The new Trade Act 2021

Posted on 11 May 2021 by Brick Court

Sarah Lee QC and Fergus Randolph QC

Introduction

The new Trade Act 2021 has now been passed. It received Royal Assent on 29 April 2021, after a seemingly long time spent passing through the various committee stages in Parliament. Importantly, as regards the UK’s trade remedies, the Act finally establishes the Trade Remedies Authority (TRA) as the entity responsible for investigations and for reaching decisions in this arena, including recommendations that the Secretary of State for International Trade (SoS) impose trade defence measures in individual cases.

The TRA is a non-governmental public body, and it has now replaced the interim Trade Remedies Investigations Directorate (TRID), which was part of the Department for International Trade. The TRA has taken over its on-going transition investigations dealing with the question of whether certain of the EU’s trade remedies should be transferred and imposed by the UK, and any new investigations will be carried out by the TRA.

The TRA has a number of statutory functions. Most of these are conferred by the Taxation (Cross Border Taxation) Act 2018 (TCBTA), including Schedules 4 and 5, and they are described in previous blog posts. However, the Trade Act 2021 adds a small number of further powers and responsibilities and these, along with the main features of the trade remedies provisions, are described below.

Trade remedies aside, the Trade Act 2021 confers and regulates a variety of other powers in respect of trade and treaty related matters. Following the order that they appear in the Act, these other powers are: domestic powers in relation to (i) implementation of procurement obligations following the UK’s accession to the World Trade Organisation’s Government Procurement Agreement (GPA); (ii) implementation of the UK’s Free Trade Agreements (FTAs) that have been rolled over from EU FTAs that the UK had previously participated in because of its EU membership; (iii) the new Trade and Agriculture Commission (TAC), which was in fact set up in July 2020 and (iv) the collection and disclosure of information relating to trade.

The various parts of the Act are discussed below.

Procurement and the GPA

Part I section 1 of the Trade Act 2021 confers powers to amend procurement legislation where necessary as part of the implementation of the UK’s GPA obligations. This includes making changes consequent upon alterations to the signatories to the GPA, or to the list of entities included in Appendix 1 of the GPA, or on disputes between the UK and another GPA party (under the relevant disputes procedure). It is made clear that such regulations may modify retained direct principal EU legislation.

The GPA is a non-mandatory agreement on procurement currently in place between 21 signatories (including the EU). It therefore has a broad reach, committing members to open up their procurement markets in certain areas to bidders from other member countries. It contains rules on how procurement exercises are to be conducted, including in respect of familiar matters such as transparency, non-discrimination and advertising opportunities, although there are also various differences from the EU regime which the UK has hitherto been used to applying, including fewer details as regards tendering requirements and no requirements regarding concession agreements. The UK and EU have agreed in the TCA to go further than operating the basic GPA requirements in some areas.

Implementation of international trade agreements

Part I section 2 is concerned with ensuring that regulations can be made by an appropriate authority in order to implement an international trade agreement (either an FTA or an agreement that otherwise relates mainly to trade) to which the UK is a signatory. It applies only if the other party or parties to that agreement were signatories with the EU to an international trade agreement immediately before the UK’s exit day: sections 2(3) and (4). Such regulations may only be made where provision cannot be made using section 9 of the TCBTA (which are concerned with tariff barriers).

The purpose is to enable, post Brexit, the transitioning of FTAs and similar arrangements that the UK had previously made through its participation in the EU’s international trade agreements with other countries. There are time limits on the exercise of the powers. Regulations are required to be made within five years of the 31 January 2021, with one possible extension of five years: sections 2(10) and (11).

There are notable limitations on the use of these powers. If they are to be used to make provisions about health care, those provisions must be consistent with maintaining UK publicly-funded clinical healthcare services: section 2(5). Further, if they are to be used to make provisions in the areas of protection of human, animal or plant life or health, animal welfare, environmental protection, employment and labour, data protection, or the protection of children or vulnerable adults online, then the provisions must be consistent with maintaining UK levels of statutory protection in that area: section 2(6).

Free trade agreements and genocide

Part I section 3 contains a rather different limitation on FTAs where genocide is suspected by a prospective signatory.  The provisions require a motion to be moved in the House of Commons and to be debated there, or to be moved in the House of Lords, as the case may be, following the relevant responsible committee in each House taking evidence and publishing a report stating that there are credible reports of genocide in a prospective free trade agreement counter-party state. Various conditions are attached, but the purpose is to ensure debates take place prior to any agreements being made with such countries. This provision provides an addition to the somewhat limited role of Parliament in relation to international treaties provided under the Constitutional Reform and Governance Act 2010.

