: Thank you. Janet.
[11] Professor Dwyer: I think I would agree with Wyn that it’s perhaps time to move beyond a two pillar conception for agricultural policy. However, I would say that the current situation is that a lot of Welsh agriculture is financially quite dependent upon the so-called pillar 1 support. So, in moving forward, I think what we need to do is look to maintain the positives of both parts of the old policy, but to merge them together into a policy which is for food and sustainable farming in Wales for the future.
[12] Dr Jones: I agree that I don’t think that we need to have a two-pillar model going forward. I think the benefit of Brexit from our point of view is to be able to have a policy that doesn’t have those EU acronyms and terminology associated with it. But I think as well the importance of the financial side of it is really important for farmers in rural Wales, and, when you look at the rural landscape, the rural landscape within Wales is extremely different to that within England. So, we do need to look at that. And, because of that, I think we also need to consider perhaps looking at the way the schemes might be put in place in line with perhaps the Well-being of Future Generations (Wales) Act 2015 that we’ve already got in place, because that puts emphasis not just on the economic, but the social, environmental, and cultural—which is also very important—aspects. So, in Wales, I think we’ve already got our framework, perhaps, in a way perhaps England doesn’t have.
[13] David Rees: Okay.
[14] Professor Midmore: I agree in principle with what everyone else says, but I think there are some practical issues to take into account. So, we’ve heard a little bit about a proposed great repeal Bill, which will translate all European law into the domestic legal framework, but leave pretty much everything for later reflection and consideration. I think the future’s so uncertain that it’s probably wise to consider a continuation of the pillar 1, pillar 2 framework until we can think of what would best replace it. So, I think that it’s quite likely that, in the short term at least, we’ll carry on with it.
[15] Another question that arises is that we are, in Wales, a devolved administration in a larger national context. And, in order to make sure that there’s consistency between the policy frameworks being developed in each of the constituent parts of the United Kingdom, there might need to be something that you might call a ‘British agricultural policy’ that sets down some guidelines, just as the common agricultural policy does at the moment, some scope for manoeuvre. That may actually be quite radically different in the long term from the common agricultural policy. But I think the fact that the UK itself is a single integrated market is an important consideration.
[16] David Rees: Can I ask then, without the CAP, and without a British version of the CAP, is there an economic downturn possibly for Welsh farmers in relation to that? As you identified, 80 per cent are in the less favoured areas; we’ve benefitted an awful lot from the support. Without some form of framework or guidance at least at a national level, is there a disadvantage to Welsh farmers economically?
[17] Professor Midmore: It depends whether there is an interim trade agreement in place between the UK and the EU 27. But, at the moment, the dairy farm sector in Wales has benefitted quite substantially from a weakening of the competition from continental imports. On the other hand, of course, Welsh lamb is cheaper and easier to export. So, I think different sectors of the agricultural economy of Wales may actually be affected differently, depending on whether we’re net exporters or net importers. And that applies at the UK level, as well as the Wales level.
[18] David Rees: Okay. Mark.
[19] Mark Isherwood: I was going to comment, noting the current forms of 15 per cent pillar 1, pillar 2 transfer, what impact would a pooling of the two pillars have on eligibility criteria, balancing food security/food production against sustainability? I’m not asking you to announce a political decision on what percentage you think should apply, but, in a pooled system, how could you see a formulae developing that could balance those two sometimes conflicting objectives?
[20] Professor Dwyer: I would say that, in moving forward, the split at the moment between pillar 1 not having a very strong environmental focus—I mean, it has greening, but it’s main purpose is income support—and pillar 2 being this kind of split policy in itself, in which most of the money goes into an environmental scheme and then there’s a small proportion of money that goes into rural development and economic innovation and stimulation at local level, that’s where some of the issues come, in respect of thinking about the rationale for the policy going forwards. Because, from a Welsh point of view, sustainable farming is both for economic reasons, but also for social and environmental together. And, at the moment, having most of the money in pillar 1 means that you probably underplay the importance of the environment for the Welsh nation, going forwards, and you probably don’t give sufficient support to economic diversification and development.
[21] It’s likely, in the post-Brexit scenario in the UK, that there will be a move to reduce the amount of support that’s going into pillar 1. That’s the stated aim of the UK Treasury for the last 30 or more years: it has been to say, ‘Pillar 1 doesn’t have a rationale, we would do without it if we could’. So, if you see a situation where the UK as a whole is thinking about reducing money in pillar 1, maybe maintaining that in pillar 2, or maybe reshaping it, or maybe—well, it depends a little on the debate—increasing it, I think that the Welsh perspective needs to be much more clearly on the need for these things to come together, rather than necessarily saying that we could do away with pillar 1, and then we’ll see what we’re left with. Because, actually, if you do that in Wales you undermine the whole sector, because of the level of support as it is at the moment.
[22] So, I would argue for a need to think, going forwards, of some kind of a basic payment, which is no longer just pillar 1 for income support, but which is much more about sustaining the fabric of the Welsh agricultural landscape, its environment, its economy, and its community together. And that then, on top of that, you build more targeted schemes to achieve different things in different places. The nomenclature gets difficult then, though, because that could be a modified pillar 1, or it could be an enlarged pillar 2. That depends on the way that the negotiation goes.
[23] David Rees: Does anyone else have a view?
[24] Professor Midmore: I think, also, the extent to which there was conditionality between the payment of a basic income support and the delivery of certain environmental services that you might not necessarily take for granted from traditional farming practice—so, I think that would really colour the direction in which the reform might proceed, whether it would be enhanced pillar 2 or modified pillar 1. But the two, I think we’re all agreed, would move together.
[25] David Rees: Okay, Mark?
[26] Mark Isherwood: Shall I touch on the matter I referred to earlier, with the—
[27] David Rees: I’ll come back to that one.
[28] Mark Isherwood: Right.
[29] David Rees: Suzy, on this point?
[30] Suzy Davies: Yes, Chair. I should declare an interest at this stage, inasmuch as my husband and his brother have a farming partnership, and we’re in receipt of CAP money, both pillar 1 and pillar 2, actually.
13:45
[31] I just wanted to test something—I can’t remember which one of you said this—about the fact that the exports are easier for us because sterling is low at the moment. Obviously, we don’t know about the vagaries of the currency market over time, but one truth will remain so, and that is that farmers in Wales, and particularly hill farmers, will still pay sterling costs for meeting all of the requirements of the single market while we still continue to trade with it. So, that means that our outgoing costs are higher without any guarantee on our incoming costs. Now, I know in 2020 the European Union was planning to make changes to CAP anyway—I think it’s 2020, is it? What should we be looking ahead to, whether we’re within the single market or otherwise? Because, obviously, I think we all want to make sure that our animal welfare standards don’t drop. What should we be looking forward to the UK or, indeed, Welsh Government doing to protect the income of farmers when their costs are going to remain high, comparatively high, compared to income?
[32] Professor Grant: I think one thing that is crucial is that, in any interim trade agreements, we don’t have tariff barriers applied to exports from Wales. That would be particularly devastating for the sheep meat sector. It’s also the case, of course, at the moment that the basic payments for many farmers make the difference between farming at a profit and farming at a loss, so, in a transitional period, one is going to have to continue those payments in some form or other. I think they will be changed and modified and reduced, but, if they were suddenly terminated, the effect on the sector would be catastrophic.
[33] Professor Dwyer: I think it’s also important to note that the trade situation is going to be hugely critical in respect of the profitability or not of Welsh agriculture as it is now and as it goes forwards. And there’s a lot of uncertainty around that because, when we’re negotiating trade deals, we’re negotiating as a country as a whole, as the UK, and the main interests of the UK are not always the same as the main interests of agriculture, and particularly agriculture in Wales. There’s always a risk in these negotiations that agriculture is kind of the sacrificial thing for the other things the UK wants to get out of its trade deals. So, I think, for all those reasons, from a Welsh perspective, obviously, try and negotiate the best you can to maintain the viability of the Welsh agricultural sector going forward, but also have an eye to not putting all your eggs in one basket. And I think there would be a case in the medium term to be investing in other aspects of agricultural production in Wales, to give you a greater diversity, because being so dependent upon one particular product of which the vast majority is exported—or the vast majority in value terms is exported—leaves you somewhat vulnerable.
[34] Dr Jones: The difficulty with that is that the majority of farms in Wales only have one option in terms of what they can produce on the land that they have. If they’ve got hill land, then they can only produce hill Welsh lamb—that’s the only thing they’ve got available to them. So, I think it’s difficult to predict accurately how this is going to have an effect on those areas. And I think we forget sometimes agriculture and the role the agriculture industry plays within our agricultural communities in terms of where the money that has perhaps traditionally been coming from pillar 1 is being spent within those agricultural communities, and that has a massive impact as well on the Welsh language within those communities, and the cultural aspects of those committees, as well as economic benefits. So, I think we have to look at it in a rounder frame, and I think sometimes we don’t perhaps emphasise enough or spend enough time concentrating on demonstrating public goods that agriculture provides in those communities, and I think we need to start measuring that more accurately going forward.
[35] Suzy Davies: Can I have a quick ‘supp’ on the back of that? Can I just ask you then, Peter Midmore, in, I think, your paper—apologies if it’s not—you’ve mentioned that what certainly Welsh agriculture should do is improve the quality and marketing of rural products. Is that more than just meat? Because I have to ask you: what can we do to make it better than it is, because it’s pretty good already?
[36] Professor Midmore: Maybe the quality—. Well, thinking about the markets that Welsh lamb is sold in, an awful lot of hill lambs that once upon a time would have been sold as stores are now sold as finished to the continent, where that’s appreciated. So, if there are changes in the trading arrangements, and it’s only as a result of opening up European markets from our original membership of the European Economic Community that hill farmers were able to specialise in that commodity—so, the system may actually need to adapt to new trading arrangements. It’s not, you know, the end of the world; it may be a lot more difficult to move quickly from the present mode of production to other modes, but it’s not impossible. I think, if I did write that—I’m sorry, I can’t remember which paper you’re referring to.
[37] Suzy Davies: It may not have been yours, apologies if it isn’t you. Maybe it isn’t, in all fairness.
[38] Professor Midmore: I think I was probably trying to imply that, actually, the countryside produces a broad range of things—
[39] Suzy Davies: Sorry, it was Nerys—apologies.
[40] Professor Midmore: Was it Nerys? Never mind. I would share the view anyway that the output of the countryside—. Thinking about it, only 15 per cent, in even the most rural parts of Wales, are actually employed in agriculture and associated industries. So, that’s 85 per cent of the workforce in other areas. There are lots of things that are produced that happen in the countryside. Tourism is a perfect example, which gets relatively small levels of support, but actually is of equal importance to the livelihoods of a lot of people in the countryside. So, I think maybe improving the quality of the product and the marketing of the product, for everything that’s produced in rural areas, is the key to transcending this difficulty.
[41] Suzy Davies: But changing the product, possibly, as well, to a different type of stock.
[42] Professor Midmore: You wouldn’t want to rule that out, no.
[43] Suzy Davies: Okay, thank you. Thank you, Chair.
[44] David Rees: Jeremy.
[45] Jeremy Miles: Thank you, Chair. Can I go back to this question of the UK-wide framework that you’ve all alluded to? You’ve all talked about the different contexts and the sort of tension, potentially, in terms of policy objectives that might fit the UK agriculture sector generally and those that might be particularly beneficial to the Welsh agricultural sector. Could you sketch out what it would look like for Wales if that UK-wide framework was not in place, in terms of advantages and disadvantages? You mentioned, I think, that there’s a sort of agricultural market, so to speak, but it would be helpful just to understand a little bit more about what the downsides might be if there wasn’t that UK-wide framework.
[46] Professor Midmore: Yes, of course there’s no guarantee that a framework like that will actually emerge. In principle, at least, the National Assembly and Welsh Ministers are able to make their own policies towards agriculture, but I think you have to take into account the fact, firstly, that England is the largest market for Welsh agricultural produce, and, secondly, we would probably not want to have a system in Wales that diverged very sharply from any system of support or lack of it in the rest of the UK. It may well be that there are other things in other devolved administrations, and there will also be this tension emerging. I think we’d have to wait and see, and perhaps proceed quite cautiously.
[47] Jeremy Miles: Can I just ask you why you emphasise the need to not have a system that is very different from the, let’s say, English system, given that there are particular characteristics to the Welsh agricultural sector that aren’t shared to the same extent, if you like, if I understand it correctly, with the English agricultural sector? Why is that something you emphasise?
