Why the UK needs to change the parliamentary process for considering trade agreements

A briefing paper from Keep Our NHS Public (KONP)
November 2020

Summary

Despite government assurances, there are serious concerns that the UK’s NHS and its related services will not be comprehensively excluded from future trade agreements.  In principle, one way of protecting the NHS is through Parliament’s scrutiny of these agreements. However, the current Parliamentary process is deeply flawed. For example, Parliamentarians have no legal right to see or approve negotiating objectives or read impact assessments. There is no right allowing Parliament to scrutinise the text of free trade agreements (FTAs), and scant information or time is available to allow consideration of a deal once it is laid before Parliament for ratification. There is no guarantee of a debate prior to ratification and, even if debate takes place, MPs are unable to definitively vote against a deal.

This briefing paper focuses on recent statements by the Secretary of State for International Trade outlining new arrangements for transparency and the scrutiny of trade deals. For now, these arrangements, which she describes as representing “a best in class approach”, will only apply to certain deals. Our briefing considers Parliament’s role in consultation, scrutiny, and ratification following the Secretary of State’s statements, and uses the UK-Japan deal as a case study (see Appendix). We show that her approach is no more than tokenistic: Parliament’s role remains alarmingly inconsequential. This has serious implications for the NHS and beyond.

Introduction

Despite government assurances, the NHS is at risk from new trade agreements. Potential risks include hugely increased drug prices; the free cross-border flow of NHS data with reduced privacy protections; reduced public health standards; and investment protection measures that prevent the reversal of service privatisation.

One way that civil society groups and others have attempted to protect the NHS and public services more generally is through calling for amendments to draft legislation such as the Withdrawal Bill or the Trade Bill. The aim of such amendments has been to give Parliament more power to influence, scrutinise and, if necessary, vote against a trade deal.

So far, while some amendments have been supported in the House of Lords, they have been defeated in the Commons. Nonetheless, the attention the amendments have garnered seems to have stung the Secretary of State for International Trade into issuing statements, first in October 2020, and then December 2020, suggesting new ‘transparency and scrutiny arrangements’ for future international trade deals. At first glance, these arrangements appear to give Parliament more of a say. However, a closer look shows that in reality, they are no more than tokenistic. 

The existing parliamentary process

The UK’s departure from the European Union (EU) means that there is now a greater need than ever for Parliamentary scrutiny of trade deals. Previously, these were negotiated by the EU on behalf of the UK and its other member countries and were subject to the European Parliament’s system for scrutiny. In the case of ‘mixed deals’,[1] almost all the parliaments of individual EU countries have the power to veto an agreement, but under UK law, our Parliament does not.[2]

The royal prerogative

Until now, decisions around trade agreements involving the UK but not falling within the EU’s remit were the sole preserve of the UK government, acting under the ‘royal prerogative’.[3] This has meant that Parliament has had no legal right to be informed of a deal’s negotiating mandate or its negotiating objectives. There has been no requirement for MPs to vote on the original mandate for a trade deal: they can only ‘opine’ upon the outline approach. They have had no right to read negotiation papers.

International law trumps domestic law

Parliament’s main role has been – and continues to be – limited to scrutinising and voting on any domestic legislation needed to implement obligations arising from agreed trade deals. However, treaties “are binding in international law and form the basis for domestic legislation” (our emphasis). In other words, international law takes precedence: international treaties such as trade deals “compel changes in domestic law” – they even “compel the UK not to change its current law, regulation or practice in the future” (our emphases).[4] If this is Parliament’s main role, it is hardly a meaningful one.

Parliament’s lack of veto

Historically, Parliament’s involvement was governed by the Ponsonby Rule, which stipulated that treaties had to be laid before Parliament for 21 sitting days[5] prior to ratification.[6] In 2010 this rule was put on a statutory footing, with the Constitutional Reform and Governance Act (CRaG). CRaG requires that a treaty put forward for ratification has to be accompanied by an explanatory memorandum (EM). This is the only information that the government is legally required to give Parliament and it sets out the treaty’s provisions and why the government wants to ratify it. However, the Act does not set out any detailed requirements about the contents of EMs, which typically have been alarmingly short on substance.[7]

Treaties are subject to a negative resolution procedure, which means that no Parliamentary debate or vote is required before they are ratified. A debate on ratification can be requested, but such a request “has to be balanced against other demands on parliamentary time”. Furthermore, there is no clarity about how a debate or vote on ratification can be triggered, only that “it would be left to the “usual channels” and for “people to make a noise”. Without a debate and vote, a trade deal goes though ‘on the nod’. Perhaps it comes as no surprise that, since the enactment of CRaG in 2010, there has been no vote on a treaty and no meaningful debate during the 21 sitting day period.

