Table of contents
- 1. UK Government: Trade policy skip to link
- 2. Trade agreements: Parliamentary scrutiny and the need for legislation skip to link
- 3. UK’s current trade negotiations skip to link
- 4. Other potential trade-related legislation skip to link
- 5. Read more skip to link
1. UK Government: Trade policy
In the last Queen’s Speech on 11 May 2021, the Government set out that enhancing the UK’s trading relationships with other countries was a key part of its global Britain strategy. This included “working with our allies, deepening our trade ties” and also deepening trade ties “in the Gulf, Africa and the Indo-Pacific”. In the background briefing notes to the 2021 Queen’s Speech, the Government said that it would be “expanding our network of like-minded partners to reflect the shifting balance of power towards the Indo-Pacific”, citing an application to become an ASEAN (Association of Southeast Asian Nations) dialogue partner as an example. The UK became an ASEAN dialogue partner in August 2021. This reflected policy set out in the Integrated Review (IR) of Security, Defence, Development and Foreign Policy published in March 2021.
1.1 UK’s 2021 presidency of the G7: Dedicated trade track
The UK held the 2021 G7 presidency. The UK had stated that its tenure would feature a dedicated ‘trade track’. The G7 trade ministers’ website stated it would be “an opportunity for the UK to work with our G7 partners to shape a bold global vision for economic recovery that sees us build back better together—greener, more prosperous, resilient, and fair”. The trade track would focus on: World Trade Organisation (WTO) reform; trade and health; digital trade; and trade and climate policy.
The Government published the UK’s G7 presidency report on 16 December 2021. Specifically on the issue of trade, the Government said that the G7 had agreed to “champion free and fairer trade within a reformed multilateral trading system”. The UK also re-established the G7 Gender Equality Advisory Council (GEAC). The G7 committed to action on “ensuring our trade policy supports women’s economic empowerment”, which was one of six areas raised by GEAC. A joint communique was also issued by G7 countries at the G7 trade track on 22 October 2021. This covered the following areas:
- WTO reform. The G7 said it was committed to “advancing work towards WTO reform in a way that is inclusive and action-orientated, to build a more viable and durable multilateral trading system”. This included “advancing the effectiveness” of the WTO’s monitoring, negotiating and dispute settlement functions.
- Free and fair trade. The G7 said it had strengthened its resolve to “tackle unfair trade practices that threaten the livelihoods of our citizens, harm our businesses, erode trust in, and undermine the functioning of the global trading system”.
- Modernising trade. The G7 said it opposed “digital protectionism and authoritarianism” and had adopted the G7 Digital Trade Principles. These would guide its approach to digital trade. The G7 committed to working collaboratively “including with relevant international organisations, to address the risk of carbon leakage, while enhancing international climate ambition”.
The G7 said it would continue discussions under the trade track of the German Presidency in 2022.
2. Trade agreements: Parliamentary scrutiny and the need for legislation
The UK is a dualist state. This means that international treaties do not automatically become part of domestic law. In instances where agreements need to be implemented in domestic law, Parliament will need to pass legislation. Depending upon their scope, some future free trade agreements may need implementing in domestic law.
The negotiation and signature of international treaties is conducted by the Government under the royal prerogative. However, Parliament has a role in the ratification of treaties under the Constitutional Reform and Governance Act 2010 (CRAG). The House of Lords Constitution Committee considered CRAG in a report published in April 2019. Amongst its conclusions the committee argued that CRAG’s provisions for enabling parliamentary scrutiny of treaties were “limited and flawed” and that reform was needed to allow for effective scrutiny. In its response to the report, the Government said that CRAG remained a “viable legal framework for scrutiny”, but it agreed that “improvements can be made to the operation of the scrutiny mechanisms and processes within that framework, and that information provision between the Executive and Parliament can also be improved”. The House of Lords has debated the Constitution Committee’s report, and reports by the European Union Committee, on the scrutiny of treaties. For further information see the Lords Library briefing: ‘Parliamentary scrutiny of treaties: Debate on committee reports’ (19 August 2020).