[48] Professor Midmore: One idea that’s been trialled quite a lot is the idea of crop insurance as a substitute for price support. Supposing that England introduced a scheme of crop insurance, which largely displaced the need for income payments to arable farmers, for example, and if it all worked well, its expenditure would go down and there would be a Barnett consequential for that. Then, that would mean that the money available for supporting Welsh policy would be—. Well, you know, the Government can determine how it apportions the budget as it wishes, but it may put a big strain when there are lots of other priorities like, particularly, health and education that focus the mind of the Minister for finance in the Assembly.
[49] Jeremy Miles: So, is it the effect of Barnett that’s of major concern for you there?
[50] Professor Midmore: Well, who knows if there’ll be Barnett in 2020.
[51] Jeremy Miles: Indeed, and that’s really what I’m heading towards.
[52] Professor Midmore: But, you know, we were thinking, maybe over-optimistically, that there would have been a more rational system for funding the devolved administrations in the last Parliament, but it came to nothing, unfortunately.
[53] Jeremy Miles: But is it Barnett that underscores your concern?
[54] Professor Midmore: If Barnett operates, there are all the issues to do with the structural funds about co-financing and whether that is Barnett-included or not. But if Barnett operates, and agriculture is within Barnett, then that would be the consequence, I think.
[55] David Rees: Professor Dwyer.
[56] Professor Dwyer: I wanted to say something about the framework. It seems to me that the most obvious place where you need a common framework is in relation to external relations and trade. Because to have the capacity within the Welsh administration to do all of that side of things would be a huge burden on the public administration. But trade is also the area where you have, perhaps, different views compared to the rest of the UK. So, I think you have to work on a situation where you accept that the UK is the main negotiator of trade deals, but then you need an agreement with the Government in England as to the things that make Welsh agriculture different and that need different treatment. So, I think it would be impossible for everything to be done in Cardiff. You have to accept that that means that certain deals will be done that aren’t necessarily in the interests of this principality, but you focus on agreeing with London the areas that make Welsh agriculture different. I would say that, in respect of the policy here, it is about a focus on community and the importance of agriculture in underpinning the Welsh community, the Welsh character and Welsh culture, and also the environment, where you have a particular concentration of very high nature value landscapes, which have potential in economic terms as well as being important to the people of Wales culturally and in terms of their quality of life. So, I think that’s the sort of way in which I say: you need a UK framework, but you also need to say what’s special about Wales in those discussions.
[57] Jeremy Miles: So, I suppose it depends on how comprehensive that framework is, effectively. In a sense, this is, on some level, semantic, isn’t it? It depends on what’s dealt with at a UK level—clearly, trade negotiations would be one of those. But, above and beyond that, I suppose it depends on what you described as the framework and what is particular to Wales.
[58] Professor Dwyer: Peter and I were here a couple of weeks ago, talking to one of the other committees, and one of the issues that came up was, if you were to reconsider the division of resources between the four parts of the UK, and, in the agriculture sector, if you moved towards a policy that was more focused on the environment, whether that would actually change the division of resources more in favour of Wales.
[59] David Rees: Okay. Suzy—on to the framework.
[60] Suzy Davies: Yes, it’s still on the framework. In discussions like this, I am always cautious that we don’t consider England as a homogenous agricultural offer either. Just for the record, could you tell us which you think are the regions or areas of England where the agriculture offer is similar to Wales, and whether we will necessarily be talking about a regional framework of some sort, rather than a—?
[61] Professor Midmore: Wales is unique, but I’m sure we can think of some. Shall we try and think of—?
[62] Suzy Davies: Well, areas that might be facing not dissimilar challenges.
[63] Professor Midmore: Well, Cornwall.
[64] Professor Dwyer: The north-west.
[65] Suzy Davies: It’s just for the record as much as anything.
[66] Professor Grant: The Yorkshire moors. Areas like that.
[67] David Rees: Okay. If you think of any, please give us a note and let us know. Steffan.
[68] Steffan Lewis: Picking up from Jeremy Miles’s point in terms of how you could have a UK-wide framework functioning with, quite clearly, the competence for agriculture falling with the devolved administrations, I wondered if you could specify the bare minimum that you think should be agreed at the UK level. By the way, I disagree that this would be a unilateral decision for the British state. I mean, it’s something that will probably emerge as one of those issues that needs to be concurrently agreed between four administrations. I don’t think we are going to have a situation emerge where matters are reserved to London and then that’s the end of that. So, I think it’s quite possible that it could be a joint decision by the four administrations that they come to an understanding and a memorandum of understanding. But, in terms of the bare bones, what would deliver? What kind of a UK framework, if we had to have one at all, would need to be agreed in terms of the specific issues at the UK level, and therefore would allow, then, the greatest possible flexibility for us, as democratically elected institutions at the national level, to pursue our own policies, as we do now? Would it be a matter, simply, of the elements of EU treaties pertaining to agriculture that currently reside at an EU level being agreed concurrently at a UK-wide level, and therefore everything else would carry on as normal? Or would there be perhaps fewer issues that would need to be determined at a joint level?
[69] Dr Jones: Well, that’s the big question here, though, isn’t it? Are we replacing the EU with the UK, or are we actually going to develop something that is broader than that and that gives more power to Wales in terms of agricultural issues? I would be in favour of that. I would be in favour of more control on a devolved legislative basis because of the unique nature of Welsh agriculture. I think we do need to not just transpose what the European Union is providing to us in the treaties to the UK level and then leave it at that. I think we do need to have a wider discussion about what comes in and what doesn’t come in.
14:00
[70] Steffan Lewis: So, what would you say then, Nerys, if you had to say, right, on the agenda at the joint ministerial committee at a UK level between the four Governments, what issues needed agreement at that level and the rest, then, that could just be decided by the nations?
[71] Dr Jones: I think the main one has already been mentioned heavily hasn’t it, which is trade? So, it is the issues relating to trade and I think there are aspects of our laws and policies that have a direct impact on that. They may be things like animal welfare and issues like that. We are still operating at the moment in a position where we have one jurisdiction as far as England and Wales is concerned from a legal point of view. From that point of view, at the moment our legislation in relation to animal welfare, animal movements and that kind of thing very much still have a UK-wide applicability. And those are the types of things, perhaps, that we should still continue to have consensus across the UK on because they have a direct impact on trade.
[72] Professor Dwyer: If I could add to that, I think environmental legislation would be another bedrock.
[73] Professor Grant: I think the basic principles on farm support would need to be agreed between the four administrations whilst then leaving plenty of room for differentiation to take account of the particular circumstances of Wales. Animal welfare and animal health have already been mentioned. Another area in which I think there would need to be a measure of agreement is plant protection legislation relating to pesticides, which is a very complex area at the moment. But I think there would need to be UK agreement on how that would operate.
[74] Dr Jones: Can I add, in relation to that, I’d be concerned if support and the mechanisms of support were something that were a UK decision because I think there are specific reasons why you might want to have direct support in Wales, which you wouldn’t perhaps necessarily want to have in England. So, I think that is something that I would want to see being a Welsh decision as opposed to a UK-wide decision.
[75] Steffan Lewis: Okay. If I could have a follow-up question as well, because what you all agree on is that there will be inevitably a UK-wide approach to trade, particularly if we’re out of the single market. But agriculture is one of those issues that is always, it seems to me, excluded from any trade agreements. With the comprehensive economic and trade agreement arrangement, which is still yet to be agreed, of course, between the EU and Canada, agriculture is not a part of that agreement. Norway’s relationship with the single market—agriculture again is excluded from that. So, in terms of how we can get some sort of concession or accommodation for Wales’s agricultural sector in terms of UK trade deals with other countries, is it a matter of fact that, globally, there isn’t a precedent, or much of one, to actually get agriculture in full stop let alone Welsh agriculture?
[76] Dr Jones: To clarify—the UK is the member state as far as the World Trade Organization is concerned, and if we want to trade on a global level we do need to be able to still adhere to the requirements of that World Trade Organization agreement on agriculture. There was mention earlier about having production linked to subsidies and things like that. That’s not something that is an option within the green-box compliant options at a World Trade Organization level, so we do need to be careful that we are still able to trade with the whole of the world on agricultural matters.
[77] Steffan Lewis: Sorry, if I can have a follow-up on—
[78] David Rees: Go on, yes.
[79] Steffan Lewis: I was wondering, in terms of—because, again, another point where I disagree is that the UK should be exclusively in charge of trade deals. There are numerous examples around the world where you have federal states where trade agreements are negotiated jointly and agreed jointly. So, again, I allude to Canada where the provincial Governments there are not only having to ratify trade agreements but they mandate them and they have their own negotiators in the room. Do you think that if we are not going to do just a cut, copy and paste in terms of how the EU does things to the UK, and for the UK just to assume the position of the EU, there might be examples around the world, particularly where you have different jurisdictions responsible for agriculture within a state—examples elsewhere—that we could follow in terms of that external negotiation?
[80] Professor Dwyer: If I could say just two things. I don’t think it’s correct to say that agriculture is excluded from trade agreements. I think it’s correct to say that agriculture gets different treatment because it’s a sensitive sector. So, it would still need to be part of those sorts of agreements. I think, in talking about the UK leading as the body that negotiates in the different trade deals, it’s not to say that the UK would be only speaking with a London voice but it is that it would be just one party to the negotiations, because I don’t know if it’s really feasible to consider a situation where, between the Welsh and English border, there are trade limitations in respect of what moves back and forth across the border, or what rules apply in each of the two parts of the UK. I mean, maybe by comparison with countries like Canada you could envisage such a situation, but at the moment our trade is so inextricably linked across those intra-country borders I think it would be very difficult to envisage a situation where the Welsh Government has a different position on trade with other countries to the UK Government. But that’s not to say that the Welsh shouldn’t have a voice at the table when the UK is negotiating its trade deals.
[81] Steffan Lewis: No, just to clarify on that point, Chair, it’s in terms of the UK Government leading on trade, and that isn’t a foregone conclusion and that is something that could be concurrently done. We’ve seen little examples of it happening over the years with the Council of Ministers, whereby a devolved Minister would lead on behalf of the United Kingdom, but it’s a concurrent process rather than being the department for trade in London, nothing to do with us, and them doing everything on our behalf. So, just to clarify that point. I’m not suggesting we should have multiple single markets on this island, let alone on this continent. Thank you very much.
[82] Professor Dwyer: Fine. We’re in agreement. [Laughter.]
[83] David Rees: Before I move on to Mark, you’ve talked about the great repeal Act that might well be looking at the legislation to cover us in a period of time between any agreement in leaving the EU. What impact will that have upon the Welsh agricultural sector post exiting the EU? Because, obviously I’m assuming everything that is currently under the regulations, the laws that have applied, will continue to apply as a consequence of that until we come to a new agreement. But what will happen to the funding? Is your fear the funding aspect of that, because we’re not guaranteed funding post 2020? But the trade discussions may well go beyond 2020.
[84] Professor Midmore: Well, as Janet said, the Treasury in Westminster has had an ambition to get rid of the pillar 1 payments for a long time, and it rather depends, I guess. And that may, actually, also cover the period of the previous Labour administration as well as the current one. That may suggest that there would be an attempt to, sort of, move gradually away from the inherited policies that will apply up to the moment just before we leave the EU. So, I think some caution is necessary because the future is so completely uncertain. Perhaps the best way to think about this is that there might be a number of different scenarios that could emerge, and then think about what one’s reaction would be in each of those separate scenarios. So, they may be taking into account the fact that, actually, the loss of the UK consumer is a big problem for EU-27 agriculture. Likewise, it’s a big problem for the financing of the common agricultural policy after 2019. So, there are all sorts of posturing at the moment about—you know, it’s either the single market and free movement of people or no single market and you can have your own immigration policy. But I would expect that there’ll be scope for some flexibility on both sides to come to an arrangement.
[85] David Rees: Is everyone in agreement?
[86] Professor Dwyer: I would say that, in the face of the uncertainty, which almost everyone seems to agree is going to last for at least five years if not longer, anything that the Welsh Government can do to increase the resilience of the sector, of its environment, of its communities, of its skills and its young generation, would be really worth focusing on in the short term. Because whatever happens, whatever is concluded from all these different negotiations that have to happen at the international level, the more the farming population in Wales and the wider rural population in Wales is geared up to cope with uncertainty, the better you will ride the storm, it seems to me.
[87] David Rees: And is that likely to be out of the block grant rather than any additional funding coming from Westminster?
[88] Professor Dwyer: Sorry, I—
[89] David Rees: Is that likely to come out of the block grant allocation rather than any extra additional funding from Westminster?
