Trade Bill

Written evidence submitted by TheCityUK (TB32)

Dear Sir/Madam,

House of Commons Public Bill Committee: The Trade Bill

I write in response to the Public Bills Committee’s request for Evidence from TheCityUK on the Trade Bill.

TheCityUK is the industry-led body representing UK-based financial and related professional services. In the UK, across Europe and globally, we promote policies that drive competitiveness, support job creation and ensure long-term economic growth. The industry contributes nearly 11% of the UK’s total economic output and employs over 2.2 million people, with two-thirds of these jobs outside London. It is the largest tax payer, the biggest exporting industry and generates a trade surplus greater than all other net exporting industries combined.

As part of that work, TheCityUK’s Liberalisation of Trade in Services Committee, chaired by John Cooke, exists to consider trade and investment liberalisation questions affecting UK financial and related professional services. The Committee has considered the issues raised by the Trade White Paper ‘Preparing for our future UK Trade Policy’ (Cm 9470), the Trade Bill (published November 2017) and the Government Response to comments on the Trade White Paper (published January 2018).

Our Evidence focuses on all aspects of the Bill, but particularly on Part 1 of the Bill, dealing with the implementation of certain international trade agreements and the powers required to do so.

Our Evidence also reflects points made TheCityUK’s publication ‘Future UK Trade & Investment Policy: TheCityUK Submission’, which was issued at the start of 2017.

We hope the views of TheCityUK will help the Committee in considering the Trade Bill, and would be pleased to provide further insight.

Yours faithfully,

Gary Campkin

Director, Policy & Strategy, TheCityUK

The House of Commons Public Bill Committee: the Trade Bill



1. In its evidence to the Committee TheCityUK welcomes the Trade Bill as a necessary step in advancing the UK’s trade and investment agenda. We draw attention to the TheCityUK’s publication ‘Future UK Trade & Investment Policy: TheCityUK Submission’ [1] (2017) as the basis for some of the views we express. TheCityUK has focussed its attention mostly on matters directly relevant to financial and related professional services. This includes ensuring the UK can operate an independent policy, data collection issues, and consultation and accountability mechanisms. We conclude by underlining that the Trade Bill, while important for securing certain objectives, cannot cover areas of future UK trade and investment policy on which the government is still engaged in preparatory work on the policy decisions that will need to be addressed.

2. Context

Following the strategy outlined in the government’s White Paper ‘Preparing for our future UK Trade Policy’ (Cm 9470), the Trade Bill’s four Parts cover:

· Powers necessary for the implementation of the WTO Agreement on Government Procurement and for the Implementation of any international trade agreements designed to continue to give effect to the provisions of existing EU trade agreements to which the UK will no longer be a party after leaving the EU.

· The establishment and role of the Trade Remedies Authority.

· The collection and disclosure of trade information by HMRC.

· General provisions on the name of the Bill and its interpretation, extent and commencement.

3. Not all of the matters covered by the Bill are of equal interest to the financial and related professional services industry. For instance, Part 2 of the Bill, dealing with the Trade Remedies Authority, is likely to be mainly relevant to trade in goods, given that it concerns trade remedies, such an anti-dumping and countervailing measures, that will apply to goods rather than services. Parts 3 and 4, while clearly of long-term importance, cover general powers and provisions in relation to trade information and the general operation of the Bill, with few proposals at a sufficient level of detail to allow TheCityUK to offer comment on their bearing in practice on trade in financial and related services. Our main focus with therefore be on Part 1, with some comment on the other Parts.

TheCityUK’s overall view on future UK trade and investment policy

4. TheCityUK’s members are drawn from the entire range of UK-based financial and related professional services. Whilst there is naturally a range of views on many questions, a strong measure of agreement exists on key features that a new and independent UK trade and investment policy would need to include. These were set out in TheCityUK’s publication ‘Future UK Trade & Investment Policy: TheCityUK Submission’, which was issued at the start of 2017. It called for the UK to make the most of the once-in-a-generation opportunity to recalibrate and repurpose its trade and investment policy to benefit the wider economy once Britain leaves the EU.