Under section 42 of the Agriculture Act 2020 (subject to certain conditions), if a free trade agreement includes measures applicable to trade in agricultural products, the secretary of state must lay a report before Parliament explaining whether the measures are consistent with UK levels of statutory protection in relation to: human, animal or plant life or health; animal welfare; and the environment. The treaty may not be laid before Parliament under part 2 of CRAG until the report under section 42 has been laid. The Trade Act 2021 amended section 42 of the Agriculture Act 2020 to require the secretary of state to request advice from the Trade and Agriculture Commission in relation to the above matters (except human life or health) and to lay this advice before Parliament.
The House of Lords International Agreements Committee scrutinises all treaties that are laid before Parliament under CRAG. It also considers ongoing negotiations.
In the House of Commons, international trade agreements would typically be scrutinised by the International Trade Committee, which is conducting an ongoing inquiry into the UK’s trade negotiations. The House of Commons Public Administration and Constitution Committee is currently conducting an inquiry into the scrutiny of international treaties and other international instruments. The inquiry has a particular focus on the role of the House of Commons.
The Government has made a number of statements regarding parliamentary scrutiny of trade agreements. For example, in a written statement on 7 December 2020, the Government said that it is committed to facilitating the scrutiny of future trade deals with the US, Australia and New Zealand, and its proposed accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This includes publishing the objectives for new free trade agreements and scoping assessments when negotiations begin. It also stated it would continue to publish ‘round reports’ to keep Parliament and the public informed.
In addition, the Government said it would work with the Commons International Trade Committee and the Lords International Agreements Committee to “ensure they have treaty text and other related documents or reports on a confidential basis, a reasonable time prior to them being laid or deposited in Parliament under the Constitutional Reform and Governance Act procedure”. The aim would be to facilitate any reports the committees might wish to produce. Should either committee recommend a debate on a deal, the Government said it would “seek to accommodate such a request subject to Parliamentary time”.
The Government argued its approach to scrutiny by Parliament and other stakeholders was “at least as strong as any other Westminster-style democracies such as Canada, Australia and New Zealand”. It said that the arrangements were appropriate for the UK’s constitutional make-up and separation of powers. It also stated that if Parliament was not happy with a trade deal “it can raise concerns by resolving against ratification and delay any implementing legislation indefinitely”.
In its second report on working practices, published on 17 September 2021, the House of Lords International Agreements Committee expressed concern that many of the Government’s commitments on parliamentary scrutiny had “been subject to frequent and iterative change and have not been consolidated or formalised”. It recommended that, in the absence of legislation, the Government consolidated the commitments made to Parliament into a “formal” concordant:
[…] to demonstrate that these are requirements which are serious, certain, and concrete and should be respected by future administrations. The concordat should be jointly negotiated with us and the International Trade Committee in the House of Commons.
The committee included a draft of the proposed concordat in the report.
In its response to the committee, published on 18 February 2022, the Government said it did not believe that now was the “right time” to consolidate various commitments into a formal concordat. It said it would keep this position under review:
However, as previously stated we will continue to review this position as our first new free trade agreements (FTAs) are scrutinised by Parliament. As we, and indeed Parliament, learn valuable lessons from the passage of our first FTAs, our processes will continue to evolve. We believe that formalising current arrangements at this time would prevent the Government and Parliament from flexibly adapting to implement lessons learned.
For further information on the Parliamentary scrutiny of treaties, see the House of Commons Library briefing How Parliament Treats Treaties (1 June 2021).
3. UK’s current trade negotiations
The Government has said that its priority has been to launch trade negotiations with the US, Australia and New Zealand. It has run consultations and has published policy papers outlining its approach to each of the trade negotiations. The Government also intends to join the CPTPP. The CPTPP is a free trade agreement between several countries in the pacific region, and is discussed further below. The Government has also opened trade negotiations with other countries, such as India.
The UK has agreed a large number of so-called continuity agreements to replace trade agreements it benefited from as part of its membership of the EU.
As a result of the invasion of Ukraine by Russia, the UK has also reduced tariffs on all goods from Ukraine to zero under the existing free trade agreement between the two countries.