Should there be a debate and the House of Commons opposes ratification, a further 21 sitting day period is triggered, during which the government may lay a statement explaining why ratification should take place, regardless of the Common’s opposition. The House of Commons might again vote against ratification, and the process may then continue ad infinitum. Invoking the process is challenging and has never been done. In effect, Parliament can only delay ratification.

According to the Secretary of State, “This overall approach goes well beyond many comparable Parliamentary democracies” (an apparent reference to the Westminster-style democracies of Canada, Australia and New Zealand). The approach has met with widespread objection from civil society groups and others. This has included the House of Lords Select Committee on the Constitution, which described the powers available to Parliament as “anachronistic and inadequate” and in need of reform, although it stopped short of recommending that Parliament should be given a definitive vote.

The new arrangements following the Secretary of State’s announcement

The new arrangements most recently announced regarding transparency and scrutiny only apply to the agreed UK-Japan trade deal (CEPA),[8] the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), plus new deals with Australia, New Zealand and the US.  Other potential deals are “beyond the scope of these arrangements”.

The new measures, where they apply, are said to allow effective scrutiny at all stages of negotiations. Arrangements include

  • publishing the objectives and scoping assessments for new FTAs at the outset of negotiations;
  • keeping Parliament updated on negotiations as they progress, including
    • close involvement with relevant Select Committees, such as through public and private briefings with Ministers and Chief Negotiators;
    • ‘Round Reports’ for Parliament and the public on the progress of negotiations; and
    • regular briefings for Parliamentarians and opportunities to ask questions of Ministers;
  • confidential access for the International Trade Committee (ITC) and International Agreements Sub-Committee (IAS-C) to the text of a treaty and associated documents at a reasonable time before a treaty is laid before Parliament for ratification, enabling these Committees to produce a report, should they wish to;
  • access for Parliamentarians to an independently verified impact assessment covering economic and environmental aspects of a deal.

This suggests that Parliament will have more information in future, at least on certain deals, and more opportunities to scrutinise some aspects of trade negotiations. However, the legal rights of Parliament remain unchanged. As a more detailed look at the arrangements for consultation, scrutiny and ratification shows, Parliamentarians will still have little power to influence the substance of any deal, and are still unable to decisively vote against a bad deal.

  1. a) Consultation

The Secretary of State recently said, “Widespread prior consultation and the publication of detailed impact assessments and objectives upfront, allows informed debate at the start of the negotiations.”  However, this statement provides little clarity about who is to be consulted or to have access to relevant information.

We know that in August 2020 the government axed the expert advisory groups that included representatives from civil society groups, academics and trade unions that had previously advised it on trade deals. Instead it set up 11 Trade Advisory Groups (TAGs) entirely composed, with one exception, of representatives from business.[9]

The Secretary of State has said that some aspects of trade agreements are to be shared at various points with the House of Commons’ ITC,[10] and the House of Lords’ IAS-C.[11] In the case of the UK-Japan deal, which is now signed, these committees did indeed take evidence from the public, stakeholders and MPs on the approach to negotiations. According to the Secretary of State, the committees “may choose to produce independent reports on the agreement – which they did.” Nothing is said however about the influence, if any, that such committees and their findings can have on government thinking and trade negotiations.

  1. b) Scrutiny

The Secretary of State claims that the new arrangements represent “a best in class approach to transparency and openness to scrutiny by Parliament and other stakeholders”. This statement does not stand up well to scrutiny.