5. Our paper underlined the potential presented by deals that focus on regulatory coherence and co-operation as well as next-generation international trade and investment agreements which would not only strengthen London’s position as the leading global financial centre, but also bring new growth opportunities to key financial centres across the whole of the

country. It also highlighted the unprecedented importance for UK policies to relate to global growth trends in both developed and emerging markets. It called for greater focus on supporting trade in services to reflect its vital contribution to the national economy and underlined the need for Britain to take a global leadership role in twenty-first century issues such as data and data localisation, cyber security and Fintech. It also noted that the decision to leave the EU had led to much debate about the need for the UK to replicate existing policies and international trade and investment agreements, and argued that while existing key commercial links would need to be maintained, there would be significant new opportunities for trade and investment policy to be varied in innovative ways, breaking away from the legacy of past practice set by the EU.

6. It made a particular recommendation on consultation and accountability in relation to the new UK policy. We said (paragraphs 81 and 82):

"Trade and investment barriers in global markets have become more complex – particularly regulatory barriers in other countries. An independent UK trade and investment policy will allow fresh scope for tackling these in ways attuned to the specific interests of UK business. To ensure that this is done effectively, UK trade negotiators will need to draw on the experience of UK businesses competing in global markets. This needs to be done in the most efficient way possible, drawing on the example of other countries’ practices facilitating consultation. There are various models for this. One of the most advanced is the mandatory inter-agency system developed in the United States. As well as providing for mandatory consultation with interested parties and stakeholders, the US system also makes provision for reading rooms for trusted stakeholder representatives to read non-public texts.

"TheCityUK accordingly proposes that a new system of consultation – possibly mandatory – be developed to ensure that UK trade and investment policy is firmly based on consultation with stakeholder interests and answerability to them. A clearer system governing expectations and practice in the UK’s internal consultation processes would represent a vital step towards maximising the UK’s competitive advantage by negotiating market opening trade and investment agreements that play to UK commercial strengths to the maximum possible extent."

7. We added a Recommendation that:

"A coherent – possibly mandatory – system for consultation on UK trade and investment policy should be developed."

The Trade White Paper and the Trade Bill

8. TheCityUK supports the general approach that the government is taking in preparing to operate a new and independent UK trade and investment policy. The government has been successful in its early steps to clarify how, post-Brexit, the UK’s commitments under the WTO Agreements are intended to be treated: there are now ongoing negotiations in the WTO framework, involving the UK, the EU and other WTO members, to resolve remaining issues. The government has also been clear that it would wish to find a way of ensuring that the benefits of existing EU trade agreements to which the UK is a party would continue to be enjoyed by the UK until fresh agreements between the UK and the countries concerned had been negotiated. Again, we welcome and fully support this, even though existing EU trade agreements with third countries have tended to provide only limited extra benefits for financial and related professional services.

9. We have been interested to note the points made in response to the Trade White Paper, and also in proposed amendments to the Trade Bill. Some of these have focused on consultation processes to be followed by the government in conducting future UK trade and investment policy, while others (particularly proposed amendments to the Bill) have

dwelt on the need for greater accountability and Parliamentary scrutiny. We understand that the government is still considering how consultation and accountability objectives might best be achieved. We do not have a developed view on the precise methods that might best be used. But, as stated in the recommendation in our submission, we are clear that a coherent – possibly mandatory – system for consultation on UK trade and investment policy should be developed.

