Scotland, Trade and Brexit Contents

3Role of the devolved administrations in trade policy

12.As a member of the EU, the UK’s trade policy has been bound up with the EU’s trade policy, with the European Commission responsible for negotiating trade agreements on behalf of all Member States. This will change when the UK withdraws from the EU, with Trade Minister George Hollingbery telling us that the UK would be “free to negotiate its own free trade agreement and […] conduct our own independent trade policy” after we leave the EU.26 During this inquiry we heard that repatriating trade policy presented an opportunity for the Government to improve its engagement with the devolved administrations.

Existing mechanisms for influencing trade policy

13.International relations, including the negotiation and ratification of treaties, is the exclusive responsibility of the UK Government. However, with the scope of modern trade deals focusing more on regulatory barriers to trade than traditional barriers such as tariffs, agreements can make commitments in devolved policy areas, such as setting food safety standards for exports, which the devolved administrations are responsible for implementing.27 To reflect this, the two governments have agreed guidelines on how devolved administrations are involved in treaty agreements.28 These state that the two Governments should cooperate by exchanging information during the negotiation of treaties and the implementation of treaty obligations. They also provide for devolved ministers to form part of the UK treaty negotiating team when invited by the UK Government.29

14.Professor Michael Clancy, Law Society of Scotland, told us these existing measures provided inadequate scrutiny and needed to be revisited as part of the UK Government’s review into intergovernmental relations.30 This view was shared by the Scottish Government’s Trade, Investment and Innovation Minister Ivan McKee MSP, who said the current arrangements would be “outdated” post-Brexit as they did not reflect the shift in responsibility of trade policy from the EU to the UK Government.31 Instead the Minister said a new consultation and decision-making process needed to be set up which guaranteed the devolved administrations a role in:

All stages of the formulation, negotiation, agreement and implementation of future trading arrangements.32

15.The UK Government’s 2017 White Paper stated that the devolved administrations would “have the opportunity to engage with and contribute” to our trade policy”.33 George Hollingbery MP, Minister of State for Trade Policy expanded on this when he gave evidence in December 2018, saying the Government was drafting a concordat which would clearly define the role of the Scottish Government and the other devolved administrations in future trade policy. We were told this would be shared with the Scottish Government “very shortly”.34

16.We are pleased that the Government has committed to publish a concordat outlining the role of the devolved administrations in future UK trade policy. As the UK approaches the date of EU Exit, we ask the Government to provide an update on the status of this concordat in response to this Report.

Future role for the Scottish Government

17.Our witnesses supported the principle of a greater role for the devolved administrations in UK trade policy. Both the Scottish Chamber of Commerce and Scottish Council for Development and Industry said that it was in the interest of Scottish business for there to be close cooperation between governments when negotiating future trade agreements.35 The Law Society of Scotland told us the best way to achieve this was through a formal framework setting out the role of the devolved administrations at each stage of the process. This, they argued, would “facilitate trade-related confidence-building and good-faith collaboration across devolved and Westminster administrations [and...] tie in with the “common frameworks” to be agreed as a result of the repatriation of EU powers.”36

18.In the rest of this chapter we explore the options for the Scottish Government being more involved in trade policy; when negotiating mandates are being set, during the negotiations and in ratifying the final agreements.

Setting the mandate

19.Before entering formal trade talks with a country, the UK Government intends to publish an “Outline Approach”, setting out the high-level objectives and scope of a negotiation.37 Aarti Shankar, Senior Researcher, Open Europe told us engaging with the devolved administrations during this process should be a “high priority” for the Government, arguing that it would only be able to deliver successful trade deals if the interests of the devolved nations had been taken into account.38 Some witnesses felt that the existing Joint Ministerial Committee (JMC) structures could provide a route through which the devolved administrations could influence the Government’s mandate before trade talks commenced.