For example, in the US, Congress defines negotiating objectives for trade agreements. Congress also has a legal right to be informed and have access to documents, including negotiating texts.  In the EU, Members of the European Parliament (MEPs) have the legal right to be informed during the negotiating process and, in practice, may examine negotiating texts in a secure reading room. In contrast, MPs in the UK have no legal right to define negotiating objectives or to be informed of a negotiating mandate; no legal right to be informed during negotiations; and no right of access to texts.

According to the Secretary of State, the impact assessments of future trade agreements are to be scrutinised by the Regulatory Policy Committee, an ‘independent’ body sponsored by the Department for Business, Energy and Industrial Strategy. This is in addition to scrutiny by the ITC and IAS-C before such agreements are laid before Parliament. However, she has failed to clarify the extent to which the views of Parliamentarians are taken into account following their scrutiny or debate of any material they have access to. It is unclear so far whether, or under what circumstances, committee recommendations are heeded. In addition, relying heavily on members of Parliamentary committees for scrutiny can pose problems: the current government is not above trying to influence the membership of such committees or expecting its majority in the Commons to allow it control over every aspect of Parliamentary business.

  1. Ratification

In the US, as the Trade Justice Movement points out, the Government must notify Congress and publish a treaty before it’s signed, and the approval of Congress is necessary for ratification. Similarly, in the EU, Parliamentary approval is necessary for ratification and the same is true for Japan. However, in the UK, it is only once a deal has been signed that the text of an agreement and the draft EM can be shared – in confidence – with the ITC and IAS-C, and only then “where circumstances allow”. These Committees may then wish to call expert witnesses and produce a report. This potential stage, in theory, takes place before the CRaG process (although not in the case of the UK-Japan deal, where it took place at the same time).

Besides providing an economic and environmental impact assessment when a trade deal is laid before Parliament, the new arrangements leave the process of ratification unchanged. In contrast to many other democracies, the approval of Parliament is not necessary for ratification, something justified by the Secretary of State who points out that, “Ultimately if Parliament is not content with a trade deal, it can raise concerns by resolving against ratification and delay any implementing legislation indefinitely”. Yet as George Hollingbery (the Minister for Trade Policy back in 2018) has admitted, “It would be disingenuous of me to agree absolutely that Parliament can indefinitely delay.”[12]

He noted that Parliament might instead be able to block a controversial trade deal by voting against any primary legislation needed to enact it. On that basis, he thought it unnecessary for Parliament to have a binding vote on trade deals, arguing this would mean huge constitutional change. Presumably the Minister is referring to the removal of the royal prerogative, which he and others have argued enables trading partners to trust that the proposals put forward in negotiations represent the unwavering position of the UK. It has to be said that many countries are able to negotiate trade deals without the benefit of a royal prerogative.

In addition, and as shown earlier, it is misleading to claim that Parliament can block a trade deal by voting against any domestic legislation required to enact it. Not all trade deals necessitate changes in domestic law while international treaties can compel changes in domestic law, and not vice versa. On top of which, the Withdrawal Act (2018) gave extensive new powers to Ministers to make secondary legislation in the form of statutory instruments in order to adapt the EU law underpinning ‘rolled over’ trade deals. There is some concern now that the current government will exploit these powers to change key policy areas and domestic law without consulting Parliament.[13]

Conclusions

International trade deals can significantly impact on our day-to-day lives, such as how our personal data may be traded, or whether the NHS will be sustainable if forced to pay higher prices to US drug companies.

Unlike the parliaments of many other countries, the UK Parliament has no significant role in influencing, scrutinising or ratifying a trade agreement. Even if a trade agreement requires changes in domestic legislation, the hands of Parliamentarians are tied as, ultimately, an international treaty legally overrides any conflicting domestic law. Our elected representatives’ final recourse is to delay ratification of a controversial deal: they have no definitive veto.

This lack of parliamentary control over international trade agreements, and potentially over our own UK legislation, significantly reduces the UK’s autonomy – one of the main objectives of Brexit. As we leave the EU, the UK needs a new process that gives Parliament greater democratic powers to deal with major international agreements. We can no longer rely on the parliaments of EU member states to protect us from a bad deal.