3.1 Australia and New Zealand
The UK has signed trade agreements with both Australia and New Zealand. These are the first two trade agreements that the UK has negotiated from scratch since leaving the EU.
The agreement with Australia was signed on 16 December 2021 and the agreement with New Zealand was signed on 28 February 2022. The Government has published a range of information on both agreements, including explainers on the provisions of the treaties.
Section 5 of the draft explanatory memorandum on the free trade agreement between the UK and Australia states that primary legislation will be needed to implement the procurement chapter of the treaty. The explanatory memorandum states that, for procurement covered by the treaty, this would comprise:
- extending the duty owed to suppliers by UK procuring authorities under domestic legislation to suppliers from Australia, which has the effect of providing Australian suppliers with access to the additional procurement markets provided under the treaty that are over and above those covered by the GPA [the WTO Agreement on Government Procurement];
- extending the rights enjoyed by suppliers under domestic legislation to challenge procuring authorities for a breach of domestic procurement legislation and seek redress in UK courts to suppliers from Australia; and
- amending domestic procurement rules to reflect new rules set out in the treaty.
The memorandum states that primary legislation “will also be needed to implement changes over the lifetime of the treaty”. This includes, for example, “any updates to financial thresholds in the treaty above which procurement obligations apply”.
Similarly, section 5 of the draft explanatory memorandum on the free trade agreement between the UK and New Zealand states that primary legislation will be needed to implement the procurement chapter of the treaty.
In answer to a written question on parliamentary scrutiny of the UK-Australia trade agreement, the Government said that “any legislative changes required to give effect to the agreement will need to be scrutinised and passed by Parliament in the usual way before it can be brought into force”.
The Department for International Trade published the Trade and Agricultural Commission’s advice on the Australian free trade agreement under section 42 of the Agriculture Act 2020 on 13 April 2022. In a letter to the chair of the House of Commons International Trade Committee on 22 April 2022, Anne-Marie Trevelyan, Secretary of State for International Trade, wrote that “although I cannot commit to a fixed period of time between section 42 publication and CRAG, I will, however, endeavour to ensure that you receive the section 42 report prior to publication in order that you can fully consider it”. In a previous letter dated 14 April 2022, the chair of the committee, Angus Brendan MacNeil (Scottish National Party), requested that the committee had “at least 15 days between the publication of the section 42 report and the beginning of CRAG”. Mr MacNeil said the committee needed a minimum of 15 days in order to finalise its report before CRAG was triggered.
In a subsequent letter on 27 April 2022 (written after an appearance before the committee), Anne-Marie Trevelyan said that “I will endeavour to ensure your committee receive it [the section 42 report] prior to publication to ensure you can consider it fully”. She said the timetabling of these processes “is ultimately for the business managers to determine” and that she had raised the committee’s position with the Leader of the House. On 28 April 2022, Angus Brendan MacNeil wrote to the Leader of the House of Commons, Mark Spencer, to ask if he could confirm that he would “support Parliamentary scrutiny of new FTAs by enabling my committee to proceed with the assurance that we will have the requested 15 sitting days, wherever this may come under your responsibilities as Leader of the House of Commons”.
Further information and commentary on these trade agreements can be found at the following links:
- The House of Lords International Agreements Committee is conducting an inquiry on the negotiations between the UK and Australia and an inquiry on the negotiations between the UK and New Zealand.
- The House of Commons debated an oral statement on the UK-Australia trade agreement on 5 January 2022.
- The Trade and Agriculture Commission ran a consultation on the New Zealand trade agreement which closed on 22 April 2022.
- Department for International Trade, ‘UK-Australia Free Trade Agreement’, 20 December 2021; and ‘UK-New Zealand Free Trade Agreement’, 4 March 2022
- House of Commons Library, ‘UK-Australia Free Trade Agreement’, 19 April 2022; and ‘UK-New Zealand Free Trade Agreement’, 4 March 2022
3.2 United States
The first round of negotiations between the UK and the US took place between 5 and 15 May 2020. There have now been five rounds of negotiations.
