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Trade and Public Policy (TaPP) Network [1]

13 June 2022 [2]

Free trade agreements (FTAs) cover the liberalisation of goods, services, and investment and can have substantial and long-term implications for many areas of public policy, from the environment to public health, from industrial strategy to farming practices. In the UK, parliamentary scrutiny plays an important role in holding the Government to account and ensuring that UK FTAs reflect the public interest, from negotiations to signature, and later, implementation. This blog highlights six ways to further strengthen the process.

Parliament has come a long way, but there’s further to go

From a standing start in 2016, parliamentary scrutiny of FTAs has come a long way.

The International Trade Committee in the House of Commons, and the recently created International Agreements Committee in the House of Lords, have taken on the significant responsibility for scrutiny.

In May 2022, the Committees agreed a formal exchange of letters with the Government, setting out the first clear framework for parliamentary scrutiny of FTAs. It includes consultation requirements, an agreement to keep the Committees updated; and to provide “a reasonable period of time” for the Committees to report before a new FTA is laid before Parliament.

Agricultural aspects of FTAs are subject to particular attention. An independent non-parliamentary body, the Trade and Agriculture Commission (TAC) was established in September 2021 to advise the Government on whether UK FTAs protect – or at least maintain – UK statutory protections for human, animal or plant life or health, animal welfare and the environment. This advice is annexed to a separate ‘s42’ report by the Government on these issues and on the impact on human health of the FTA’s provisions on agricultural trade.

Where FTAs raise particular concerns, other Committees may also act: for example, the Environment, Food and Rural Affairs Committee also ran an inquiry on implications of the UK – Australia FTA for agriculture and the environment. Yet, save the TAC, scrutiny bodies have few statutory powers, staff, or resources; the information and evidence they have to rely on is of variable quality; many interest groups struggle to engage; and timelines are short and often unclear. For them to fulfil their constitutionally critical function, they must be able to scrutinise UK trade agreements effectively.

We have identified six practical ways to improve scrutiny:

1. Give Parliament more formal power to scrutinise trade agreements 

The UK has a treaty scrutiny process under the Constitutional Reform and Governance Act 2010 (CRAG). This clearly provides for the scrutiny of FTAs (as treaties), but its effect is narrow.[3] Particularly in the case of trade policy, its limitations are clear: it only covers ratifiable treaties, is unclear over the scope of when treaty amendments are to be covered, and does not extend to non-treaty instruments, such as Memorandums of Understanding, which can still be of critical importance. Further, decisions taken through treaty bodies (for example decisions of committees created by FTAs) are unlikely to be covered either. These may be substantial in content but fall outside of the (limited) scope of CRAG.

The International Trade Committee’s formal role is to scrutinise the work of the Department for International Trade – not the content or impact of FTAs. The International Agreements Committee has a more wide-ranging remit, but it is required to scrutinise every ratifiable treaty laid before Parliament (not just FTAs).

Notably, neither Committee can require a minister or named civil servant to attend at a time of their choosing, nor is there a clear power to compel the Government to provide detailed information about a proposed FTA. In the recent exchange of letters, the Government committed that Ministers and civil servants should attend to provide evidence to both Committees, and it has also said that it will provide regular updates to Parliament. However, this falls far short of the more formal powers which are granted to legislative bodies in other jurisdictions.

While this blog contains a number of recommendations, our primary conclusion is that unless Parliament is guaranteed a vote on trade agreements, including the ability to prevent the ratification of treaties it deems not to be in the national interest, its ability to hold the Government to account will continue to be weak.

Recommendations:

  • Develop the statutory basis for the scrutiny of trade agreements by Parliament. Specifically, to include a requirement that relevant committees are provided with information and given time to produce a report on a trade agreement before this can be laid for ratification under CRAG (similar to the powers granted to the Trade & Agriculture Commission).
  • Amend CRAG to give Parliament the right to an affirmative vote on trade agreements, and to explicitly cover Memorandums of Understanding and significant decisions of treaty bodies.

2. Secure Parliament’s time to scrutinise trade agreements effectively

A statutory basis for parliamentary scrutiny can both give committees greater power and improve the quality of scrutiny by securing meaningful time for examining materials.

Scrutiny of complex trade agreements requires time. Updating Committees during negotiations helps with this process, so that issues of concern or topics of technical complexity can be trailed ahead of signature. As noted above, in a helpful recent exchange of letters, the Government committed to such updates, and further agreed a framework for the scrutiny of FTAs and committed to provide Parliament with a “reasonable” period of time for scrutiny, including by providing a window of time between the moment an agreement has been signed and before it is formally laid before Parliament under the CRAG Act. While this is very welcome, it would be even more helpful if there was clearer guidance on precise timelines and a schedule for scrutiny.

Recommendation:

  • Clarify the timing and schedule for scrutiny, particularly during the period after signature and before the agreement is laid before Parliament under CRAG. This timing should be either agreed between the relevant Committees and Government or, preferably, placed on a statutory footing.

3. Strengthen the evidence base via independent impact assessments

High-quality, robust evidence is vital for effective scrutiny. While Government provides an impact assessment alongside its trade agreements, these assessments focus on the economic implications of trade agreements with considerably less attention paid to environmental impacts. Discussion of other important trade-related policy areas, such as gender, is peripheral, if covered at all.

To fully understand the implications of a given FTA, it is important that Parliament has access to fully independent analysis that considers the economic as well as wider social, environmental, and human rights impacts of trade agreements.  Parliament could commission independent experts to produce such assessments as, for instance, the European Parliament does. Alternatively, an independent body could be created – like the Office for Budget Responsibility or, closer to home, the Trade and Agriculture Commission – to undertake thorough assessments. At the least, more detailed reporting of the projected consequences of FTAs should be done.