The ‘new opportunities’ for parliamentary involvement post-Brexit, as recently outlined by the Secretary of State for International Trade, do not extend to allowing Parliament any more involvement in influencing or ratifying a deal than before. The emphasis is almost entirely on scrutiny, and that scrutiny is largely restricted to certain trade deals and, for the most part, to the work of a small number of committees. It has yet to be seen whether these committees will have teeth.

In the short term, we cannot depend on the existing Parliamentary process to influence or stop trade deals that threaten the nature or future of the NHS. This makes it all the more important now for MPs to support the amendments to legislation that aim to do this.

In the long term, there needs to be constitutional change to both CRaG and the use of the royal prerogative to allow Parliament to effectively scrutinise, influence and, if necessary, veto future trade deals.

Recommendations

  • Members of Parliament should have a meaningful role, including a vote, in the creation of the mandate for a trade deal.
  • There should be constitutional change to enable Parliament to have a greater role in scrutinising, debating and shaping trade agreements both during negotiations and pre-ratification. Changes should include
    • giving MPs the legal right to see negotiating papers, initial impact assessments, and consultation reports at the earliest opportunity,
    • the legal right to see the agreed text of a deal before signature, and
    • the legal right for Parliament to have a decisive vote on ratification.
  • In the absence of constitutional reform, MPs (in addition to whatever opportunities they have for scrutiny) should support amendments to relevant draft legislation that aim to prevent adverse consequences of trade deals for public health and public services like the NHS.
  • Information and analysis of a proposed deal, whether from committees charged with scrutiny or other sources (such as civil society groups), should be available to MPs well in advance of any debate.
  • The explanatory memorandum and any impact assessment provided prior to any final Parliamentary debate should be appropriately detailed, and incorporate independent analysis from a range of experts, not just from commerce.
  • CRaG should be reformed to ensure greater time for Parliamentary debate once a treaty has been formally laid before Parliament.
  • Ultimately, there needs to be constitutional reform that ends the UK government’s ability to negotiate trade deals under the royal prerogative.

Appendix 

Case study: the UK-Japan Comprehensive Economic Partnership Agreement (CEPA) 

The UK-Japan trade agreement is the first that the UK has signed in its own right following Brexit and the first to be subjected to new transparency and scrutiny arrangements.

Consultation

The formal consultation period for CEPA ran from 20th September to 4th November 2019. It was only after this, in May 2020, that the government published its objectives, alongside a scoping exercise. The deal was agreed in principle in September 2020, and signed on October 23rd.  The Secretary for International Trade claims that progress on the deal was discussed with “trusted advisors across industry” – yet we know little about who these advisors were and on what basis they were trusted.  There is no mention of any consultation with experts from trades unions or civil society groups. 

Scrutiny

One the 14th September 2020, just over five weeks before it was signed, the Secretary of State promised a full scrutiny process for the Japan deal. This involved the issuing of an impact assessment, and once the deal was signed, allowing the ITC sight of CEPA’s text, under a duty of confidentiality.

Despite assurances from the Secretary of State that “the Government will seek to allow time between finalising a new FTA and laying it before Parliament under the CRaG procedure, so the relevant scrutiny committees in Parliament may produce an independent report on the agreement”, there was no such time lapse between signing CEPA and laying it before Parliament. CEPA was signed on 23rd October and immediately laid before Parliament. The IAS-C launched an inquiry the same day, calling for evidence “to help inform detailed scrutiny of the text”. This meant that, unless an extension was allowed, only 21 sitting days were available in total for the Committees to gather evidence and write any report; for Parliamentarians to then consider a Parliamentary report, along with the EM and impact assessment and any reports the Committees disseminated; and for any debate before ratification.

The ITC also launched its own inquiry on 23rd October. Notably, the Committee’s Chair admitted that, due to the very limited time available, the Committee would be unable to conduct comprehensive analysis of the text and would be relying on the evidence of stakeholders instead. This appears to be a very hurried, cut and paste approach to scrutiny, and seriously inadequate remembering that the only information legally available to Parliamentarians prior to ratification is an Explanatory Memorandum.

Ratification

Background information provided for those submitting evidence to the ITC inquiry on CEPA makes clear that the Committee’s report to MPs may – only may – recommend that the deal is debated in the House of Commons Chamber, and that the government will endeavour to provide time for such debate should the Committee recommend it. At the time of writing, it is not known whether a debate and vote was held.