[90] Professor Dwyer: No, I think in the short term it’s with your current CAP resource in the rural development programme. In the medium term, it depends, obviously, what comes out of the settlement in respect of the future CAP beyond 2020, and the way that the UK decides to diverge from that in its Brexit process. But I think you have good infrastructure in Wales for building human capital and social capital within the rural areas, and I think that’s something that you could be doing in the short term.
[91] David Rees: Jeremy.
[92] Jeremy Miles: There’s been reference already to the Norwegian relationship with the EU in terms of agriculture, which, obviously, although it has good access for other sectors, the agriculture sector, as I understand it, is not included within that. Are there any lessons for UK policy from what is the relationship between the Norwegian agricultural sector and the rest of the EU?
[93] Professor Dwyer: Norway gives a lot of support to its agriculture—much more than we do.
[94] Professor Grant: It’s one of the highest levels within the Organisation for Economic Co-operation and Development, in Norway, because of the very challenging geographical conditions that most of Norwegian agriculture faces, which I think are even more challenging than those faced in large parts of Wales.
[95] Professor Midmore: Yes, they’ve got a massive sovereign wealth fund that enables them to be relatively generous with their payments to farmers. And it’s not just payments to farming, it’s a very significant package of measures to support settlements outside of the area of greater Oslo, where, actually, probably without Government funding people would not be able to live.
[96] Jeremy Miles: And in terms of the trade relationship around agriculture between Norway and the EU—
[97] Professor Midmore: This is an area that’s not included in the European economic area arrangements. So, I guess that they have very high tariffs—significantly higher than the EU’s tariffs—and so they import judiciously, I guess.
[98] David Rees: Thank you. Mark.
[99] Mark Isherwood: I just want to pick up on a couple of things. We had some reference to WTO rules and trade. Suzy earlier mentioned, I think, welfare standards. One of the recurrent concerns expressed for many, many years—for as long as I can remember—in Wales by the farming unions has been the level playing field in terms of welfare and hygiene standards, and therefore costs, not just in terms of whatever settlement we get with the 27 EU nations, but in terms of trade deals that we might agree more broadly globally. How do you feel we could address those concerns around a level playing field on welfare hygiene standards perhaps better than we’ve been able to thus far?
[100] And a linked question: we heard reference to Norway, and we were told, when some of us visited Brussels a couple of weeks ago, by one of the people we met that the Ukraine has access to the single market for goods, but not services. Are you aware how, if at all, agriculture might be addressed or is addressed within that?
[101] Professor Grant: It’s certainly been the case that there’s been a real problem in quite a few other member states with the actual implementation and enforcement of animal welfare and animal hygiene regulations. They haven’t been properly implemented in a number of member states, and that means you don’t have a level playing field. That’s an even bigger problem, I think, outside the European Union in a number of countries in the world that are obviously not producing to the high welfare standards that we have here. Obviously, this is something that can be used in marketing. I mean, the fact that goods are being produced to higher animal welfare standards is something that can be used in a positive way, I think, to sell the produce.
[102] Professor Dwyer: I think in the future—. It’s increasingly the case that standards are becoming normalised among all the major trading partners. So, the thing about a not-level playing field—you have to unpick a little bit the rhetoric from the reality. I think we do have common welfare standards across Europe in the legislation; we may not have in the implementation and that, as Wyn said, is kind of a slightly separate issue. But we also have choices, when we pass legislation and translate it into our own country’s system, about how we implement that legislation. And I was certainly aware that in the 1970s and 1980s when we were implementing EU legislation, for example on the rules controlling the infrastructure in the meat supply chain, we applied our rules in such a way that it became unprofitable for small operators to continue in business. That was a choice made at the UK level on the basis of efficiency, on the basis that if you had fewer larger plants, they were cheaper to monitor and to control. In France, they took a different view. They said that it was very important to the rural economy to maintain the small abattoirs and cutting [correction: meat cutting] plants in the rural areas because that was important for the rural infrastructure, so they implemented the rules in a different way, which didn’t put the cost so heavily on the smaller plants and many more of those survived. As time has gone on, actually the situation has equalised because competition within the single market has made the smaller operators less viable. But what I want to say is that, when people talk about a level playing field, it’s not always the fact that it’s an issue to do with European legislation, but it’s the choices made at the national level about how things are implemented that can often make the difference.
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[103] Mark Isherwood: And in terms of non—. I think we’ve had very helpful responses in relation to the EU members on trade, and interpretation of standards between the EU members, but in terms of negotiating bilateral trade agreements beyond Europe in the future, again, how do you feel this can be addressed whilst complying with WTO or other requirements?
[104] Professor Midmore: The WTO has laws about so-called phytosanitary provisions—there are a lot of things that are excluded, which would count as unfair practice. Where we start from is that, up until 2019, we would have a framework of quality standards for welfare and food quality and hygiene and so on that are equivalent to the EU. I think there would only really be a problem if the EU standards diverged subsequently. So, one of the arguments that came out in the referendum campaign, of course, is that if we want to have access to the single market from outside, we have to accept the rules that are made within the European Union and nevertheless have no influence over. Whether one country has much influence over such a large subject is a matter of debate, of course. So, I think what would probably happen is that there would be efforts that would be needed to be made in order to keep up with evolving standards of hygiene in the EU-27, if we wanted to continue to export to them.
[105] Mark Isherwood: Just a little more about the standards we want to impose with regard to new trade agreements with other parties outside Europe—I’m not going to name countries, but, historically, some of the concerns raised  by farming unions here have related to, say, countries in the Americas, for example.
[106] Professor Dwyer: I was involved in a study about a decade ago looking at the welfare and environmental standards of the United States, Canada, Australia, the EU, and, I can’t remember, there may have been the South American block there too. Our conclusion was that in environmental legislation, certainly America doesn’t have the same standards in place in all areas as we do, and certainly in animal welfare there are quite big differences. So, it might be that in negotiating with the Americas, those should be a focus for concern. But there are moves to globalise standards in a number of sectors. The one I know about is the fresh produce sector where we have GLOBALG.A.P. now, which has replaced the European level standard that used to exist, and so people who want to operate in those kind of international trading markets are increasingly adopting common standards.
[107] Professor Grant: I think in any bilateral negotiations we would need to emphasise this issue, but we would, of course, be constrained by these phytosanitary rules, which have been referred to. The other concern I have is—GLOBALG.A.P. I think works particularly well, but if you have global standards, are they actually—if you, for example, take countries in South America—being implemented in a proper fashion? It’s one thing to have a standard, it’s another thing to actually have it working properly on the ground.
[108] Mark Isherwood: And in terms of Ukraine, do you feel you’ve addressed that by—? Does the Ukraine agreement include agricultural food or not? And if it does, are we to assume, therefore, that Ukraine, outside the EU, has nonetheless had to agree to meet EU welfare hygiene standards?
[109] Professor Grant: Yes, I think Ukraine would have to meet those standards as part of that agreement.
[110] Professor Midmore: Yes, in fact it’s probably the case that there isn’t very much trade from Ukraine into the EU because of the level of the tariffs and the conditions that are required to be met. But I’m not familiar with the figures at this precise moment; it’s something that you could find out very easily.
[111] Mark Isherwood: It’s just that we were told that they had an agreement with the EU to give them access to the single market for goods but not services and otherwise. I’m just intrigued to discover what that might involve. It maybe something we have to do. Thank you.
[112] David Rees: Suzy, do you want to add something here?
[113] Suzy Davies: I think it was Janet Dwyer—I might be wrong again, apologies if I was—. Your understanding of the great repeal Bill—I appreciate none of us really know what this might mean yet. But if that means that we are going to just keep on going with existing EU rules up to a time to be determined in the future, would your understanding of that be that we are bound in by the rules as they are written in the EU, or the rules as they are gold-plated in the UK?
[114] Professor Dwyer: My understanding of it is drawn from a statement that was made by Sonia Phippard, who I think is second in command in DEFRA, about what was going to happen to legislation. She was basically saying it’s just a practical thing—if we’ve got two years once we invoke article 50 to get out of Europe, the easiest thing is to roll everything over. So, you roll everything over, which means you translate into UK legislation all the things that are currently in the provisions of European legislation. So, it then becomes the UK’s own law, not governed by Brussels anymore, but the shape and form is very much as it was before. So, we would have that translated law, and we would have whatever UK choices about implementation sit under those still sitting there. So, we would actually have both still. But beyond that point it becomes the UK’s decision, and the decision of those negotiating within the UK as to how that then develops.
[115] Suzy Davies: But the implication of that is—. Because, you know, we’re going to be bringing thousands, probably, of regulations in, and it’s going to take years to go through all this. Are you saying that it’s still open to the UK to gold-plate its own legislation? Because that is what it’ll be by then.
[116] Professor Dwyer: Effectively, yes.
[117] Suzy Davies: That’s lovely, thank you.
[118] Professor Midmore: Not necessarily gold plating—gold all the way through.
[119] Suzy Davies: If those are the standards, I’m glad they’re so high.
[120] David Rees: Can I add to that? Actually, there are some regulations that are not enshrined in law in the sense that there’s EU law that’s been enshrined in the UK law, but there are some regulations that operate that are direct regulations that we operate under. Is there a fear that we’ll lose those regulations as a consequence of the great repeal Act, or will you be expecting all the regulations, which may not be enshrined in law, to still be operational?
[121] Professor Dwyer: Yes, I think the expectation is that all of them would be transposed into UK law in the short term, and then the Government would have a series of priorities for change. So, in the areas where it most wanted things to be different from how they operate currently under the European Union legislation, those would be the areas where there would be new legislation to make changes. But, in the short term, we just take everything, and then we start to look at changing things.
[122] Professor Grant: It’s going to be a very long process of review, but, clearly, what one needs to do is to identify priorities, and particularly those regulations that are seen by farmers as particularly onerous and blunt in their impact—things like the nitrates directive, for example.
[123] David Rees: Jeremy and then Dawn.
[124] Jeremy Miles: Quite a lot of what we’ve been talking about is about designing new things, or designing new standards, or reinvention, if you like. What’s your perception of the capacity, either at a Welsh Government level or a UK Government level, to do the work of redesigning and devising new standards and devising new programmes, given that much of that activity would have happened at a European level until Brexit?
[125] Professor Midmore: We recognise that there’s a shortage of people who are skilled at trade negotiation because that function’s been carried out—. It’s one of the only functions—one of two, I think—that the European Commission can act directly on, rather than in concert with the rest of the member states. So, yes, there’s a need for capacity there, and, certainly in a Welsh context, the role of the respective departments involved has been to take European law and to translate it and adapt it to the local context. Now that role will change, and so maybe the expertise that they have can be redirected towards that. I would hope it would be, but there may be a need for some additional support in that respect.
[126] Professor Grant: One of my concerns would be the way in which DEFRA has really been hollowed out, and its capacity to deal with these issues reduced. I’ve been on secondment there in the past, and a lot of the specialist teams that existed in the past have virtually disappeared, so there’s been a substantial reduction in capacity at UK national level to deal with these issues.
[127] Professor Dwyer: What I would say is positive, though, is the development at the local level of much more capacity to act and to understand the complexity of the issues that we’re dealing with. My experience, certainly in respect of agri-environmental management and landscape management more broadly and, if you like, bottom-up rural development, is that, actually, there’s a lot of capacity at local level that wasn’t there a generation or two ago, and it’s come because of the changes in demography, the changing nature of populations in rural areas, the increasing knowledge that we have from research and from a better understanding of the knowledge that’s within the farming community itself. I think there is a much more respectful, shall I say, and equal capacity now at local level to have a really ambitious vision for sustainable land management.
[128] Jeremy Miles: When you say ‘local level’, what level does that—?
[129] Professor Dwyer: Within Wales, it might be, I don’t know, half a dozen areas or more. I’m not an expert on where people feel their identity is best defined, but it would be smaller than the level of Wales as a whole nation.
[130] Jeremy Miles: So, regional level within Wales, effectively, is what you’re saying.
[131] Professor Dwyer: Yes, so things up in Snowdonia are different from down here.
[132] Professor Midmore: As far as you could comfortably cycle in a day is local. [Laughter.]
[133] David Rees: Nerys.
[134] Dr Jones: One of the main concerns I have as a practitioner is how we’re going to deal with this from a legal point of view and from a policy point of view at a Welsh level. Certainly, I think the amount of work to be done means that we need to be starting it earlier rather than later, because, when you come to the end of 2020, if that’s the date when we move from the current system of payments that we have on to a new system of payments, there will be incredible discontent among farmers if they have to adhere to rules that they are no longer in receipt of any money for and for doing things for. So, we do need to manage that quite carefully, I think, and know that we have the policy and the law in practical terms, ready and there, before we actually are asking them to change their practices significantly. So, I think that’s a big concern from my point of view.