Part 1 of the Trade Bill

10. Part 1 of the Trade Bill is the part of greatest interest to financial and related professional services, as Clause 1 would confer on the government the powers necessary to enable the UK to accede to the WTO Government Procurement Agreement (GPA), and Clause 2 would provide powers to bring into operation, on behalf of the UK, arrangements continuing existing EU trade agreements to which the UK is a party. We fully recognise the need for the UK to become a party to the WTO GPA: the GPA binds nineteen parties comprising 47 WTO members (counting the European Union and its current 28 Member States, all of which are covered by the Agreement, as one party). The GPA requires that open, fair and transparent conditions of competition be ensured in government procurement, and establishes general principles and detailed procedural requirements that the GPA parties are obliged to apply in the covered procurement activities, which cover both goods and services.

11. As for the EU’s agreements with third countries, these offer only limited advantages to UK financial and related professional services. Nonetheless, to the extent that they so do, it is important to our sector that their benefits continue, post Brexit. Clause 2 of the Trade Bill provides the necessary powers to enable the government to fulfil the UK’s obligations under any EU agreement that continues as envisaged. They are "Henry VIII" powers, operable for only a limited period, and only in relation to existing EU agreements to which the UK is a party. They will not therefore be available for use in connection with any new trade agreements that the UK negotiates with third countries once the UK has left the EU. We look forward to seeing the government’s proposals for the powers that will be needed to bring into operation such new agreements, and which will supersede the Clause 2 powers.

Parts 2, 3 and 4 of the Trade Bill

12. There is not a strong locus for TheCityUK to comment in the same level of detail on the other Parts of the Trade Bill. Part 2 (on the Trade Remedies Authority), as we understand it, relates essentially to trade in goods. Part 3 is dealt with below. Part 4 is mainly technical and procedural.

13. Part 3 (on the collection of exporter information by HM Revenue and Customs) may be designed mainly to cover information on trade in goods collected by HMRC at ports and airports, and confers what appear to be "Henry VIII" powers for information collection and disclosure. It may therefore not be directly relevant to trade in financial and related professional services, which is not subject to the same border controls. However, TheCityUK takes this opportunity to make the point that, in the longer run, the government will need to devise improved systems for collecting and recording information on the UK’s trade in services, whether conducted cross-border, or by commercial presence in other markets, or by the movement of individuals. Given the importance to the UK of trade and investment in services, it is ironic that the international statistical data for services trade is patchy and poor- a cause for concern given extra weight by the Office for National Statistics’ article (29 January 2018) on unexplained asymmetries in bilateral trade data, particularly on services [2] . Measuring the extent, pattern and flows of different types of trade

and investment will be self-evidently important for UK policy, which will be concerned with removing barriers and promoting freer trade and investment flows aligned to the comparative and competitive advantage of different trade partners. Unless these factors can be established with reasonable certainty, it will be hard to set objectives to be achieved in future trade and investment negotiations.


14. TheCityUK welcomes the Trade Bill as an important step in conferring certain powers, and creating some of the institutional framework, that will be necessary to support the upcoming progress that will need to be made in advancing the UK’s trade and investment agenda. But it is only a step, confined to those aspects that require an Act of Parliament to be taken forward in the immediate term. Looking further ahead, as envisaged in its Trade White Paper, the government will need to frame other policy aspects relating to the longer term, particularly as regards new UK agreements with trade partners going beyond continuing existing EU agreements.

15. These aspects will require some further legislation, not least to confer longer-term powers to implement new UK trade and investment agreements. In all probability they will also require there to be an agreed framework covering consultation – possibly mandatory - with stakeholders, a more formal system of accountability, and some definition of the role of the devolved administrations in trade policy. There is also the question of the role of Parliament in approval and ratification processes for international agreements (particularly if these go beyond the current provisions of the Constitutional Reform and Governance Act 2010 enshrining the Ponsonby Rule that most international treaties have to be laid before Parliament 21 days before ratification). Finally, any external trade and investment policy is inevitably an outward reflection of a country’s internal policies in such matters as the form and extent of support for certain sectors (such as agriculture), immigration policy (with its critical links to access to talent) and attitudes to inward and outward investment and mechanisms for investment protection. On all of these, further policy steps remain to be taken.

January 2018




Prepared 1st February 2018