This blog explores what the UK Trade Bill is and what it means for the Scottish Parliament.
Background: the UK is leaving EU trade deals
Trade agreements remove or reduce customs tariffs on trade between different countries. Modern trade agreements also reduce bureaucratic barriers (referred to as “non-tariff barriers”), for example through mutually-recognising the other country’s food safety or environmental standards.
While a member of the EU, the UK was part of EU-wide trade agreements with about 80 countries, such as Canada, Singapore and Japan. But at the end of 2020, when the Brexit transition period ends, the UK will no longer be party to these deals.
As a result, if no action is taken, any lower tariffs or mutual recognition of product standards that form part of these trade agreements will no longer apply. Trade rules would revert to World Trade Organisation terms and some UK businesses would face new barriers to trade.
That is why the UK government has sought to continue, or “roll over”, the EU’s agreements. Or more precisely, negotiate new agreements closely based on the existing ones. Progress on these negotiations is published by the Department for International Trade.
As making international agreements is a reserved matter, the UK government negotiates trade agreements. But implementing any deals that affect policy areas within devolved competence, such as food and environmental standards, is the responsibility of the Scottish Government and the Scottish Parliament.
UK Trade Bill 2019-21: what it does
The Trade Bill 2019-21 is designed to give the UK government and devolved administrations the power to implement any “rolled-over” trade agreements by making the necessary changes to domestic law.
The Bill provides UK Ministers (and in devolved areas, the Scottish Ministers) with a regulation-making power to implement agreements on non-tariff barriers (e.g. labelling or product specifications). This power can only be used to implement trade deals or mutual recognition agreements with countries which had an agreement with the EU on 31 January 2020, although there is no requirement for the content of the “rolled over” deal to be the same.
In addition, the Trade Bill confers a power on UK and Scottish Ministers to implement the UK’s membership of the Agreement on Government Procurement (GPA). The GPA is a voluntary agreement between the EU and 19 countries to open up their public procurement markets to each other.
The Bill also:
- Establishes a new UK non-departmental public body, the Trade Remedies Authority (TRA), to investigate whether new trade remedies are needed against unfair competition from dumped or subsidised imports and to advise the UK government on international trade disputes.
- Provides for the collecting and sharing of trade information by HMRC and other public and private bodies.
Because the Trade Bill confers new powers on Scottish Ministers, the UK government is seeking legislative consent from the Scottish Parliament.
Feeling of déjà vu?
You’d be right. A very similar bill was introduced in 2017 in the previous session of the UK Parliament and legislative consent was also sought from the Scottish Parliament.
At the time, the Scottish Government’s position was to recommend the Scottish Parliament did not to consent to the UK Bill as drafted.
The Scottish Government’s principle objection was that the Trade Bill 2017-19 placed “constraints on the Scottish Ministers’ ability to act on all devolved matters”. For example, the powers could not be used by Scottish Ministers to modify retained direct EU legislation that had been saved into domestic law, even if the legislation was within devolved competence. The same objection was levelled against the European Union (Withdrawal) Bill at the same time.
Following intergovernmental negotiations – primarily on the European Union (Withdrawal) Bill but mirrored in the Trade Bill – the approach to the ‘repatriated’ EU powers in devolved areas was changed. Scottish Ministers’ Trade Bill powers would only be constrained in devolved areas if those areas had been actively ‘ringfenced’ by UK regulations.
This change was not sufficient for the Scottish Parliament to consent to the European Union (Withdrawal) Bill before it became law. But the same question never came to a head on the Trade Bill because the Bill did not complete its passage through the UK Parliament before the 2019 General Election.
Wider debates: what influence should devolved institutions have?
As mentioned previously, the role of negotiating international agreements is reserved to the UK Government. But the implementation of elements of a trade deal can fall within the competence of the Scottish Parliament, for example the implemention of food and environmental standards across Scotland.
This tension has led to concerns that trade agreements signed by the UK may constrain the policy options open to Scotland in devolved areas. As a result, the Scottish Government has called for:
“a guaranteed role for the Scottish Government and Scottish Parliament in all stages of the formulation, negotiation, agreement and implementation of future trade deals.”
Others, such as the Institute for Government in its recent Trade and regulation after Brexit report, have argued that:
“the best way to avoid outbreaks of hostility between the UK government and the devolved administrations, to the extent that the wider politics of the situation make this possible, would be to involve them fully in decision making, especially (but not exclusively) on issues where responsibility for implementing the decisions made sits with them.”
These calls for greater devolved influence over trade negotiations played out in the UK Parliament throughout the passage of the first Trade Bill and remain live during the passage of the current Bill. For example, in response to a proposed amendment to require the approval of the devolved legislatures before implementing any trade deal, the Minister of State for Trade Policy, Greg Hands, argued that negotiation of international agreements was a prerogative power of the UK government and it would therefore be inappropriate to give the devolved nations a veto. Instead the Minister emphasised his commitment to the established practice of not normally legislating in devolved areas without the consent, and never without consultation, of the devolved administrations – more on that below.
Play it again, LCM
The new Trade Bill has now passed though the House of Commons and is with the House of Lords. On 18 August, the Scottish Government published its position on legislative consent to the new Bill. This time round, the Scottish Government’s Legislative Consent Memorandum (LCM) recommends consent. The LCM explains:
“The Scottish Government’s primary objection to recommending legislative consent to the previous Trade Bill concerned the restrictions it placed on the Scottish Ministers’ ability to amend retained EU legislation when exercising the powers of implementation. This constraint has been removed from the current Trade Bill.”
The LCM also notes a set of commitments that UK Ministers made during the previous Bill process and which have been restated this time around on involvement in the Trade Remedies Authority, consultation on any decision to extend the five-year “sunset” provision, and (to follow established practice) to:
“not normally use [the Bill’s powers] to legislate within devolved areas without the consent of the relevant devolved Administration or Administrations, and never without consulting them first.”
However the LCM also lists some concerns:
- That the commitments given by UK Ministers are non-legislative.
- That the implementation powers are broad and could be used to “roll over” trade agreements that are substantially different from the existing ones.
- That Scottish Ministers are required to consult the UK government before using the Bill’s powers in certain restricted circumstances (the previous Trade Bill 2017-19 as introduced required Scottish Ministers to obtain consent from UK Ministers but this was amended to the present a requirement to consult).
Scottish Ministers conclude that their current concerns:
“need to be weighed against the prospect of finding Scotland unable to maintain, at least to some degree, continuity in its trading relationships and access to procurement markets following the end of the implementation period and thereby, in the absence of equivalent Scottish powers in Scottish legislation, reliant on the UK Government to exercise these powers on Scotland’s behalf.”
The Ministers’ position is therefore to recommend that the Scottish Parliament consents to the Bill.
What now?
The Trade Bill is relatively narrow in scope but the policy issues it raises are broad. Tensions remain between the UK government negotiating international agreements (a reserved matter), the Scottish Government being responsible for implementing them in devolved areas, and the potential for international agreements to constrain the Scottish Parliament’s ‘legislative space’.
The Finance and Constitution Committee scrutinised the previous Trade Bill and LCM and published its report in 2018. It is also the lead committee for the current proposals and its consultation is open for written views until 9 September 2020.
Iain Thom
Researcher (Environment, Rural, Constitution and International Relations Research Unit)