[135] Also, the method of exit and the actual point of exit—there will inevitably be issues in relation to existing schemes and existing payments and disputes in relation to those that will carry over into the new system. How they are going to be managed is crucial as well.
[136] David Rees: Dawn.
[137] Dawn Bowden: Thanks, Chair. A lot of it was covered with the questioning from Mark, actually, particularly around animal welfare and so on. Mine’s quite a simple question. Having heard everything that’s gone on, one of the things that are evident is the relative levels of employment in agriculture in Wales compared to the rest of the UK. I was actually quite surprised at the big difference, something like 4 per cent and more, compared to only 1.5 per cent in the rest of the UK. And then some of the discussion and some of the information coming out about the nature of different trade deals, the different types of trade deals, and how that would impact differently on different types or on the different sectors, and whether there is any type of deal that we could do that would find favour, really, across all the sectors, seeing that, clearly, there are going to be winners and losers, or whether we are just going to have to grasp the nettle and do whatever we can with whatever trade deal we get—maybe a beneficiary trade deal for the biggest sector, and the others have to come along behind that. Or is there a way of getting a deal where we can get some equity across all of the sectors? I’m just thinking about—the size of the business that we have with the EU is enormous, both in terms of exports and imports, and whether any kind of trade deal that we do that doesn’t include the EU to the same extent is going to have a very adverse effect on the industry in Wales.
[138] Professor Grant: I think one thing we need to think about that we haven’t talked about so far is the tariff protection that is given to us for quite crucial sectors in the Welsh agriculture economy, things like beef and dairy, and very high tariff barriers that are there as members of the European Union. There is a very difficult question about how these tariff rate quotas and so on are going to be shared out. There isn’t really an agreed mechanism for doing that, because, if those tariff protections are removed, then that would make these sectors very vulnerable indeed. Equally, of course, on the export side, there’s the whole sheep meat issue.
[139] Professor Dwyer: I think there’s an issue in respect of what’s good for the food sector and what’s good for farming and that they aren’t always the same. Certainly, in some of the rhetoric that was in the debates around the referendum, there was definitely one view, which was that what we need to be is a free-trading nation with very few barriers to imports of food products and that that makes a good deal for our consumers, because then our food is cheap. The consequence for agriculture is that it becomes less competitive than it is at the moment with the system that Wyn’s just described in place. I think, for me, it’s important for agriculture and the food sector to be talking together much more about what solutions, what ways forward, could be advantageous for both parties, because I’d not like to see a situation where one’s being played off against the other to the potential detriment of the Welsh countryside.
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[140] Dr Jones: But surely what we should be talking about here is, essentially, brand Wales, because brand Wales is all sectors: it’s all types of landscape within Wales, it’s the food sector and the kind of producer sectors, the processing sector as well, and all the other industries, so, you know, tourism, all of it, feeds, really, on brand Wales. When you look at New Zealand as a model, they are very successful in achieving and developing new markets because they have a brand New Zealand, haven’t they? So, that’s what we need to be thinking.
[141] Dawn Bowden: So, it would be kind of extending the protected geographical indicator thing, really, and just branding everything from Wales. Am I right in saying that one of the concerns about the Brexit proposals is that, depending on the type of trade deals that we get, we could end up being swamped with New Zealand lamb, for instance?
[142] Dr Jones: Exactly. Yes.
[143] Dawn Bowden: What would stop that happening?
[144] David Rees: [Inaudible.]
[145] Professor Midmore: Most-favoured nation tariff arrangements of the World Trade Organization are what we would be allowed to apply in the absence of any formal bilateral trade deal. So, I’m not sure of the difference between the EU’s tariff—I guess it’s the same, because that would be what’s applied to New Zealand. So, I think we’d be able to say a 13 per cent tariff or something like that. But there are some arrangements between the EU and New Zealand, which come from the time of British accession, which allow a certain amount of lamb to come in underneath this most-favoured nation tariff status.
[146] Dawn Bowden: Okay. And the other big concern that I picked up when I was talking to some of your farming colleagues at the Royal Welsh Show—and you’ll understand that I’m not from a farming background, okay, so bear with me on this—the dairy farmers in particular seemed to be very concerned about what might happen given that there is a huge glut of milk throughout Europe and that they will be disinclined to buy British/Welsh milk when there’s so much—. There are milk lakes, or whatever the terminology is that they use in Europe. So, again, it’s just a question about how we might manage and deal with that within trade deals.
[147] Professor Midmore: Well, Britain is a net importer of dairy products from the rest of the EU. This is the other side of the coin. If we can’t sell our sheep meat to them, then they won’t be able to sell their dairy products to us. So, already, the effect of the sterling depreciation has made the situation of Welsh dairy farmers a little bit more competitive, but, as you rightly know, they also have to pay for their inputs in sterling terms, and those become more expensive.
[148] Professor Grant: I think that the need is to concentrate even more on high-value added niche products coming from the dairy sector—specialist cheeses, specialist ice creams, these sorts of products, which can derive very high value and bring a good return to the farmer, ultimately.
[149] Professor Dwyer: I would agree that it’s high-value products. I wouldn’t necessarily say that it’s niche products, because, I think, actually, if you look at the volume of product coming out of Wales, often you could up the quality, increase the value added, and increase the security of production at a level that is higher than a niche, because Wales is a small principality and the totality of UK consumption is quite large. I think stronger supply chain arrangements to give security to the production base—to the farmers in Wales—that what they’re producing will have a market with UK processors and retailers—
[150] Dawn Bowden: Identity of brand, is it?
[151] Dr Jones: Yes, identity of brand, but also that you’re producing for the consumer that is looking to buy that product as well. There is more work to be done in relation to that, you know, making sure—. New Zealand lamb comes in at certain times of the year—well, there is an option or scope to look at producing lamb all year round within Wales to provide that security in terms of the market as well, and achieving that. So, I think it’s looking at alternatives in terms of how we practice our trade.
[152] Dawn Bowden: Okay.
[153] David Rees: Michelle.
[154] Michelle Brown: Coming back to the great repeal Act, Brexit gives us a chance to basically overhaul what is in place at the moment. I don’t want to be too detailed about it, but are there any specific areas that you would prioritise looking at first over others? If you were going to remove regulations, where would you go first?
[155] Professor Grant: I think I would look at how the nitrates directive operates and I’d look at aspects of the water framework directive.
[156] David Rees: I’ll give you time to think on that one. Perhaps you’d want to give us a note on it.
[157] Professor Midmore: Well, I would like to see a strengthening of the rural development provisions of agricultural policy, particularly—not the ones that apply to agri-environment, but the ones that apply to rural economic diversification and community strengthening, because I think those are, for historic reasons, related to something that you probably know is the Fontainebleau formula, which has a distorting effect on the way that policies have been applied in the UK. I think that, historically, we’ve underspent on those areas to our detriment. So, I’d want to make that a priority.
[158] Professor Dwyer: I would completely agree with Peter, but I also do think that there’s more that we could do in respect of trying to achieve a better balance in bargaining in food supply chains, to return more of the value of the end product to the primary producer.
[159] Suzy Davies: Can I just ask a question on that? That’s a fantastic vision, but you know that the supermarkets in the UK in particularly are rather overmighty. Is that vision realisable while we still have such dominant—
[160] Professor Dwyer: Well, you never know until you try, do you? What I would say is that I think that we suffer too much in this country from a view that there are things that the market does and there are things that Government does, and if the market is doing something, then Government doesn’t need to do it. Actually, I think the financial crisis and other things have told us that what you need is Governments and markets working closely together. I’ve certainly been in other countries in Europe where people get around the table with the leaders of industry and they jointly plan to achieve things that are in the interest of both industry and Government. I think that that would be something that would be important in this sector because so much, as you say, does depend upon the supermarkets and the way in which the supply chains work. You’re not going to get anywhere with trying to regulate without talking to them.
[161] So, an important role to be played by Government going forward, I think, is to work with people all the way through the food supply chain. I think this is why some academic commentators are talking about the need to shift the policy away from just being about agriculture and being much more about food, because, actually, it’s the way that the supply chain operates at the moment that leads to a situation where a lot of farming support actually comes from the taxpayer, rather than from the food chain, when, logically, you might think it should be the other way around.
[162] Suzy Davies: Thank you.
[163] David Rees: Nerys.
[164] Dr Jones: Other priority areas would be capital grants for new technologies and improvement in terms of the efficiency of farming as well, because there is certainly a need for input into infrastructure, and improving infrastructure, and there’s a lot to be learnt from outside the UK in terms of that. So, we need to make sure that that information is being passed down to ground- level farming. Also, we have an ageing farming population, and that should be one of the key priorities in terms of policy going forward within Wales, I think. We need to address that, because unless we address that, we’re not going to have an agricultural industry anyway to support.
[165] David Rees: We’re obviously focusing on the Welsh economy, and, clearly, as has already been stated this afternoon, the Welsh farming sector is different because it has a different focus, perhaps, to what you would find traditionally in England, which is more arable. If you are advising the Welsh Government as to what is the priority for Welsh interests in any negotiation, both within the UK, and for the exit negotiations with the EU, what would it be? Professor Midmore.
[166] Professor Midmore: That’s a very good question, and one I’m not sure whether I know, or am properly prepared to give an answer to. The reason I say that is because it’s actually something that we haven’t had enough time to think about. Negotiations on the future relationship will be about numerical things like what’s the access to the European market that is allowed from UK farms—what proportion of the pension pot. You know, stuff like that, which is at a level of detail that we haven’t really got to grips with yet. So, I’m not sure that I’d want to give any advice at this stage. I think I’d want perhaps six months to go away and think about it, do some modelling of the potential consequences of different options, and then come back with a set of recommendations.
[167] David Rees: Based upon the fact that we have been informed that the Prime Minister will invoke article 50 before 31 March—which is about six months away—do we have sufficient time, therefore, to actually have an input into the early negotiations and the early position of the UK Government’s discussions?
[168] Professor Midmore: Well, we have the amount of time that we have. I think all of these discussions indicate that we haven’t actually been prepared for the outcome that we are now facing. But it’s important also to remember there are two distinct negotiations: one is the negotiation of the terms on which we leave the European Union, and the other is what kind of trade relationship we might have with the EU, and other countries, after that. And the two are necessarily distinct.
[169] I think a helpful way of thinking about this is: what happens when a country joins the EU is that it goes through a pretty lengthy process of harmonising its legislation, so that it’s got that acquis, as it’s called in the jargon, to actually be able to implement all European law from the moment. And then, when they join, of course, there’s a transition period as well. So, I think we should also be thinking in those terms: that negotiation to leave should actually involve negotiating a slightly longer transition period than the two years. Maybe the agreement to leave is finished at the end of that period of time, but the withdrawal could be smoother if it were longer.
[170] David Rees: Professor Grant.
[171] Professor Grant: I think what I would advise is that one needs to protect the ability of Wales to engage in policy differentiation that will take account of the particular needs of Welsh agriculture and the Welsh rural economy more generally, and the contribution, which has been emphasised, that that makes to various public goods, including the preservation of a distinctive Welsh culture. I think, in order to do that, what you need to do at this stage is to have a debate about objectives. One of the problems with the common agricultural policy was that it had a list of objectives, which weren’t prioritised, and which, to some extent, were contradictory. So, I think what you need to do in Wales is to sort out what the objectives of a differentiated Welsh agricultural policy will be, and what are your first priorities within that set of objectives.
[172] David Rees: Thank you. Professor Dwyer.
[173] Professor Dwyer: If we’re thinking about priorities for Welsh agriculture and fisheries—I guess, in this panel, it’s agriculture—I think you will probably have a stronger degree of social objectives for your agriculture than would be the case for the UK as a whole. So, I think it’s quite important if you’re able to articulate those objectives—what it is about agriculture in Wales that’s important to your social and cultural values. I think the environment has to be there—it’s a very important thing. Wales has fantastic natural assets, which it would be important to emphasise in any discussion. And, in a sense, it’s your natural capital upon which your economic future depends. So, it’s making that link between culture and the environment, and then the sector. I do think it’s important that one shouldn’t reduce discussions on the future of agriculture to just the sector, and just the policies for the sector—you’ve got to be thinking all the time about the wider impacts.
[174] David Rees: We are doing fisheries next, by the way.