JMC Committee on international trade

20.The JMC is the main formal mechanism for ministerial discussions between the UK Government and the devolved administrations, it is a quadrilateral forum comprised of ministers from the UK and the three devolved administrations. The JMC’s remit includes considering non-devolved matters which intersect with devolved responsibilities, reviewing the relationship between the UK Government and devolved administrations, and considering intra-UK disputes.39 The JMC does not have a regular schedule of meetings, instead meeting when the UK Government chooses to; the UK Government is also responsible for setting the JMC’s agenda. Sub-committees of the JMC have been established to discuss issues where there is a need for greater inter-governmental dialogue in greater detail. There are currently two active sub-committees - JMC Europe and JMC Europe Negotiations - which both focus on the UK’s relations with the European Union.40

21.The Institute for Government (IfG) and Trade Justice Scotland have argued that the creation of a JMC sub-committee on international trade could provide a suitable forum for “extensive consultation” with the devolved administrations when preparing the UK’s negotiating mandate ahead of trade talks.41 The Welsh Government have also called for a Joint Ministerial Committee on International Trade to be created, telling the International Trade Committee it would:

Enable timely comprehensive consultation on overall trade policy and individual trade negotiations [ … and provide] the governance structure needed to allow Ministers from the four administrations to agree on priorities for trade negotiations, particularly in respect of areas of devolved competence.42

Maddy Thimont Jack, a researcher at the IfG, argued that any such sub-committee should be supported by a “properly resourced” JMC secretariat. This was to ensure the committee was a meaningful forum for engagement that met regularly and where all parties had input into the agenda, rather than the frequency and topics of meetings being entirely determined by the UK Government.43

22.While the Scottish Government were not convinced that the current JMC mechanism was the most appropriate way to hold intergovernmental discussions on trade, they were supportive of the principle behind a sub-committee on international trade.44 Trade, Investment and Innovation Minister Ivan McKee MSP told us the Scottish Government’s preference however was to establish a statutory intergovernmental trade committee to oversee the process of negotiating and ratifying trade deals.45 Unlike the JMC, the Minister said this proposed body would meet on a regular and planned basis and give “due weight and attention” to the needs and requirements of the devolved administrations by ensuring they were kept updated on all trade developments and invited to give input at each stage of the trade process.46

23.When we discussed the possibility of creating a JMC sub-Committee on International Trade with UK Ministers, the Rt Hon David Mundell MP, Secretary of State for Scotland said it was worth consideration, adding that:

There is certainly a case to be made for that type of arrangement […] I am not dismissing it.47

24.The Government should explore new options to facilitate extensive consultation with the devolved administrations when setting negotiating mandates in the future. One of these options should be the establishment of a JMC sub-committee on international trade. This should be supported by a fully resourced JMC secretariat responsible for ensuring the sub-committee meets regularly and that the devolved administrations have a role in setting the agenda for meetings. We will be returning to the broader question of the JMC’s effectiveness in our inquiry into The relationship between the UK and Scottish Governments.

Representation during trade negotiations

25.Another proposal to increase the involvement of the devolved administrations in trade policy was for ministers from the devolved administrations to form part of the UK negotiating team for future trade agreements. Maddy Thimont Jack and Dr Michael Gasiorek were both supportive of such an approach, with Ms Thimont Jack saying it could be particularly helpful when negotiators discussed areas of devolved responsibility such as agriculture, where the devolved administration would be responsible for implementing commitments made in trade agreements.48 Similar arrangements are currently in place for fisheries, where Scottish ministers are included in the UK delegation at the EU Fisheries Council.49 Trade Justice Scotland said extending this to trade agreements was not a “radical” suggestion, adding that there were many examples of countries including regional and provincial representatives in trade talks which the UK could emulate.50

26.One international example frequently cited during our inquiry was the approach taken in Canada during the CETA trade deal negotiation with the EU. During these negotiations the Canadian provinces were closely involved in setting the Federal Government’s mandate and were invited to be present during the negotiations as observers. This process was explained to us by former Canadian trade official Dr Kristen Hopewell:

The provinces played a particular large role. They were involved in crafting the mandate for the negotiations; they provided inputs on their issues of interest and expertise; they had access to the confidential negotiating documents and they were extensively consulted throughout the negotiations. The provinces [also] nominated their own chief negotiators to join the Canadian delegation.51

Professor Hopewell argued that this involvement of provincial representatives helped the Canadian delegation in the negotiation room, as the provincial administrations tended to be closer to the sectors and industries in their provinces and provided a better sense of how potential trade provisions would affect them than the federal government.52 Professor Andrew Scott, Edinburgh University said the UK could learn from the approach taken during the CETA talks, arguing that the inclusion of Scottish Government Ministers in future UK delegations could provide similar benefits.53

