Trade Bill

Written evidence submitted by The Trade Justice Movement (TB02)

Trade Bill (2019-21)

Submission to Public Bill Committee

KEY POINTS

- The Government is pressing ahead with trade negotiations with the US and elsewhere, despite there being no system of transparency or democratic scrutiny of trade deals.

- The Trade Bill provides an opportunity to set out a democratic process for trade agreements. MPs should support amendments which provide for this.

- The Trade Bill should also include amendments which maintain UK food and animal welfare standards and protect the NHS and public health from provisions in trade deals.

- The Covid crisis has hit global trade. It is essential that the UK trade policy maintains the right to regulate, protects the NHS and supports countries in the Global South.

I. Background

The Trade Bill aims to put in place provisions needed before the UK can adopt an independent trade policy, including the establishment of a Trade Remedies Authority, and also provides for the ‘rolling over’ of some 40 trade agreements to which the UK is party through EU membership. These need to be signed and implemented before the end of the Brexit transition period.

While the Bill does not explicitly set out a framework for the development and scrutiny of trade policy, it is the only piece of trade-relevant legislation proposed by the government. The previous version of the Trade Bill, which was dropped by the last government, was amended to include provisions on Parliamentary scrutiny of new trade deals (more on this below). While the new version of the bill is unlikely to see the same level of government defeats as before, it remains a controversial piece of legislation due to the importance of post-Brexit trade policy, the lack of scrutiny provisions and how trade deals could impact public health, services, women’s economic rights, food standards, animal welfare, chemical protection standards and the environment.

II. Scrutiny

Modern trade agreements affect huge swathes of public policy, including consumer and workers’ rights, environmental legislation, food standards, health, public services and international development. It is therefore critically important that trade deals are developed democratically.

The current treaty scrutiny system - as outlined in the Constitutional Reform and Governance (CRAG) Act - is inadequate, and has been criticised by five Parliamentary committees. [1] The UK’s processes for agreeing trade agreements provide a far lower level of scrutiny than that in many major trading partners such as the EU and the US. This means MPs will have less say over trade deals than their counterparts in Brussels and Washington D.C..

The Trade Bill should be amended to provide a trade deal scrutiny framework which includes:

1. Before negotiations: a debate and vote for MPs on the government’s negotiating objectives

2. During negotiations: transparency through the release of negotiating texts and regular updates to Parliament

3. After negotiations: a vote for MPs on a final deal, with the power to seek amendments.

4. At every stage of the process: there should be public consultation and meaningful engagement with civil society, as well as an independent impact assessment which looks beyond economic metrics, including impact on the environment, human rights and developing countries.

5. A guaranteed role for the devolved administrations

It is important that these guarantees are set out in primary legislation, and that the Constitutional Reform and Governance (2010) Act is amended accordingly.

The Trade Justice Movement previously gave evidence to the House of Lords Constitution Committee explaining why this proposed system of scrutiny is compatible with the UK’s traditional constitutional division between executive and legislative powers, where the executive is responsible for foreign policy. This is because although trade deals are international agreements, they touch on matters of domestic policy, and can directly or indirectly influence public services provision, environmental regulation, animal welfare standards, workers’ rights, digital regulation and human rights. Not all of these areas would require separate implementing legislation. For instance, public services provisions in trade agreements often require no further liberalisation of industries after the trade deal is agreed. This does not necessarily require a change to domestic legislation, but will limit the government’s ability to regulate or re-nationalise health services, normally considered a domestic competence. In order to ensure Parliament is sovereign over domestic affairs, it is essential that it is given a role in scrutinising trade agreements.

III. Protecting the NHS

Trade deals have the potential to negatively impact on health services. While the Government has repeatedly pledged that the NHS is "not on the table" in trade negotiations, leaked documents detailing conversations between UK and US negotiators revealed that health services had been discussed, including US "probing" on the UK’s "'health insurance' system", [2] and the US has made clear its desire for the UK to change its drugs pricing mechanism. The Trade Bill should be amended to protect the NHS. This amendment should include:

1. Specific carve-out for the NHS, all health-relevant services and regulation: it would be illegal for the government to conclude a trade agreement which altered the way NHS services are provided, liberalised healthcare further, or opened up parts of the NHS to foreign investment.

2. No use of negative listing: these clauses require that all industries are liberalised in trade agreements unless there are specific carve-outs. It is not always easy to define what services count as health services: for instance, digital services may seem irrelevant to health, but NHS data management and GP appointments are increasingly digitised. Negative lists therefore make it harder for governments to regulate and provide health services.

3. No standstill clauses or ratchet clauses: these provisions mean that, after the trade deal has been signed, parties are not allowed to reduce the level of liberalisation beyond what it was at the point of signature. This can make it difficult to reverse NHS privatisation. [3]

4. No ISDS: Investor-State Dispute Settlement (ISDS) clauses in trade agreements allow private investors to challenge government policy when this affects their profits. Failure to abide by these clauses can result in legal challenge from the trade partner, or if there is a separate ISDS clause, challenge from private investors (see ISDS section below).

5. No changes to drugs pricing mechanism: the US has stated that they wish to challenge the NHS’s drugs purchasing model, which keeps prices low. This could also happen through IP and non-patent exclusivities. A trade deal must not be used to facilitate this.

IV. Protecting food standards

Trade deals can put pressure on food standards and lead to the import of low-standard food. The US administration has made clear that it wants the UK to lower its food and animal welfare standards to allow the export of products currently banned in the UK.

The Trade Bill should be amended to protect these standards. This amendment should include:

1. A ban on the importation of food which is produced to standards lower than those in the UK. The US and other countries have far lower animal welfare standards, and adopt practices which are illegal in the UK for health and environmental reasons, including chlorine-washed chicken, hormone-fed beef, the use of various pesticides and GM crops.

2. No regulatory cooperation on food and animal welfare. Trade deals increasingly include provisions with the aim of aligning standards, which could lead to lower standards.

3. No regression from existing standards. An independent body should be established to assess new regulations to ensure that they do not lead to lower outcomes.

4. Enshrinement of the Precautionary Principle. This principle is fundamental to EU policymaking but there is limited provision for it in UK law, to ensure it applies to food standards.

TJM is also generally supportive of calls for a food standards commission, which could be established to assess the process and production methods of food imports, and where these standards differ to those applied to UK farmers. We also note the use of tariffs to restrict imports of food products which are produced to lower standards, and the risk that removing these tariffs (as is the intention of trade agreements) could make it harder to restrict these products. The Trade Bill is an opportunity to raise these issues and put in place some protections for food standards.

V. Environmental regulation and other standards

Trade agreements are often designed to liberalise regulations, including environmental regulations. The Trade Bill is an opportunity to redesign trade policy to support the UK’s environmental ambitions, including the target of net-zero carbon emissions by 2050. A number of policy proposals should be considered, including:

1. Environmental conditionality: the UK could require that trade partners ratify and implement key climate change agreements, such as the Paris Agreement, before entering into trade negotiations.

2. Suspending ISDS agreements: environmental policy has also been the object of Investor-State Dispute Settlement litigation, as detailed further in our ISDS briefing .

3. Regulatory cooperation and Level Playing Field: trade agreements increasingly include regulatory cooperation provisions, which are designed to encourage liberalisation through regular dialogue between regulators in both countries. However, international agreements can also be used to agree a common regulatory floor, below which standards cannot fall. An example of this is the EU’s proposed Level Playing Field, which covers environmental regulation. The UK should pursue a Level Playing Field with the EU and use this as a basis for other trade agreements.

June 2020