[175] Dr Jones: I think I would be prioritising setting out our own agenda, and what our vision is for the agricultural industry going forward, not just for two years’ time, or three years’ time, four years’ time, but what it is for the next 10, 15 or 20 years. I think the basis for that is the well-being goals, and looking at the well-being goals that we have within the future generations Act and thinking about how we might set a specific agenda for agriculture within those, and trying to perhaps come up with a unique and deliberately designed policy for Wales going forward, as opposed to being influenced by what is happening at the moment in terms of the exit strategy itself.
[176] David Rees: Thank you very much for your time this afternoon. We’ve come to the end of our time, unfortunately. You will receive a copy of the transcript for any factual inaccuracies you may spot. If there are any, please let us know as soon as possible so that we can get them corrected. Once again, thank you very much for your evidence session.
[177] Dr Jones: Diolch yn fawr.
[178] David Rees: A five-minute break? Just until we get the video links completely confirmed.
Gohiriwyd y cyfarfod rhwng 14:45 a 14:51. The meeting adjourned between 14:45 and 14:51.
Gadael yr Undeb Ewropeaidd: Goblygiadau i Gymru—Amaethyddiaeth a Physgodfeydd Leaving the European Union: Implications for Wales—Agriculture and Fisheries
[179] David Rees: Can I welcome Members back to this afternoon’s session and move on to the next item of evidence? We are going to focus upon the fisheries agenda. Can I welcome Professor Richard Barnes, University of Hull, via the video link, and Griffin Carpenter of the New Economics Foundation? Can I thank you for the evidence that you’ve written and sent in to us? Thank you very much for that. We’ll just go straight into questions if that’s okay with both your selves.
[180] Professor Barnes: Yes. Prynhawn da, Chair.
[181] David Rees: We understand that, in Wales, fisheries may be a slightly different agenda because the majority of the Welsh fleeting fleet is under 10m, while the major deep-sea fishing fleets are based in Scotland and England. But, in that sense, what are the issues that we need to focus upon? Could there be a position where, within a UK situation, we are now able to expand our fishing fleet as a consequence of possibly leaving the EU? Perhaps, Griffin, you start, and then I’ll ask Professor Barnes to come in.
[182] Mr Carpenter: Sure. So, maybe let’s just start by going over the basics of the Welsh fishing fleet and what it is and isn’t. So, compared to the rest of the UK, as you mentioned, the Welsh fishing fleet is largely small scale. So, we tend to split things into over 10m and under 10m. Over 90 per cent of Welsh vessels are under 10m. In the UK as a whole, it’s about an 80:20 split. Most of these vessels also fish shellfish stocks, which largely are not under EU management—because they’re more inshore, they can be managed by each member state individually. So, for these two reasons, largely, Welsh fisheries are not as engaged with EU policy as the UK would be as a whole.
[183] So, in terms of scope for change, I would be of the position that we would not be expecting large-scale change for a number of reasons that I’m sure we’ll talk about today, one being that the Welsh sector is targeting shellfish, and that is going to continue and these are not mobile stocks that you’ll steam for large periods of time to access, and, again, that Welsh vessels are small scale. So, they probably won’t be going into foreign waters as much as other vessels would be. So, I think because of those features, we won’t expect large-scale change.
[184] There could be some changes in terms of quota management, and the UK may receive larger shares of quota or possibly smaller shares in the future due to a renegotiation of our terms with the EU. Again, I’m sure we’ll talk about this in direct detail, but we’re of the position that we shouldn’t expect large-scale changes there, mostly because of a trade-off between access to markets and access to waters.
[185] So, this has been the case, for example, with Greenland, when they left the EU, where there is a trade-off between EU vessels retaining access to Greenland waters in exchange for Greenland having access to the EU market. This is also currently the situation with Norway. Norway has not claimed a hard 200 nautical mile limit, as is being proposed right now for the UK. In exchange, the EU still has tariffs on 70 per cent of Norwegian fishing products, but has lower tariffs than would otherwise be the case. So, Norway went through that trade-off and said, ‘Okay, we’re not going to have a hard 200 nautical mile limit. We’re going to give up some access to our waters so that we have access to the market’. So, I think that all of these things will be relevant to the UK and relevant to Wales. So, I would not expect a large-scale change of the Welsh fishing fleet in 15 or 20 years or whatever we’re talking about here.
[186] David Rees: Thank you. Professor Barnes.
[187] Professor Barnes: Yes, thank you. I would agree with what Griffin has just said there. I don’t anticipate significant changes either in terms of the condition of the fishery or additional quotas. Perhaps one thing to add would be that, within the UK, the allocation of quotas has largely been something that has been a matter of domestic policy within the common fisheries policy. Maybe over the last five to 10 years, there have been some legal challenges to the allocation of quotas to the under-10m group of vessels. The first of those challenges was largely successful, but the second wasn’t. There are nuances in the two cases there, but what’s probably important here is that the courts there upheld that there was a large degree of discretion that the Government enjoys about how it allocates quotas, either between the under-and-over-10m sector or within the under-10m sector. So, unless there is a significant policy change, following Brexit, I wouldn’t envisage that situation changing significantly. But there may be some reasons why that may change. Perhaps we’ll come to that later on.
[188] David Rees: Thank you. Michelle, do you want to come in on this?
[189] Michelle Brown: Thank you, Chair. There’s been a bit of a conversation about whether fisheries should be devolved to Wales or that it should be retained as a UK competence. Do you have any thoughts on the pros and cons of whether fisheries is regulated and controlled as a UK responsibility or by the Welsh Government?
[190] David Rees: Professor Barnes.
[191] Professor Barnes: I think the position, obviously, at the moment here is that most fisheries are regulated initially at the European level under the common fisheries policy and that sets out most of the substantive law governing fisheries. Within the framework of the common fisheries policy, there is a reasonable degree of devolution of fisheries management. So, obviously, the Welsh Assembly, as you would appreciate here, has responsibility for fisheries management under the settlement as it stands at the moment. So, is the question you’re asking: post Brexit should that situation continue, in a sense, with the UK retaining responsibility for what the EU is formally doing, or are you suggesting that perhaps what the EU is doing ought to also be delegated or be a matter for which the Welsh Assembly is responsible? Is that clarification, perhaps, Michelle?
[192] Michelle Brown: Currently, on what the EU are doing, i.e. regulating and setting fisheries policy for the UK, in your opinion, once we Brexit, should that be carried out by the UK Government or the Welsh Government and what are the pros and cons of each?
[193] Professor Barnes: Okay. In my view, I think fisheries management will probably have to be done at different levels. I think, at a regional level, and by that I mean at the European level, under international law and for practical reasons, I think that it’s important that there’s a degree of co-operation in terms of how we manage fisheries.[1] So, I think there are still obligations under international law that would require the UK to co-operate with its neighbouring states in respect of certain aspects of fisheries management. Most are the large-scale pelagic and demersal fisheries, but there may be other fisheries that fall within the scope of that.
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[194] I think, once we come out of the EU, then the UK will have to decide how best it wants to manage its fisheries, and I think that, probably, our economies of scale, about how it proceeds forward on this—I think there will be certain things that the UK Government may be best situated to do, for example, entering into negotiations about quota allocations between the EU and the UK, and between the UK and third states. I think that would be best done by the UK. There’ll be certain degrees of co-operation that will be required between the UK and third states for particular species, namely straddling and highly migratory stocks. Again, I think that would be best addressed at a UK level. Within that, I think considerable discretion would exist for the management of fisheries at a regional level, possibly to enhance what’s happening under the current settlement at the moment.
[195] David Rees: Have we lost him? Okay, thank you.
[196] Professor Barnes: If I can—.
[197] David Rees: Griffin.
[198] Mr Carpenter: Sure. Largely the same as what Richard’s been saying, that, I guess, our position is common resources largely need common management, and that would be as close as possible to a situation where you have all of the relevant member states working together to agree to measures. It largely doesn’t make sense if you have a different mesh size set by one country rather than another country if they’re sharing one stock together. So, what that means for the devolution question is largely the same: that, for the UK, if it were taking over its own fisheries management, we wouldn’t want to have different regulations in Wales than in Scotland than in England, because you do have a mobile fleet that’s operating in all these jurisdictions. As Richard was getting at, there is an issue over something like quota allocation, where I think Wales already does have some responsibility here, and, continuing in that stream, different Governments might have priorities for the fishing sector. What is a successful fishery is actually an interesting question that doesn’t have an obvious answer because it brings in all sorts of things like culture, coastal communities; it’s not just about maximising gross domestic product for its own sake. There’s lots of other objectives that we have, and those will be different objectives, I imagine, whether we’re in Wales or in Scotland or in England. So, I think that’s where there’s scope for change—saying, ‘How do we distribute our quota?’. But that’s different than saying, ‘Do we set our own quota for Wales versus Scotland?’ or ‘Do we set our own mesh sizes?’ I think that could be very problematic.
[199] David Rees: Thank you. Jeremy.
[200] Jeremy Miles: Taking that into account—that last response—in your note you say that some organisations that advocate a change in the post-Brexit system so that it’s a market-based system of quota ownership, which, if it were to be introduced, would disadvantage Wales because of the nature of our fleet essentially. Under what scenario would that become a risk? I.e. who would be advocating, what would be the impetus for that change, and what would Wales need to do in terms of how it organises its powers, I guess, or what settlement would need to be achieved for us to protect against that outcome?
[201] Mr Carpenter: So, Wales is a bit of an interesting one here because we’re largely talking about quota allocation, and most of Wales’s fisheries are not about quota—so, you know, scallops, whelks, lobster, these are the big fisheries and they’re not actually about quota. So, this is maybe a smaller issue than these other fisheries, but, still, we can think about some species like skates and rays that are landed in Wales and could be affected. So, there are a number of proposals on the table, and I guess the first thing to mention is this has always been, and will continue to be, a member-state responsibility, which is something I found myself correcting all the time during the referendum campaign—that if small-scale vessels get a small amount of quota and the large-scale vessels have a lot, there’s concentration over time, and this has nothing to do with the EU.
[202] The EU sets the amount of quota, it goes to the individual member states, and they decide the vessels that that goes to. So, actually, this is a market system. Other groups have proposed systems very different than what I propose, where you have a free marketing quota and one vessel could purchase a share from another. So, one vessel has 2 per cent of the skates and rays quota, another vessel has 2 per cent. They can purchase their quota, buy them out of the business and have 4 per cent. So, this is what we see, and some member states have gone in this direction—the Netherlands, Sweden, parts of the Danish fishery. They’ve all gone in this direction, and their fleets have shrunk in size, and quotas been concentrated. So, you know, it has its arguments. Some think that profits will increase in this system, and so it’s the most economically efficient outcome. Others say, ‘Well, we want fishing to remain in coastal communities, and we don’t want a situation where it’s just a couple of vessels that own all of the fishery’. It’s an interesting political discussion, but the point being: this is one that’s made by individual member states. There’s a lot of energy right now about changing fisheries. So, even though this isn’t an issue that’s affected directly by Brexit, it’s one that’s being debated a lot right now because there’s a focus on fisheries. You know, fisheries are about 0.03 per cent of the UK economy—so very, very small—but during the referendum campaign there was a lot of focus on it in many different ways. So, I think people are using this energy right now.
[203] Interestingly, Scotland has come out very strongly against these types of free-market quota allocation systems. They’ve made it clear that they’re not going to have that sort of system. The Scottish Government, through Marine Scotland, wants to remain as the owner of the quota and distribute it according to how they feel. We’ve been having interesting chats with them about a system that we would prefer, where a quota is allocated based on performance. So, if you’re using gears that impact the environment less, you get more quota. You can look at a whole bunch of metrics, whatever’s important to you—if it’s about creating jobs, if it’s about landing in the UK versus landing abroad, if it’s about the amount of fuel that you use. You can use a quota to reward performance and, in that sense, incentivise the type of industry that you want to create.
[204] David Rees: Professor Barnes.
[205] Professor Barnes: Yes, I would agree. Obviously, the Brexit scenario creates possibilities for new management regimes. I suspect, in the short term, that there’s going to be a greater need for certainty; so, retaining a large degree of what we’ve got, at least initially, until we actually map out exactly how the state of fisheries is going to be moving forward. If we’re introducing or considering the idea of rights-based fishing, as Griffin’s mentioned to you, the main driver for that has been one of economic efficiency. Where it has been introduced—Iceland, New Zealand and some other states—we have seen efficiency gains there, but often that’s come with a high degree of social cost, for example the exclusion of certain fishing groups. There have often been quite strident debates about who gets the initial quota and on what basis they’ll get the initial quota. For example, is it a windfall gain, or is it historic practices? For those fishermen who engaged in overfishing, should they be able to benefit from that? There have been debates about how that fits with, for example, recreational fisheries and whether they would still have access to stocks. So, there are quite difficult questions about who gets these quotas and whether or not criteria other than simple economic efficiency should be used. I think that there are some interesting points that are worth pursuing about these alternative options, for example, looking at more sustainable fisheries[2]. In the longer term, I think there will certainly be a high degree of interest in pushing that aspect a bit further.
