The Trade Bill – renegotiation and renewal of EU trade agreements after Brexit – in this new constitutional territory more Parliamentary scrutiny is urgently needed

Posted on 06 Dec 2017 by Brick Court

Professor Derrick Wyatt QC

The lack of adequate Parliamentary scrutiny when the UK negotiates trade agreements (something it has not done in its own right for many years) has come to the attention of the House of Commons International Trade Committee. This is timely given the prospect of the UK negotiating the single most important trade agreement it is likely to negotiate for a long time – its future trade agreement with the EU. The context for the Committee’s concern is its inquiry into the Trade Bill. One of the issues which the Bill addresses is the domestic implementation in the UK of those EU trade agreements which are adapted for continued application by the UK after Brexit. The Committee has asked whether Parliamentary scrutiny of ministerial rules implementing these agreements is adequate, and, more broadly, whether scrutiny of the UK signing up to these and other trade agreements, is adequate.

There is a statutory procedure which must be followed before the UK can commit to a trade agreement, or indeed, any international treaty. The Constitutional Reform and Governance Act 2010 (CRAG) provides that a treaty must be laid before Parliament prior to ratification (which is defined broadly as covering any formal expression of intent by the UK to be bound by a treaty), thus codifying a practice hitherto known as the “Ponsonby rule”. Once laid, the treaty can be ratified after 21 days unless the House of Commons or House of Lords passes a blocking resolution. A blocking resolution by the House of Lords can be by-passed simply by a Minister providing an explanation to Parliament. A blocking resolution by the House of Commons can be overcome if a Minister indicates that he is still of opinion that the treaty be ratified, and there is no further blocking resolution within 21 days, and this process can be repeated ad infinitum. In practice the CRAG procedure makes for weak Parliamentary accountability, and in any event it comes too late in the day to influence the content of a treaty.

The UK currently trades with dozens of non-EU countries via trade agreements between these countries and the EU. For the UK to maintain this trade after Brexit there will have to be agreements in principle with the countries concerned, along with preparation of adapted texts which, for example, insert the UK as sole party on one side, modify the composition of bilateral co-operation and dispute settlement committees, and specify the UK share of tariff-rate quotas currently attributed to the EU as a whole. More significant re-negotiation of some agreements might take place, either at once, or after Brexit. Ratification in international law of these renegotiated and adapted agreements by the UK Government does not under UK law require any form of Parliamentary consent (see above re CRAG).  Implementation in the UK of non-tariff provisions of these agreements would under the Trade Bill be by ministerial regulations in Parliament or the devolved assemblies, but there would be no requirement for positive consent by these legislative bodies, and nor would there be any such requirement for reductions in tariffs under renegotiated agreements under the Taxation (cross-border trade) Bill.

The House of Commons International Trade Committee heard evidence on the Trade Bill on 29^th November. That evidence included the question of the adequacy of Parliamentary scrutiny of the renegotiation and renewal of EU trade agreements in force at the time of Brexit, and the measures adopted to give them effect in the UK.

Derrick Wyatt QC gave oral evidence to the Committee. A summary of the main points is as follows.

• Trade agreements have as much impact on individuals, businesses and economic welfare as many statutes, and the degree of parliamentary scrutiny should reflect this.
• In the context of renewal of existing agreements, under considerable time pressure, the Government might be forgiven for seeking some lightness of touch as regards Parliamentary scrutiny. But the Trade Bill could apply to significant re-negotiation of existing trade agreements, up to ten years after Brexit. Derrick Wyatt QC suggested that this period might be reduced to eighteen months after Brexit, after which the consent of the House of Commons should be required for domestic implementation of agreements.
• The lack of any requirement for positive parliamentary consent before the UK committed itself to new trade obligations, or implemented such obligations in the UK, was a disincentive to the Government to co-operate as fully with the process of scrutiny as it might.
• The Government’s general view was that Parliament should receive ex post facto disclosure of what had already happened in negotiations, but no more. That should not be a hard and fast rule. Scrutiny should involve Government disclosure of its objectives prior to negotiations, and from time to time as negotiations progressed, and should provide an opportunity for scrutiny to make a difference to the negotiating process.
• Professor Wyatt said he was not calling for Parliamentary micromanagement of trade negotiations, and accepted that issues of confidentiality would require safeguards.
• An affirmative vote in the House of Commons should be a precondition to the UK committing itself to a new or revised trade agreement, and this would encourage more adequate levels of Parliamentary scrutiny. The Government might be wary of such scrutiny, in current circumstances, but it could strengthen the Government’s arm in negotiations, rather than weakening it. The practice of the European Parliament (EP), in making its position clear about what it will and what it will not accept as an outcome to trade negotiations, is worthy of note.
• More generally, the practice of the EP gives some indication as to what is feasible in practice by way of Parliamentary scrutiny of trade negotiations. The European Commission is party to an inter-institutional agreement with the EP, whereby the Commission informs the EP of the progress of negotiations in good time for any input by the EP to be taken into account in negotiations.
• As regards input from the devolved administrations, the Government should (as it does) consult with them about trade negotiations. In addition, the process of Parliamentary scrutiny at Westminster could provide a platform for the devolved administrations to provide input to the relevant committees about ongoing trade negotiations.
• In response to a question from the chair, Derrick Wyatt QC said he would like to see a specific inquiry by the International Trade Committee into the Parliamentary scrutiny of trade agreements.

The issues addressed by the Committee on International Trade are a reminder that Brexit is new constitutional territory for the UK, and that new Parliamentary mechanisms will be required to oversee the negotiation of future trade agreements, not least the future trade agreement between the UK and the EU. Constitutional arguments for enhanced scrutiny are that Parliamentary oversight should be commensurate with the impact on the rights and interests of individuals and businesses of the agreements in question, and that the UK Parliament should not settle for a lower standard of scrutiny of trade agreements than that currently applied by the European Parliament.

For a link to the hearing see here.