In a written statement following the fifth round of negotiations in October 2020, the then Secretary of State for International Trade, Liz Truss, said almost all the chapter areas were in the advanced stages of talks and that a “significant proportion” of legal text had been agreed in several chapters. The Government said in February 2021 that the negotiators had also continued working level technical discussions since the end of round five of the negotiations.
In September 2021, BBC News reported that US President Joe Biden had “played down the chances of a post-Brexit free trade deal between the US and UK”.
The UK and the US have also held two ‘dialogues on the future of Atlantic trade’. The first dialogue was held on 21 and 22 March 2022 and the second on 25 and 26 April. The dialogues:
[A]re exploring how the United States and United Kingdom will collaborate to advance mutual international trade priorities rooted in our shared values, while promoting innovation and inclusive economic growth for workers and businesses on both sides of the Atlantic.
The Department for International Trade has also said that the dialogues would be used to help move the UK and US bilateral trade relationship forward:
Secretary of State Anne-Marie Trevelyan and Ambassador Katherine Tai will use these dialogues and their ongoing engagement with stakeholders to identify further steps to move forward our important US-UK bilateral trade relationship and address our shared challenges and opportunities over the coming months.
BBC News has recently reported on comments made by the US trade representative Ambassador Katherine Tai regarding the UK Government’s future policy on the Protocol on Ireland/Northern Ireland. Asked about reports the UK might legislate to override parts of the protocol (see: House of Lords Library, ‘Queen’s Speech 2022: Brexit—Retained EU law and the Protocol on Ireland/Northern Ireland’ (5 April 2022)), Katherine Tai said this was a matter for the UK to decide. She stated that the US was “watching closely” and felt “very, very strongly about the legacy of peace and prosperity on the island of Ireland”. Katherine Tai noted that there was “a lot of interest” in the US “from the president and from leading members of Congress, and also from our very, very large Irish-American population”. She said the US was “fully supportive of the UK and EU continuing to bring cooperation and courage to the conversations between them”.
Asked specifically if the threat to repudiate the protocol was making it more difficult to secure new free trade agreements, Anne-Marie Trevelyan said she had discussed the issue at length with Katherine Tai and members of congress. She noted that:
We’re all committed to the Good Friday agreement remaining absolutely solid, and that’s in very large part about trade. So it’s so important that the US and UK continue to have these conversations.
The BBC also reported that the Department for International Trade was looking at agreements with individual US states and cities, “although they have limited powers to change the rules of trade”.
3.3 Comprehensive and Progressive Agreement for Trans-Pacific Partnership
On 1 February 2021, the UK Government submitted its notification of intent to begin the process of acceding to the CPTPP. The CPTPP is a free trade agreement between Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore and Vietnam.
The UK entered the “second and final phase” of the accession process—market access negotiations—on 18 February 2022.
The House of Lords International Agreements Committee is conducting an inquiry on the UK’s accession to the CPTPP.
3.4 Other agreements
The Government has stated its aim is to open negotiations with a number of other countries and organisations, including Canada, Mexico, India, Israel and the Gulf Cooperation Council.
In March 2021, the Government said it wanted to re-open negotiations with Canada and Mexico which would support its “strategy to accede to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)”. The UK has existing trade agreements with Canada and Mexico that were rolled over from its former membership of the EU. The Government consulted on trade with Canada and Mexico between May and July 2021. The Government said that it was “preparing for trade negotiations with Canada and Mexico to upgrade our existing trade deals”. On 24 March 2022, it published a document outlining its approach to negotiating a free trade agreement with Canada. Anne-Marie Trevelyan also made a written statement to Parliament on the UK’s Canada trade policy. The first round of negotiations between the UK and Canada took place between 28 March and 1 April 2022.
The Government consulted on trade with India between May and August 2021. It published a document outlining its approach to negotiating a free trade agreement on 13 January 2022. Negotiations between the two countries were launched on the same day. Anne-Marie Trevelyan also made a written statement to update Parliament on the opening of trade negotiations with India.
The Government is currently analysing feedback on a consultation it ran on trade with the Gulf Cooperation Council. It is similarly analysing feedback on a consultation on trade with Israel.