[206] David Rees: Thank you. Jeremy.
[207] Jeremy Miles: But the issue about who gets to make those decisions and those judgments, effectively, is about the control of the quota allocation. Yes?
[208] Mr Carpenter: That’s right.
[209] Jeremy Miles: At the moment, that is for the under-10m and the non-sector fleet at a Welsh Government level. So, those policy considerations are entirely devolved within our current system. To what extent would you need to be able to achieve control of quotas for larger vessels in order to guard against the risks—I suppose some might regard them as opportunities—to control the policy options that you’re describing there?
[210] Mr Carpenter continues: I don’t know all of the exact details on the degree of control that the Welsh Assembly has over the large-scale sector. From what I understand, you get to make those decisions on allocation. So, I think it would be more about protecting the Welsh share of that quota, to make sure it isn’t grouped in a larger system, because these economic efficiency gains come when you add in more and more vessels; you create a larger market. So, there would be a push, if such a system were created, to bring the Welsh producer organisations, which I think have about six vessels, into this system. So, from what I understand, it’s more about protecting against this change than any new legislation that would have to take place.
[211] David Rees: Do you concur with that, Professor Barnes?
[212] Professor Barnes: Yes, I agree. If we’re looking at these rights-based systems, the right, who has it and how they use that, would be entirely contingent upon the local [correction: domestic] legislation. So, it’s more a question of actually how you design the legislation to ensure the protection of certain types of vessel [correction: right], or you delimit the extent of the right and who can come into [correction: and which fishermen can enter] the fisheries. So, as long as you have exclusive control over that element of the regulatory process, you ought to be able to facilitate that type of rights-management system.
[213] One difficulty I think is, though, that when you look at these systems, they tend to work best in single-stock fisheries, and they’re perhaps not very well suited where the fishery is complex. So, for example, multi-species fisheries or where there are certain overlaps between fisheries. The right there becomes quite a difficult thing to delimit. So, again, you would have to look at the specific fisheries you were considering applying it to and how that was affected by other fishing practices and other activities, not just fishing, but for example vessel movements and offshore developments, because these all impact on the value and the quality of the right.
[214] David Rees: Thank you. Suzy.
[215] Suzy Davies: It’s not on this specific issue. Is that okay?
[216] David Rees: Go on.
[217] Suzy Davies: I wonder if we can just take a step back and have a look at the wider picture at the moment. When the UK leaves the European Union, which countries within the EU are most likely to lose out on potential markets here? Who is fishing in our waters at the moment, effectively?
[218] Professor Barnes: That’s a good question.
[219] Suzy Davies: I’m guessing that not all EU countries have a fleet.
[220] Professor Barnes: I think Griffin’s in a slightly better position to answer this one, but we’re trying to undertake a study that actually maps out exactly where fishing is being undertaken, by which countries, and, even behind that, who actually owns the vessels that are engaged in fishing. So, I think there’s probably a bit of research to be done to actually map out exactly where the fishing is taking place.
[221] There are some areas where I think there are potentially savings in terms of Brexit for fisheries, if you can permit me. One of the concerns raised during the referendum debate was historic fishing rights. These are ones that were largely consolidated by an international agreement in 1964[3] and that guarantee, going forward, access to certain fishing grounds within European coastal waters for neighbouring states. Now, that settlement has since been, I guess, largely put on the back burner, but the allocation of historic fishing rights is now entrenched within the omnibus European common fisheries regulation. To an extent, I think, the UK doesn’t really benefit from that. I think there are about five grounds within foreign states’ waters where we can fish, but European states have access to about 32 fisheries within the UK, and a couple of those are within waters for which the Welsh Assembly has some degree of responsibility. So I think, in terms of historic fishing rights, there is the potential to rebalance that, but I think these probably aren’t the most significant commercial fisheries, so there’s not a huge amount of movement or change that we could introduce there.[4]
[222] David Rees: Griffin.
[223] Mr Carpenter: Lots of countries, the most significant being Spain, France, the Netherlands, Ireland, Belgium, and you’d also have Denmark, Germany—almost everybody. The North sea is just a big mix; everybody fishes in each other’s waters.
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[224] So, if you try to isolate any one of those countries, everyone else who shares the North sea is affected. It has been for a long time—everybody just fishes around as they chase a mobile stock through the north Sea.
[225] Suzy Davies: Okay. That’s helpful just to try and understand which countries within the EU will be pressing for access to the waters around Britain.
[226] Mr Carpenter: Yes, lots, and I have heard that, in Brexit negotiations, Spain and France have already said that fishing is going to be a priority for them. Whether it is for the UK, you guys will probably have a better position after all these evidence sessions, but we’re obviously worried, as it’s 0.03 per cent of GDP, that it might not be high up the list.
[227] Suzy Davies: Just a last question on that. Do their vessels tend to be the over-10s, if I can put it like it that?
[228] Mr Carpenter: No, almost every country has more small-scale vessels than large-scale vessels, but obviously when it comes to these international issues you’re talking the large-scale versus the large-scale. It’s not their under-10m vessels coming into Welsh or British waters.
[229] Suzy Davies: They can’t get that far.
[230] Mr Carpenter: Yes, they can’t get that far—they’re day boats. So, we are talking about the large-scale fleet. And, as Richard hinted at, one of the issues is ownership and ‘Whose vessel is it really?’ Maybe this will come up. So, some of the vessels that we talk about—Dutch vessels and Spanish vessels in particular—are actually British-flagged vessels, but owned by those member states in terms of the owner’s nationality or, more controversially, where the profits flow.
[231] Suzy Davies: Thank you. Thank you, Chair.
[232] David Rees: Can I clarify one further point on that? The historic rights—will they disappear when we leave the EU and will they be forming part of the negotiations?
[233] Professor Barnes: That’s a very good question. I think my position is that the settlement under the European [correction: London] fisheries convention of 1964 would stay in place, but the practice that we have under European Union law would disappear. Whether then we go back to the situation where the London convention governs things is not entirely clear. There are quite technical treaty provisions within the London convention which suggest that we’re allowed to adapt and introduce ad hoc measures. Having done that through the common fisheries policy, arguably, it makes the European [correction: London] fisheries convention defunct now.
[234] I suppose the simple answer is that if we come out of the Common Market and we go back to the European [correction: London] fisheries convention and we don’t like that, the UK could withdraw from it and those historic access rights within the coastal waters would disappear.
[235] I would have to stress as well that those historic fishing rights are only within the six to 12-mile zone; they don’t exist within the broader exclusive economic zone, which goes out to 200 nautical miles. Historic fishing rights don’t exist in those waters, at least as a matter of international law.
[236] David Rees: Okay, thank you. Mark.
[237] Mark Isherwood: Under international law, what would take precedence in terms of access rights? Would it be where a vessel was flagged or where a vessel was owned? Reference was made to Ireland as one of the states fishing in the North sea and elsewhere. Was there a bilateral agreement with Ireland preceding 1972 that some might consider could come back into existence? As with border issues, might that be a consideration in negotiations? More broadly, in terms of the Welsh market, where are our biggest markets? Would I be right in assuming the rest of the UK, then France and then otherwise? If so, to what extent do negotiations need to consider market access issues?
[238] David Rees: Professor Barnes.
[239] Professor Barnes: I don’t think older bilateral agreements are probably helpful to look at. I think that probably some of these will be defunct or at least have been replaced by the London convention. So, I don’t think we’re going to go back to the situation where these bilateral provisions would determine access to fisheries.
[240] As a matter of international law, each state—the UK, France, Germany—has exclusive sovereign rights over its coastal waters, and it’s for each state to decide what its own fisheries management rules are going to be. So, there are obligations within international law that require a coastal state to conserve and manage its stocks, but, basically, if the coastal state sets its total level of catch and it’s able to fully exploit that allowable catch with its own vessels, then under international law, strictly speaking, unless there are shared or joint stocks, there is no obligation to share that [correction: to share that catch]. Now, the situation at the moment is that, because we’re part of the EU under the common fisheries policy, that decision is largely been one that is being carried out at the European level. So, we go back to the situation where the UK determines access to fisheries and the allocation of those[5]. Now, the question of vessel flags is only really indirectly relevant to that. So, if the UK wants—. Sorry, can you hear me still?
[241] David Rees: Yes, we’re fine.
[242] Mark Isherwood: Yes, thank you. We’re still listening.
[243] Professor Barnes: Sorry, I think the signal was breaking up a little bit at this end. If the UK wants to establish its own access and management of rules and to allocate quota only to UK-flagged vessels, then the question of whether or not foreign companies would be able to take advantage of that would depend on the rules governing the nationality of vessels. And, again, when we’re no longer part of the common market, then I suppose, in principle, the UK could exclude foreign-owned vessels, but this would really be contingent on what settlement the UK reaches with the EU going forward in terms of access to markets, common customs union, trade and fisheries products—. We’d need to know a little bit more about that.
[244] There’s one example. If we negotiate to retain membership of the common market, the single market, and that extends to fisheries, then that would then entail that EU member states, nationals and companies would presumably still have the right to register vessels and operate fishing concerns within the UK. So, again, it’s contingent on what settlement we reach.
[245] David Rees: Griffin.
[246] Mr Carpenter: Yes. So, just to pick up on that last point about what we can do now about ownership of vessels. We already can do a number of things, and this is called the ‘economic link’, in terms of specifying that, if you fly a British flag on your vessel, you need to either land a certain percentage—50 per cent—of the catch into UK ports, or employ a certain percentage of the crew, or actually gift some of your quota to the under-10m fleet. So, what we can now do, or what we will be able to do that we couldn’t before, is something around the nationality of the owner. So, that’s the only thing if you say that you actually have to be a British citizen in order to fly the British flag on your vessel. So, that’s the new opportunity, if you like, that has opened. So, to be clear, there already are a number of requirements that we can and do make with respect to vessel ownership and what you have to do, and those can be tightened. We could make that 90 per cent of your landings if you fly a British flag and need to go into British ports.
[247] On that point, with respect to historic access, I think it’s the flag of the vessel that matters historically. So, if you had a Spanish owner with a British-flagged vessel fishing in this area for 30 years—Richard can clarify—I think it would be the fact that it’s flagged that’s the issue of significance.
[248] In terms of largest markets, I was trying to look at the data for this session to split Welsh fisheries from the UK, but I couldn’t seem to find the statistics that do that. But we do know, for the UK as a whole, that 80 per cent of our landings are exported. It’s actually higher for shellfish, which is very relevant for Wales, with, as was mentioned, France, Spain and Ireland being the largest markets there. Fisheries is a really export-driven market. We have this image of docking in ports, buying fresh fish—that’s a very, very small percentage of the market. And what’s actually interesting is that the EU consumer market is actually larger for UK fisheries than the UK market. So, if you were to ask UK fishers, ‘Would you rather lose the UK market, or the EU market?’—. They would say the EU, because we export 80 per cent of what we catch, and two thirds of that goes to the EU. So, over 50 per cent on net of our exports—as I mentioned, it’s higher for shellfish—is going to the EU.
[249] David Rees: Thank you. Steffan.
[250] Steffan Lewis: To what extent are the decisions made by the North East Atlantic Fisheries Commission relevant to Wales, or is that body’s decisions more relevant to the bigger fisheries up in Scotland, and in England?
[251] Mr Carpenter: The latter—mostly Scotland, even more than England. I think it’s in the briefing note, but we would probably need to apply for membership, and so this gets a bit interesting, because the existing members might attach a condition to the UK becoming a member of that body.
[252] Steffan Lewis: That was going to be my supplementary question, because that is a body where there is precedent for sub-state nations to join it. So, the Faroe Islands, even though part of the Danish kingdom, is a member itself, and represents itself on that body. Can you envisage a scenario where there’s a case, then, for Scotland to apply for membership of that body, at the same time as the UK, which it would be entitled to do? In which case, would there be any practical ramifications for Wales, or will it just be a very interesting political spectacle?