The Trade Remedies Authority

In addition to the formal establishment of the TRA and the laying down of rules about its composition and the transfer of staff to it, Part 2 of the Act also contains a provision requiring the TRA to provide the SoS “with such advice, support and assistance as [they] request” in connection with the conduct of an international trade dispute, the SoS’s trade functions and the functions of the TRA: Part 2, section 7. That may include analysis of trade remedy measures imposed in countries or territories other than the UK and of the impact of such measures on producers and exporters in the UK. However before making such requests, the SoS must consult the TRA and have regard to its expertise and the need to protect its operational independence as well as its ability to make impartial assessments when performing its functions.

This provision is therefore intended not to jeopardise the functional separation of the TRA from the SoS and its ability to act independently. The TRA can also, in the absence of such a request, provide such advice support and assistance as it considers appropriate on matters relating to international trade and trade remedies.

Also on the theme of the TRA’s independence, Schedule 4, paragraph 1 states, amongst other things, that the TRA is not to be regarded as the servant or agent of the Crown, nor as enjoying any status, immunity or privilege of the Crown. Nonetheless, it is clear that the SoS still has a role to play in the membership of the TRA. For instance, provisions are made requiring the SoS to appoint the Chair and other non-executive members, and also approve the appointment of the chief executive chosen by the Chair: Schedule 4, paragraph 2.

In addition, the SoS also provides the funding: see paragraph 29. The SoS can remove individuals from non-executive posts, if, in the opinion of the SoS, the person is unable or unfit to carry out the functions of the office. The TRA is able to determine its own procedure and the procedure of any TRA committee: see paragraph 26. There are also specific controls relating to the TRA’s ability to delegate its functions: see paragraph 28.

Various items of guidance have already been published by both the TRID and by the SoS and these have been referred to in previous blogs. Paragraph 34 refers to the fact that it is mandatory for the TRA to have regard to the guidance published by the SoS. However, the Act also introduces certain safeguards, such that guidance may not be issued by the SoS to influence any individual investigation. So, for example, under that paragraph, the TRA is not obliged to have regard to any guidance of the SoS published during an investigation and the SoS may not publish guidance in relation to any specific trade remedies investigation. Further, before publishing guidance the SoS must consult the TRA and must have regard to its expertise and the need to protect its operational independence and the ability to make impartial assessments.

Trade and Agriculture Commission

The Act sets out the power of the SoS to appoint members to the Commission and describes its purpose, which is to provide the SoS with advice under section 42 of the Agriculture Act 2020: Part 3, sections 8 and 9. It is therefore required to prepare reports relating to FTA considerations on agricultural matters. The Commission was set up in July 2020 and the Act formalises the arrangements.

Trade Information

Part 4 section 12 enables HMRC to request any person to provide information for the purpose of assisting the SoS to establish the number and identity of persons exporting goods and services from the UK in the course of a trade, business or profession. Section 13 provides for various statutory gateways for disclosure of the information including to a Minister of the Crown or a devolved authority or any international organization or authority or any other body in respect of its public functions relating to trade. The offence of wrongful disclosure under section 19 of the Commissioners for Revenue and Customs Act 2005 applies in the case of relevant breaches: section 13(4).

Other public authorities are also authorized to disclose information in order to facilitate the exercise by a Minister of the Crown of the Minister’s functions in relation to trade: Section 14. The public authorities specified are listed in section 14(2) and the recipients may make onward disclosures but only with the consent of the party who provided the information: section 14(5). An offence is created for unlawful disclosures: section 15.

The Schedules

Aside from Schedule 4 dealing with the TRA (discussed above), the Schedules deal with principally with the conditions relating to the exercise of the powers conferred. Schedule 1, paragraph 1, therefore, makes plain that devolved authorities have no power to make any provision under the Act unless that provision is within its devolved competence, and deal otherwise with such matters of joint exercise and requirements for consultation and consent. The questions of the freedom that devolved administrations might have in important matters reflecting trade, which might in turn restrict the policies which devolved authorities are able to pursue, were discussed animatedly prior to the adoption of the Act

Schedule 2 deals with the extent to which the powers to make provisions are subject to the negative or affirmative resolution procedures of Parliament. Regulations under section 2(1) and 2(10)(b) require a resolution approving them by both Houses of Parliament. These are, respectively, regulations made for the purpose of implementing a FTA to which the UK is a signatory and regulations extending the five year period in which such regulations are to be made.

Conclusion

In summary, the Act deals with a collection of various matters, whose common theme is the exercise of independent trade functions by the UK. The TRA has now finally been established and benefits from these new provisions setting down rules on its composition and intended to secure its independence from the SoS, particularly when making trade remedies decisions and recommendations to the SoS to impose a remedy.

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