The Government signed a new ‘digital economy agreement’ with Singapore in February 2022. Amongst the benefits cited by the Government are improved cross-border data flows and strengthening the UK and Singapore’s relationship in financial services. In a written statement, the Secretary of State for International Trade has said that she expects the agreement to come into force later in 2022:
Following signature of the agreement today [25 February 2022], it will shortly be laid before Parliament, in line with usual practice, after which it will also be published online. I expect the agreement to come into force later this year once both the UK and Singapore have completed our respective domestic procedures.
4. Other potential trade-related legislation
4.1 Digital trade: Electronic records
In November 2021, the Government published a refreshed 12-point export strategy to support new and existing exporters: Made in the UK, Sold to the World. In the strategy document, the Government said it wanted “trade between businesses and across borders to be easier, more digital and seamless”. It said it would legislate to introduce electronic trade records for business-to-business (B2B) trade:
Internationally, we are leading the way through our trade policy. We are concluding a Digital Economy Agreement with Singapore. To go further at home, government will legislate, when parliamentary time allows, to introduce electronic trade records for B2B trade. This will streamline the process for business by removing the need for paper documents for some trade documentation. As well as increasing the efficiency of business interactions at the border, it will also directly support driving down costs, increasing security and reducing our carbon footprint.
The Law Commission was asked to look at electronic trade documents by the Government and to make recommendations for reform “to allow for legal recognition of trade documents such as bills of lading and bills of exchange in electronic form”. The commission published its final report and a draft bill on 16 March 2022.
4.2 Trade remedies framework review
The Department for International Trade is undertaking a ‘trade remedies framework review’ to “ensure that the trade remedies framework reflects the UK’s needs in a post-Covid world”. The Trade Remedies Authority (TRA) investigates whether new trade remedies are required in response to unfair trading practices:
The UK’s Trade Remedies Authority (TRA) investigates whether new trade remedies are needed to prevent injury to UK industries caused by unfair trading practices and unforeseen surges in imports. These remedies usually take the form of additional duties on those imports. Our work helps to create a level playing-field for UK industries. You can apply for a new trade remedies investigation and view our active cases and reviews on our online platform, the Trade Remedies Service.
In March 2022, the Government introduced new ‘call-in’ powers for the secretary of state. The chair of the Trade Remedies Authority, Simon Walker, explained these changes in a letter to the chair of the House of Commons International Trade Committee as follows:
In the Finance Act 2022, the Government introduced new powers which allow the Secretary of State for International Trade to ‘call in’ reviews the TRA is carrying out for the UK into the forty-four trade remedy measures transitioned from the EU. If a transition review is called in, the secretary of state will have wider discretion to determine the outcome than under the regime set out in Taxation (Cross-Border Trade) Act 2018. The call-in powers also cover any reconsiderations that the TRA may be undertaking of reviews into transitioned measures. It does not, however, cover new investigations that the TRA initiates.
In a letter to the chair of the House of Commons International Trade Committee on 27 April 2022, the Secretary of State for International Trade said that Department for Trade officials had developed a package of proposals aimed at:
- retaining the TRA’s independent investigatory function, but strengthening ministers’ role by providing greater decision-making power;
- providing a greater degree of flexibility for ministers; and
- improving the awareness of the TRA within industry and ensuring more effective engagement during investigations.
Ms Trevelyan said that “with regards to timings, we expect legislation containing these measures to be introduced to Parliament later this year, with the intention that the measures will come into effect upon royal assent”.
5. Read more
- Department for International Trade, Trade and Agriculture Commission: Advice to the Secretary of State for International Trade on the UK-Australia Free Trade Agreement, 13 April 2022, CP 663 of session 2021–22
- House of Lords Library, ‘Integrated Review of Security, Defence, Development and Foreign Policy’, 16 April 2021
- Steve Woolcock, ‘A big challenge for ‘Global Britain’ is digital trade’, London School of Economics and Political Science, 21 April 2021
- House of Commons Library, Progress on UK Free Trade Agreement Negotiations, 28 April 2022
Cover image by Rinson Chory on Unsplash.