[253] Mr Carpenter: Yes, that is interesting. The Scottish fishers, and their federations, have advocated that position—that they would like their own seat, because it tends to be English representation that goes negotiating on behalf of Scotland, and they don’t like that situation, as you might imagine. In terms of ramifications for Wales, I suppose it might set an interesting precedent, but, as we were just discussing, it’s mostly about the large pelagic stocks—mackerel, significantly—that they’re negotiating over. So, I suppose, if there were to be another fishing commission further down the line, which dealt with shellfish stocks in the Irish sea, then there might be precedent for Wales in that case.
[254] David Rees: Professor Barnes.
[255] Professor Barnes: Yes, I would agree. The only thing that I would really add here is that, I think, the most likely scenario would be UK membership of the regional fisheries commission, but perhaps, within that, there would be scope for some degree of representation by the different devolved Assemblies. The key thing is, I don’t think the other members of NEAFC would be willing to, for example, allow three or four new seats to be made available to participants [correction: constituent parts of the UK]. One seat, yes, but then, perhaps, representing differentially the elements of the devolved Assemblies or Governments.
[256] David Rees: Steffan.
[257] Steffan Lewis: That’s okay, thank you.
[258] David Rees: The EMFF clearly is a major fund that’s been focusing on the fisheries, and supporting fishermen as well. Is there a need to replace the EMFF post Brexit? Professor Barnes.
[259] Professor Barnes: I think, probably, there will be. For political reasons, I think there has to be some degree of support for the fishing industry. The extent of that support is really a political question. But I think one area—and maybe this is more of a kind of personal observation—where I think there needs to be a bit more work on is in terms of exactly what kinds of support are provided here. Because one of the problems with fisheries subsidies, I think, is that, often, they’re given in the wrong areas, and to the wrong vessels, and that can have adverse consequences for the sustainability of stocks. So, I think whatever support is made available ought to be one that is strongly linked to sustainable management of fish stocks, as opposed to those that might have detrimental knock-on effects.
[260] David Rees: Griffin.
[261] Mr Carpenter: Yes, I think some sort of replacement would be needed. The EMFF covers, actually, a wide range of policy issues and objectives, so issues such as data collection, control and enforcement. There are funds from the EMFF for all of these, and, I think, no matter your vision for fisheries, those are probably going to be part of it. But, yes, there would be the ability to, kind of, reprioritise whichever of those issues.
[262] So, one of the more controversial issues for the EMFF is funds for scrapping vessels, or for engine replacement. So, for example, there is a problem with old engines, less fuel efficient, but there is funding through the EMFF to upgrade those to new engines—the concern being that you’re actually increasing the capacity of the fleet while doing so, when we’re trying to get this balance between the biological resources that are available and the fishing fleet. So, that’s one of the more controversial issues, and I suspect that would be something to be looked at if there was a new subsidy pot being made.
15:30
[263] David Rees: Okay, thank you. Also, there’s a question on the quotas—I need to get an understanding of the quota agenda. How does the quota agenda of the EU currently work with bodies or countries outside of the EU? Because, clearly, there’s a question as to making sure we keep the stock levels at the appropriate point, and I want to ensure that, perhaps, the discussions that will need to take place, as a member state outside of the EU, with the EU, ensure that those quotas are fair and ensure that they maintain the levels of stocks.
[264] Mr Carpenter: Yes, that’s one of my largest concerns for what post-Brexit fisheries might look like, because we already have some examples of this, as you say, with third countries. So, when we agree, or fail to agree, on a mackerel quota or herring quota with states like Faroes, Norway, Iceland et cetera—. What happens is, when the EU, let’s take the example of a stock that’s only fished by EU countries and in the English channel or something, there are messy negotiations that are made behind closed doors—actually the ones for the Baltic are made as we speak—and they tend to set quotas too high, above scientific advice, and we continue in a state of over-fishing today, although the trajectory is a positive one. So, what happens, then, if you have quotas negotiated with third countries, often Norway, the commission will come in with their proposal—Norway have their own proposal—what’s problematic is that you’re negotiating the level of the TAC—sorry, the total allowable catch: the quota—whether that should be 100,000 tonnes or 200,000 tonnes, but then each of these parties will also say, ‘We should get 30 per cent of that’ or ‘We should get 40 per cent of that’.
[265] So, the big difference—well, I guess there are two big differences between setting quotas within the EU, and setting quotas with other member states. One is that the percentage going to each member state is fixed, so Spain is always getting 20 per cent, the UK is getting 25 per cent, France is getting 15—whatever the percentages are, those are fixed based on historical fishing patterns from the 1970s. Whereas, when we go to Norway, sometimes they’re arguing a higher percentage because of something like climate change, and they say, ‘Well, more of the mackerel is in our waters now so we should get a higher percentage’, and this is really messy to be doing this at the same time as trying to set the overall TAC.
[266] The other main difference is that the EU, when setting a quota, needs to come to a decision—the doors are locked, you don’t leave the room until you come to an agreement. What’s happened in the past with the Faroes or Norway is that no-one agreed. They kept saying they wanted 30 per cent, we say we wanted 90 per cent—it’s not resolved, so everyone just sets their own TAC, and, of course, who suffers from that is the fish stock and, well, ultimately everyone in the long term. But no agreement necessarily needs to be reached, and this is a tempting position for the UK. It’s nice to be able to walk away from the table and set your own quota, but, of course, that comes with dangers. So, when we think about how we want to set up these structures for quota-setting in the future, I think the key issues we need to look at are: setting fixed percentages, so that every year we’re not negotiating what percentage goes to each country, and we’re just talking about the level and, hopefully, following scientific advice; and also some sort of procedure that will ensure, or at least encourage, an agreement to be reached, rather than these ugly situations where countries leave the table and maybe trade restrictions come in. This actually happened with the Faroes before—the EU couldn’t come to an agreement with the Faroes on how much herring to fish, they set their own TAC, the EU said, ‘Okay, we’re going to put tariffs on you’, and then they said, ‘Okay, we’ll ease off and we’ll go with what you said’. So, we want to avoid those situations.
[267] David Rees: Professor Barnes.
[268] Professor Barnes: Yes, I would agree. I mean, the key issue is setting stable TACs, and that’s got to be done through agreement. I mean, under international law, the TACs can be set and then adjusted beyond scientific advice to take into account socioeconomic factors, and that often gives a lot of wriggle room to states to try and push up quotas to meet domestic political needs and pressure from the fishing industry. That will continue regardless of whether we’re in or out of Europe. It’s one, I think, that we have to be conscious of and to manage very carefully. Griffin pointed to the idea that we’ve got fixed quotas. Within the EU as it stands at the moment, most fisheries are allocated on the basis of relative stability. It can be [correction: has been] quite contentious, but one of the advantages of that, at least within the EU, is that it supresses pressure to try and renegotiate higher fishing quotas between member states and so can help keep overall fishing levels down, as long as the TAC is fine [correction: set at appropriate levels]. So, what we have to be careful about here is not unpicking too many of the settlements we’ve got for access to [correction: allocation of] fishing quotas, because if we upset that then the whole of the edifice falls down and we may actually start fishing at levels way beyond sustainable levels.
[269] The second thing that I think that we need to do—and, again, Griffin alluded to this—is to make sure that we’ve got quite clear parameters for the negotiation of fishing quotas with third states. So, there are some principles around, for example, historic fishing levels, the principle of zonal attachment, i.e. where the fish spend most of their time, and you’ve got the special dependency of regional communities or local communities and so on. But I think what we need to do is maybe more carefully and clearly delimit how those factors feed into the negotiation, because we don’t want too much movement, otherwise the sustainability of stocks would be jeopardised.
[270] David Rees: Thank you for that. Clearly, in Wales, as you said, we are mainly shellfish and inshore, therefore the quotas might not be so relevant to us. But is there concern that the issues between the Scottish fishing fleet and the English fishing fleet might be a factor in perhaps producing a challenging settlement for fisheries, post Brexit?
[271] Mr Carpenter: Yes, I think that’s a real concern—as we’ve seen with Greenland, Norway and other cases, there is a trade-off between access to markets and access to waters—to the extent that Wales is less interested in the discussions around access to waters, but highly interested in access to markets. The position of the English fleet and the Scottish fleet does affect the export market for Wales. So, it is an interesting position that, going forward, Wales might have a position around access to waters simply by trying to retain market access.
[272] David Rees: Professor Barnes.
[273] Professor Barnes: Yes, I would agree with that. I think one of the things that has been forgotten in all of this debate about having control over our waters is actually the overriding importance of making sure that there’s going to be a market for fisheries’ products. Again, going back to the statistics there, 80-plus per cent of shellfish and an equally significant amount of other fisheries’ products are going to the EU. So, making sure that we have access to that [correction: that market] is going to be an absolute priority, because if we lose market access, or it’s jeopardised, then that will start to undermine the economic viability of the fishing industry.
[274] The other thing that’s maybe worth thinking about is that, if there is a change in the way in which quotas operate at the national level, then that might involve some renewed discussions about the allocation of quotas and fishery management responsibilities within the UK as part of the settlement between the devolved administrations. I’m not sure how that might pan out. Clearly, if there is more fishing to be had, post Brexit, then that would have a knock-on effect as regards how the quotas are allocated between the component parts of the UK. It’s worth bearing that all in mind, but I don’t think it’s nearly as significant for Wales as it may be for England and Scotland.
[275] David Rees: Okay, thank you. Can I clarify? Access to markets: clearly, we’ve heard the messages coming in from Westminster about the difficulties and the issues around access to markets and the give and take for that. Is there anticipation, therefore, there’ll be a different access-to-market agreement for fisheries, compared to perhaps other aspects of trade?
[276] Mr Carpenter: Personally, I don’t have any—[Interruption.] Sorry, Richard. I don’t have any insight into that rather than what’s in the press, but we have seen in other examples like Norway and Greenland, as I mentioned—fisheries is more of a priority in those countries, admittedly—that tariff rates were agreed industry by industry or actually even at a product-by-product level, depending, sometimes, on the competition. So, if smoked salmon products have more competition because of Scotland, then maybe those will have tariffs, but not for other products where there’s no local substitute. So, again, I don’t have any insight into the Government and what they’re thinking, but, just looking at historical examples, I could see why it might differentiate for fisheries and even at the product level.
[277] David Rees: Professor Barnes.
[278] Professor Barnes: Yes, I think, in trade agreements, fisheries are often kept aside or as a separate issue. So, there isn’t a settlement on this as part of the WTO regime and that’s been something that has been quite difficult. Fisheries tend not to be lumped with agricultural products; they tend to be with natural resources, like mining and forestry, for some reason. So, they are differentiated.
[279] I think, in terms of market access, though, the key drivers will be those [correction: those issues] that are of most concern to the UK as a whole here. So, I think, for example, the financial sector is the most significant for the UK economy and the service sector more generally. So, if an agreement is made on having access to the single market for those purposes, there will be either be a trade-off in return for that as regards things like fisheries matters, or they will be driven by the demands of the negotiation process.
[280] The other thing to think about as well is that, regardless of whatever settlement we have in terms of market access, one of things that the EU has been doing with states at the moment is imposing conditions on third states to meet certain European standards as regards food safety, hygiene, legality of fishing operations, before they can actually export fisheries products to the EU. So, even if the UK is entirely outside of the single market, if it wants to export fisheries products to Europe, then it’s probably going to have to meet a number of different regulatory standards in order to do that. So, we’re not going to be entirely free of European fisheries regulatory standards as part of that [correction: any] settlement.
[281] David Rees: Okay, thank you. Just one final question from me: based upon the likelihood we obviously will be leaving, is there any best practice elsewhere in the world that the UK and Wales can actually look to, to see how we can manage our fisheries in the post-Brexit era? Griffin.
[282] Mr Carpenter: I don’t think there’s a lot of relevant precedent here, because of the mixed nature of our fisheries. During the campaign, a lot of people would point to fisheries in Iceland or in Norway and say that in general they’re more sustainable, they are in a better shape, than UK fisheries. But, of course, that’s not the question on the table. Whether we become an isolated country and drift further away from the continent is definitely an appealing option for fisheries. It’s much better to have the political decision making taking place at the same level as the fish stocks themselves. But, in the absence of separating and moving further from the continent, we don’t really have examples internationally of successful management of fisheries between different member states. The EU has always been a bit of an experiment here to see if political institutions could overcome a fisheries problem of many countries fishing shared stocks and having to come to common property solutions there. So, I’m not sure we have a good example that we can look to internationally, unfortunately.
[283] David Rees: Professor Barnes.