27.The Scottish Government have said it “makes sense” for them to have a presence in trade talks when commitments are made which impact devolved areas of policy, arguing that it would help build consensus for final agreements and provide reassurance to future trading partners that the UK negotiating position was supported by all of the UK’s governments.54 This would be particularly relevant when trade agreements covered contentious areas such as procurement in devolved public services.55 The Welsh Government have also called for Welsh Government officials to be “part of the negotiations”, telling the International Trade Committee that they could be “in the room” or “in the room next door.56

28.When asked in July 2018 if devolved ministers could be included in future UK trade delegations, Secretary of State for International Trade, Rt Hon Dr Liam Fox MP said the existing Memorandum of Understanding already allowed for devolved ministers to attend international talks concerning devolved matters.57 However, this was conditional on them abiding by the UK negotiating position, adding:

We would not go into negotiations with someone sitting on the British side of the table who took a different view from the Government.58

29.We recommend that the Government commit to including representatives from the devolved administrations in the UK negotiating team for future trade agreements where commitments are being sought that will impact on devolved competencies. This would have to be done with the understanding that devolved ministers would not deviate from the UK Government’s negotiating position.

Ratifying trade deals

30.As well as being involved in setting negotiating mandates and taking part in the negotiations themselves, we heard arguments about what role the devolved administrations should have in ratifying any final trade deal. In their policy paper, Scotland’s role in the development of future UK trade arrangements, the Scottish Government set out proposals to extend their role in trade agreements and establish a:

Statutory requirement that the agreement and participation of the Scottish Government and Scottish Parliament [be] required where new UK trade agreements would have devolved content, or touch on devolved issues. Given the scope of modern trade agreements, in practice, this would certainly mean all such agreements.59

When we asked the Scottish Government for more detail, Minister Ivan McKee told us he wanted to avoid describing this as the Scottish Government seeking a “veto”, arguing that he saw this as a “mature and considered” approach to trade policy that allowed for the inclusion of the devolved administrations in each step of the process rather than an isolated vote at the end of the process.60 A similar argument was advanced by Dr Billy Melo Araujo, Queen’s University Belfast, in a recent paper UK post-Brexit trade agreements and devolution, where he said that a “consultative and participatory” approach to the process could foster a sense of “ownership” amongst devolved ministers and increase the chances of them supporting a final agreement.61

31.Dr Kirsty Hughes, Director of the Scottish Centre on European Relations, said the idea of the Government requiring the consent of the devolved administrations was worth considering, telling us that the model used by the EU to require the consent of some regional parliaments (e.g. Wallonia) had not stopped the progression of any trade agreements as had been feared.62 However, the proposal was not welcomed by all our witnesses, with Dr Michael Gasiorek of the UK Trade Policy Observatory saying:

I would argue that there should be a strong element of consultation, that the devolved administrations should certainly be involved in the formulation of trade policy […] but I would not go as far as to say that if, for example there was an element in some putative future trade agreement […] which the Scottish Government was not happy with, that that would give them the right of veto; in other words the ability to block such a deal.63

32.When we put the idea before the UK Government, George Hollingbery MP, Minister of State for Trade Policy said the concept of the Government requiring the consent of the Scottish Government was:

not on the table and never will be on the table. The UK is tasked with looking after UK free trade agreements abroad and we will continue to do so.64

33.The Scottish Government must have a meaningful role in future trade negotiations including in the setting of negotiating mandates and participation in the negotiations themselves. We believe a model based on cooperation and trust would be preferable to one of formal consent of the Scottish Government on a final deal, but it will require goodwill from both Governments to make it work. We recommend that the Government, in response to this Report, set out the steps it will take to involve the devolved administrations in every step of the trade negotiation process.

33 Department for International Trade, Preparing for our future trade policy, 2017

40 Institute for Government, Devolution and the Joint Ministerial Committee, 2018

49 Scottish Affairs Committee, Oral evidence: Fisheries Bill, HC 1787 Question 56, 2019

57 HC Deb 17, 16 July 2018, col 50 (Commons Chamber)

58 HC Deb 17, 16 July 2018, col 50 (Commons Chamber)

Published: 10 March 2019