The UK government must “raise its game” on Brexit and find ways to protect Wales’ interests in the negotiations, a House of Lords committee has warned.
The EU Committee’s report on Brexit and devolution said ministers in Wales and Westminster should work constructively.
It has warned of potential risks to Welsh agriculture and manufacturing.
Welsh ministers urged UK ministers to act. The UK government has said a funding deal between the governments provided long-term financial security.
The committee report, published on Wednesday, said the loss of EU funding could put Welsh agriculture at risk – and that manufacturing could be hit hard without a comprehensive trade deal.
The peers said the Welsh economy is heavily dependent on exports to the EU, operating a £2.25bn trade surplus with EU member states, against a £2.3bn trade deficit against non-EU countries.
The report highlighted “acute concern” that EU funding for the poorest parts of Wales could be replaced by a less generous formula linked to population rather than need.
It also said powers over farming and environmental protection should return from Brussels to Cardiff rather than Westminster, as – temporarily – the UK government intends.
First Minister Carwyn Jones welcomed the findings and said the UK government “cannot simply continue to put its head in the sand”.
“As the report notes, we have repeatedly tried to engage with the UK government and have put forward constructive proposals about how we can deliver a Brexit which honours the result of the referendum, safeguards the economy and respects devolution,” he said.
“I once again urge them to give serious consideration to our policy paper on Brexit and Devolution, which offers a workable blueprint for a major constitutional renewal of the UK.”