[284] Professor Barnes: I think the key point is that most fisheries are highly contextual and so what works in one country doesn’t necessarily work well within another country. I think that the proximity of the UK to its neighbouring states makes it quite difficult to take lessons from elsewhere without at least adjusting and reviewing them.
15:45
[285] More generally, I think there are some useful things that we need to bear in mind. So, for example, under the common fisheries policy, the move towards multi-annual plans and doing things not just on a year-by-year basis, but trying to plot out how you manage fisheries over a number of years, is quite good practice. Again, there are important regional arrangements and scope for regional settlements within the common fisheries policy, so, for example, maybe the rules that are afforded to regional councils on putting forward proposals and feeding into fisheries management decision making I think is, again, very good practice. We’ve already talked about rights-based measures and I think there may be scope to explore how those could be used going forward, particularly for very localised fisheries, those sedentary species where the pros and cons of those [correction: use] can be predicted with a degree of certainty. The other thing that I think is important—it’s not so much a best practice as such, but it’s to make sure that science is at the heart of the decision making, and I think at a European regional level, particularly with the role of ICES and some of the regional fisheries management councils, there are opportunities to make sure that data are developed, retained and shared, and I think whatever we do going forward we have to make sure that we make the best use of that.
[286] David Rees: Thank you very much. Do any Members have any other questions? Suzy? Mark?
[287] Suzy Davies: Yes, I wonder if you could help me with this, it was in Mr Carpenter’s notes, about the—. Because fisheries are specialising more—they specialise in different types of fish—there’s an opportunity for quotas to be swapped around; I think you give the example of swapping herring quotas for cod quotas. Can you tell us how that might actually help the UK? Because it doesn’t directly affect Wales, I don’t think, but it gives us a sense of what the UK might like to offer in exchange for our shellfish access.
[288] Mr Carpenter: Yes. So, I think the point came up in terms of drawing borders, and I think, in general, economists are a little bit scared of borders because there might be mutually beneficial solutions, and this is particularly relevant in fisheries. So, we can think about something with the North sea, where, if you draw a line down the middle and say we get one side of it and the other side’s shared between a number of European countries, if you’re chasing a fish stock—herring—through the North sea, you don’t want to just turn around because you’ve hit the line, particularly if we’re chasing a school of cod and a Dutch fleet’s chasing a school of herring. Well, it’s in everyone’s interest if we just relax a bit on the border and exchange those opportunities. So, what this might look like in practice going forwards is that—it could come out a number of different ways, but we already have a system in place for quota swaps. It’s not used very often, actually, but member states can swap quota with each other in the EU framework right now, and, actually, we do some of this with third countries as well. So, with Norway, Norway tends to swap some cod in the Barents sea—sometimes that goes to the UK actually—in exchange for blue whiting, usually in Scottish waters, but this is very—. It’s done on an annual basis, it’s not really formalised in any way. So, what I see going forward, actually, is that some sort of hybrid will emerge where the UK will claim 200 nautical miles, but use that as a bit of, you know, putting its chips on the table, but we will emerge from that position by swapping quota enough times that the 200 nautical mile limit isn’t really that relevant anymore, and in the end you’re kind of half way in between the system we have right now of fixed relative stability shares—now those have all moved around, so we’ve changed our relative stability shares, but we haven’t drawn a firm 200 nautical mile limit. So, in other words, you start with the 200 nautical mile limit, you make enough swaps that are permanent, being the main difference, and in the end you’re kind of half way in between the current system and, I don’t know, the ‘hard Brexit’ of fisheries or something drawing the border there.
[289] Suzy Davies: And the specialisation that’s arisen—. Let’s say we specialise in cod, for example, is that because there’s actually quite a lot of cod in our waters and it tends to be there longer than it is in waters outside the 200 miles?
[290] Mr Carpenter: Not exactly. So, I made the point that we’ve specialised in fisheries so, our vessels—you know, fishing vessels are quite different whether you’re targeting herring or whether you’re targeting cod, or shellfish or whatnot, so a lot of this has evolved basically because of markets. People in the UK don’t eat a lot of herring. The Dutch love it, so they come into our waters and they take our herring, and it’s controversial, of course, but we’ve more or less evolved solutions that work to benefit each party. And so, taking a hard position in drawing that 200 nautical mile limit kind of throws that up in the air, and we might need to emerge from that position, because we don’t really want to ease back on our cod fishing and not fish in Dutch waters for cod—that’s not in our interest. And we also—. Even if you take the hard 200 nautical mile limit, we would need to invest in whole new fishing vessels to catch the fish that we don’t do right now. So, this has largely evolved out of local markets and also that vessels specialise in nets that precisely target certain species. So, this kind of specialisation because of who your consumers are and where they are, and also just to quota-optimise the type of fishing that you do.
[291] David Rees: Professor Barnes.
[292] Professor Barnes: Just to add on to that, we already have these 200 nautical mile limits that the UK declared just a couple of years ago in 2014, but I think the point is that, because of the common fisheries policy, there was a sort of ‘trade porously’ [correction: boundary prosity], as it were, so we can’t exclude people from coming into our fishing grounds because of that. I think that the idea of specialising in different fisheries is quite interesting, but there are risks here attendant to that, because, obviously, as fishing patterns change, then it makes it perhaps difficult for speciality fleets to adapt to that change if they are highly geared to particular fisheries. But one of the things that we’re actually seeing just now is a potential for significant change in the distribution of fish stocks with both global warming and the impacts on ocean temperature and salinity. So, for example, when things like cod, which enjoy colder waters, are being potentially pushed further north out of what might be our coastal waters into Arctic waters; that would have a knock-on effect for how we would deal and negotiate quotas.
[293] So, I think that’s quite important to bear in mind, and I think, you know, I’d reiterate what Griffin was saying there, that, actually, different countries have different interests in different fish stocks because of different cultural and historical reasons, and we’ve largely reached a sort of settlement on most of that as a party to common fisheries policy. There’s maybe scope to adapt it here and there, so we don’t want to have to go back and reinvent the wheel, as it were, because we don’t have the fishing capacity in certain areas to catch certain stocks, and we don’t have an interest, and perhaps even experience, in catching those stocks. So, I think we need to maintain a degree of realism about what we can do to change the basis of the current patterns of fishing and to maybe move forward in a more measured rather than a radical fashion.
[294] Suzy Davies: Well, you both spotted the destination of this line of argument, and you’ve answered part of my question, which is: certain countries choose certain fish stocks because of local tastes, if you like, but, bearing in mind that we export quite a lot of our fish, we’re obviously catching fish that aren’t to our taste, but are to somebody else’s taste. How would quota swap help or hinder that? And, secondly, is there any risk that we would be left with waters that don’t actually contain the fish that we want anymore? You mentioned that, Richard Barnes.
[295] Professor Barnes: I think that the baseline’s always going to be that we will have a degree of control over our coastal waters and an interest in fishing them, so, we can adapt and we can make use of these things. There’s always going to be a market for certain types of fish stock. So, it’s just about how we actually, you know, sort of proceed there. So, I don’t see anything to worry about unduly.
[296] Help or hinder? I’ll need to give that a bit more thought. [Laughter.]
[297] David Rees: That’s fine, thank you.
[298] Suzy Davies: That’s fine.
[299] David Rees: Mark.
[300] Mark Isherwood: Yes, I’ve got a couple of very, very quick questions. How, if at all, has the size and composition of the Welsh fleet changed since 1972 in coming under the common fisheries policy, and might that be changed, dependent upon approaches after exit? And, secondly, and finally, we’ve heard reference to a number of institutions, but, in terms of domestic institutions at UK or Welsh level, what might be required, and to what extent should those be arm’s-length from Government?
[301] David Rees: Could I ask Professor Barnes first?
[302] Professor Barnes: I don’t have specific data on the changes in the composition of the Welsh fleet. I think, as a general trend, what we’ve tended to see since the 1970s is a general reduction in the number of vessels, and a growth in size of larger, more efficient and more effective vessels. I have to say that’s subject to a pretty big exception as regards the under-10m and the local or inshore fishing fleets. I think that’s largely because we’ve become much more concerned with reducing capacity, we’ve become much more concerned with regulating fishing to stop bad practices, and that has driven the general direction of the fishing fleet. I think that trend is likely to continue to some extent, because we still often find we’re in a situation where we’ve got too many vessels going for too few fish. So, I can probably see pressure on us to reduce and consolidate the size of fishing fleets going forward. That said, I think there’s potentially scope to invest in and develop in-house fishery practices that are more sustainable and can, in the longer term, generate perhaps greater returns from certain types of fish stock. But I don’t have the particular data on the Welsh inshore fisheries and shellfish industry to say too much more about that.
[303] David Rees: Griffin.
[304] Mr Carpenter: We can think about the changes as emerging out of quota management and, in particular, the reduction of quotas over the years. We’re actually seeing a reversal of that now and quotas are starting to increase as we would hope and the theory would go. So, as quotas were decreasing through the 1980s and 1990s, a lot of fishers would leave the industry. We also have technology improving over time, so it’s like a 2 per cent per year reduction in the level of labour in the fleet. But also it’s meant a change in composition of what gears are used or what species are targeted. So, if you can’t target cod or herring anymore because the quotas are going down, then you think about, ‘Okay, so, what species aren’t managed under quota?’ and this has largely been shellfish, also sea bass.
[305] So, now, actually, we’re getting into some problems, because we’ve overcompensated too much and now we’re thinking, ‘Well, we need to put quotas on more species’, because it’s like squeezing a balloon—the fishing effort is just going to other species. But the major trends are a movement towards non-quota species in the Welsh fleet, and also, as was hinted at, in Wales and everywhere else around the world, the fishing fleet is decreasing in size.
[306] Your second one about domestic institutions—that’s more difficult to answer, and we’ve hinted at some of this, but I guess, by and large, my message would be that most institutions need to be at a high level, because we’re dealing with common resources. This is the broad point about EU management, but I think it applies at the UK level as well. I guess it depends somewhat on whether we can replicate or retain our membership in organisations that already exist, so, I suppose there’s some uncertainty there. We haven’t talked too much about research and science funding and things like this, but that would be certainly a concern of a lot of people in the industry—the EU is a huge funder of research and science activity, and so there would be a push to have some sort of domestic bodies to fill that need. So, if there’s an EU study going on about a particular type of fishery—scallop fishery—UK institutions could no longer bid for that grant or be part of that, potentially, in the future. So, we may need to set up fisheries science groups that are at a UK level that used to be at the EU level. And those would probably be arm’s length; we would hope for that.
[307] David Rees: Thank you. Well, time is almost upon us, so can I thank you both this afternoon for your evidence? It’s been very interesting. Thank you very much. You’ll receive a copy of the transcript for any factual inaccuracies. Please let us know if there are any so that we can get them corrected as soon as possible. Once again, thank you very much for your time today.
[308] Mr Carpenter: Thanks for inviting me.
[309] Professor Barnes: Thank you.
[310] David Rees: Thank you, Professor Barnes.
15:58
Papurau i’w Nodi Papers to Note
[311] David Rees: I’ll move on with the agenda. Item 4, papers to note: are we happy to note the paper from Professor Fiona Smith on the implications of Brexit on Welsh agriculture? Thank you.
15:59
Cynnig o dan Reol Sefydlog 17.42(vi) i Benderfynu Gwahardd y Cyhoedd o Weddill y Cyfarfod Motion under Standing Order 17.42(vi) to Resolve to Exclude the Public for the Remainder of the Meeting
Cynnig:	Motion:
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).	that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).
Cynigiwyd y cynnig. Motion moved.
[312] David Rees: Under Standing Order 17.42(vi), I propose that we move into private session for the remainder of this meeting. Are Members content? Then we move into private session.
Derbyniwyd y cynnig. Motion agreed.
Daeth rhan gyhoeddus y cyfarfod i ben am 15:59. The public part of the meeting ended at 15:59.

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[1] Eglurhad/Clarification: international law requires states to take responsibility for fisheries management. This will be done by the state—the United Kingdom—and so the UK would resume responsibility for fisheries management (e.g. setting TAC, negotiating quotas in respect of shared stocks).

[2] Eglurhad/Clarification: rewarding more sustainable fisheries practices with greater quota allocations.

[3] : London Fisheries Convention 1964, UKTS No 35 (1966) 

[4] Eglurhad/Clarification: removing or changing these historic fishing rights would not have a significant impact on the overall levels of quota and access to fisheries.

[5] Eglurhad/Clarification: So, following Brexit, we will return to the situation where the UK has exclusive jurisdiction to determine access to fisheries in its coastal waters and how it allocates access to those.