In either event, substantial budget and resources will need to be allocated to ensure that sufficient high-quality expertise is dedicated to the analysis.

Recommendation:

  • Ensure high quality, independent, impact assessments are available for each trade agreement before they are signed to inform parliamentary and public debates about their economic, social, environmental, and human rights impacts. 

4. Assist a wider range of stakeholders to engage with consultative processes

The Government has a large cadre of officials working on trade policy, and structures in place to encourage engagement with certain stakeholders (such as domestic advisory groups). Parliament, however, relies heavily on input from interest groups in its scrutiny of trade agreements, particularly as committees are under-resourced and the limited staff pool is often required to work simultaneously on different agreements.

A wide range of businesses, consumers, workers, and civil society groups have an interest in, and are affected by, trade agreements, yet only a handful provide evidence for parliamentary inquiries. Many smaller groups simply don’t have the resources to assess the implications of trade agreements for their members, so aren’t in a position to provide meaningful evidence. As a result, the voice of better-resourced groups is heard to a greater extent during scrutiny processes, running the risk that the evidence on which Parliament relies is skewed towards the interests and concerns of some groups, to the detriment of others.

Recommendation:

  • Identify funds to support enhanced stakeholder engagement, with particular focus on resource-constrained stakeholder groups. Such support could take the form of funding to support stakeholder coordination of identify priority areas of research(with similar objectives to schemes such as K4P in the EU context). This can help stakeholders identify and articulate their interests vis a vis trade agreements . The aim should be to ensure stakeholders are better able to input into both government and parliamentary inquiries.

5. Harness the expertise of different parliamentary committees, devolved administrations, legislative assemblies, and local governments

There are many specialist committees in Parliament, including select committees, with expertise and responsibility for policy areas that are impacted by trade agreements, including the Environment, Food and Rural Affairs Committee, and Digital Culture Media and Sports Committee (for digital trade). The level of engagement of these committees in the scrutiny of trade agreements varies markedly, and it is not clear how exactly they should feed into scrutiny processes, and what their role should be. Clarifying and streamlining the work of different committees ensures that expertise in Parliament is fully utilised, avoids duplication, and assists external interest groups to effectively engage. The creation of a cross-House working group on treaties to coordinate and/or share best practice across parliamentary actors could support efforts.

Many in the devolved administrations and legislatures, as well as local government, are  marginalised in the negotiation, scrutiny and implementation of trade agreements. Encouraging their participation in any proposed working group would not only improve representation but allow all members to share expertise and insights from their respective institutions.

Recommendations:

  • Clearly set out – in a public document – which subject-specific committees in Parliament engage in the scrutiny of trade agreements, and their roles and responsibilities.  
  • Create a cross-House working group on treaties to support coordination between parliamentary committees and share best practice. 
  • Encourage participation of representatives from devolved legislatures and local government in any cross-House working group, including a standing invitation for meetings that share best practice. 

6. Develop effective processes for post-ratification scrutiny

Trade agreements don’t end when they are signed and ratified – indeed that’s only the beginning. Amendments may be needed, disputes may arise, and parts of agreements might not be implemented. Many FTAs set out a complex institutional structure of committees and working groups that allows the parties to continue building on the commitments in the trade agreement. Such decisions are not automatically subject to the CRAG process, or indeed any meaningful scrutiny. It’s important that effective parliamentary scrutiny continues post-ratification to review these activities and institutions and ensure they support UK interests.

As the UK’s trade agreements are new, we don’t have a tried and tested formula for post-ratification scrutiny, but there are lessons to be gleaned from other countries. For example, domestic advisory groups (which include business, trade union and civil society representatives) are supposed to monitor sustainability issues associated with each EU FTA. But lack of resources, uncertainty about remit and lack of responsiveness from trade officials has led to an ongoing reform agenda. In the US, Congress creates Expert Boards for this purpose, typically reporting twice a year. While each context is different to the UK’s, the UK should learn from these experiences in developing its own monitoring processes for future FTAs.

It is important to understand the ongoing impact of FTAs, and periodic impact assessments for larger FTA partners should be concluded. These could be run at 5-year intervals, and reflect on their alignment with expectations from previous impact assessments.

Recommendations:

  • Clarify the status of decisions taken within FTA institutional structures for the purposes of parliamentary scrutiny and create (at least) a notification process to the relevant parliamentary committees to ensure they are aware of developments and can decide on an appropriate level of scrutiny.
  • Commit to, and commission, periodic implementation impact assessments at 5-year intervals for FTAs with larger trading partners, or where particular UK social or economic sensitivities are at play. Lessons should be learnt from the TAC process for conducting investigations and providing advice. 

Footnotes

[1] Many TaPP members have been supporting the scrutiny of UK FTAs, providing oral and written evidence to parliamentary inquiries, acting as advisers to parliamentary committees and other bodies examining trade agreements, briefing MPs, and engaging with stakeholders seeking to shape trade agreements. Several members also have experience of scrutiny processes in other jurisdictions.

[2] This note is the product of a TaPP workshop on parliamentary scrutiny of trade agreements, held on Friday 27th May 2022. It has been prepared in light of this discussion and with input in a personal capacity from Kathleen Claussen, James Harrison, Alexander Horne, Emily Jones, Emily Lydgate, and Gabriel Siles-Brügge. The views presented are not necessarily shared by all TaPP members.

[3] This includes other trade agreements that take the form of a treaty but are not FTAs, such as mutual recognition agreements.

Disclaimer:
The opinions expressed in this blog are those of the authors alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory. 

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