[1]  Mixed deals are those where elements of an agreement are the shared responsibility of EU institutions and individual EU countries.

[2] The Secretary of State for Trade has argued that there are other examples besides the UK where the negotiation and ratification of trade deals is an executive power. This is true, for example, for Canada, New Zealand and Australia.

[3] The royal prerogative is notoriously difficult to define. It refers to the authority that, in principle, remains in the hands of the Crown (as with the dissolution of Parliament, for example). Technically speaking, the royal prerogative is exercised on the monarch’s behalf by government ministers, permitting them to act without statutory authority.

[4] Stephen Adams (Global Counsel) Written evidence to House of Lords European Union Committee on Treaty Scrutiny: working practices, 2020.

[5] “Sitting day” means a day on which both Houses of Parliament sit.

[6] There are however ‘exceptional cases’ where a Minister can ratify a treaty without following the statutory process, although there is no guidance on what constitutes an exceptional case and so it is at the discretion of ministers to decide.

[7] Jill Barrett (School of Law, Queen Mary University of London), written evidence to the Select Committee on the Constitution’s consultation on Parliamentary scrutiny of treaties.

[8] CEPA, or the Comprehensive Economic Partnership Agreement, is the first new deal signed by the UK post-Brexit.

[9] The exception is the TAG for Agri-food, which includes members of two farming unions.

[10] The International Trade Committee scrutinises the spending, administration and policy of the DIT and other associated public bodies. Members are appointed by the House of Commons.

[11] From 2019, the International Agreements Sub-Committee will assess all new agreements and consider whether they are politically, economically or legally important, or give rise to issues of public policy that the House may wish to debate prior to ratification, as well as how effectively the Government has secured its stated aims and negotiating objectives.

[12]  In evidence to the ITC inquiry into UK trade policy, transparency and scrutiny.

[13] For example, statutory instruments governing pesticides allow UK Ministers to change regulations on how active ingredients in pesticides are approved, and to amend the maximum residue levels allowed in food, as ministers consider appropriate.

References

  1. Mixed deals are those where elements of an agreement are the shared responsibility of EU institutions and individual EU countries.
  2. The Secretary of State for Trade has argued that there are other examples besides the UK where the negotiation and ratification of trade deals is an executive power. This is true, for example, for Canada, New Zealand and Australia.
  3. The royal prerogative is notoriously difficult to define. It refers to the authority that, in principle, remains in the hands of the Crown (as with the dissolution of Parliament, for example). Technically speaking, the royal prerogative is exercised on the monarch’s behalf by government ministers, permitting them to act without statutory authority.
  4. Stephen Adams (Global Counsel) Written evidence to House of Lords European Union Committee on Treaty Scrutiny: working practices, 2020.
  5. “Sitting day” means a day on which both Houses of Parliament sit.
  6. There are however ‘exceptional cases’ where a Minister can ratify a treaty without following the statutory process, although there is no guidance on what constitutes an exceptional case and so it is at the discretion of ministers to decide.
  7. Jill Barrett (School of Law, Queen Mary University of London), written evidence to the Select Committee on the Constitution’s consultation on Parliamentary scrutiny of treaties.
  8. CEPA, or the Comprehensive Economic Partnership Agreement, is the first new deal signed by the UK post-Brexit.
  9. The exception is the TAG for Agri-food, which includes members of two farming unions.
  10. The International Trade Committee scrutinises the spending, administration and policy of the DIT and other associated public bodies. Members are appointed by the House of Commons.
  11. From 2019, the International Agreements Sub-Committee will assess all new agreements and consider whether they are politically, economically or legally important, or give rise to issues of public policy that the House may wish to debate prior to ratification, as well as how effectively the Government has secured its stated aims and negotiating objectives.
  12. In evidence to the ITC inquiry into UK trade policy, transparency and scrutiny.
  13. For example, statutory instruments governing pesticides allow UK Ministers to change regulations on how active ingredients in pesticides are approved, and to amend the maximum residue levels allowed in food, as ministers consider appropriate.