4Trade agreements
94.As part of our continuing concern about business and human rights, we have been considering both the treatment of workers under EU law and various trade agreements which contain what have been described as ‘human rights clauses’. The EU includes such clauses in its international trade agreements with non-EU countries although the nature of the clause may vary from one agreement to another.
95.A standard human rights clause may comprise an ‘essential elements’ clause referring to basic human rights and democracy standards, and a ‘non-execution’ clause that provides for a mechanism for applying ‘appropriate measures’ (such as sanctions) if the other party violates an ‘essential elements’ clause. Such clauses have been used by the EU when there has been a coup d’état, for instance, in which case the EU has suspended financial aid.83 If one of the parties does not comply with this human rights commitment, the trade agreement or parts of it can, as a last resort, be suspended. The Cotonou Agreement, which is the most comprehensive partnership agreement between the EU and developing countries, has formed the basis for the EU’s relations with 79 developing countries.84
96.In her letter of 12 October 2016, the Lord Chancellor and Secretary of State for Justice, Rt Hon Elizabeth Truss MP, suggested that leaving the EU offers the UK “an opportunity to forge a new role for itself in the world: to negotiate its own trade agreements, and to be a positive and powerful force for free trade.”85
97.We also received correspondence from the Secretary of State for International Trade, Liam Fox MP. He noted that the UK “has long supported the promotion of our values globally, including via our trade policy initiatives” and acknowledged that “Britain’s exit from the EU provides us with an opportunity to explore how best we can use FTAs to uphold these values”; however, this statement was subject to the caveat that the Government’s policy would need to recognise “the need for a balanced and proportionate approach”.86
98.In oral evidence, Professor O’Cinneide stressed the fact that the Government might find itself under pressure to water down human rights clauses. He said:
As you know, the EU has many important human rights clauses in its trade agreements which are periodically activated. These are not empty vessels; they become legally important. The question for the UK going forward in negotiating its own non-EU integrated trade agreements is whether it is going to carry over those EU frameworks, whether it will improve them by adding more detail, more substance, or whether it will dilute them or ditch them [ … ] There will be pressure to dilute human rights clauses. No one likes them, so there will be substantial pressure. A government negotiating under pressure to achieve quick free trade clauses will find itself tempted to dilute. That will then give rise to imbalance between the EU standards and the UK standards, and that will certainly prove controversial.87
99.The Northern Ireland Human Rights Commission (NIHRC) provided us with written evidence noting that when negotiating trade agreements with third countries the European Commission routinely conducts sustainability impact assessments (SIA). These assessments analyse the potential economic, social, human rights and environmental impacts or trade negotiations. However the NIHRC has stated that although “there are opportunities for civil society to be involved in the assessment”, nonetheless, “the robustness of the SIA process has been questioned insofar as it relates to human rights.” It has suggested that:
In circumstances where the UK negotiates and enters into free trade agreements with other states it would be in accordance with the UK’s international human rights obligations [ … ] to conduct human rights impact assessments and there are positive examples of state practices throughout the Commonwealth.88
100.In a similar vein, Amnesty International UK suggested that Brexit gives a clear opportunity for the UK to carry out the commitments in its National Action Plan on Business and Human Rights.89
101.Any increase in trade with developing countries, post-Brexit, may result in increased economic development in those nations. This, of itself, would potentially have the benefit of increasing standards of living.
102.Marina Wheeler QC questioned the currency of “human rights clauses”, suggesting that they had already been superseded by other arrangements. She argued that:
My understanding is that although the EU has used human rights clauses in its trade agreements for many decades, in 2009 the Council changed the policy to no longer include them in new trade agreements but to have human rights clauses in the side, co-operation agreements, and no longer called them human rights clauses but political clauses. As I understand it, that was in part because the view was taken that in reality they are more political than human rights, and it is very difficult to try to enforce them. As I understand it, there have only been a handful of cases where the EU has sought to enforce a clause, and it has done so where there has been, say, flawed elections in a country where there is a trade agreement, or perhaps a coup d’état, and the result has been that development aid has been shifted from the government to, say, civil society as a result. That is how in practice they seem to be used. The question is, is that a valuable mechanism? Should it be in a trade agreement, or is there some other way of exercising that sort of governance leverage?90
103.The question of trade agreements may also raise issues in the devolved nations. Professor Douglas-Scott told us that the devolved nations “have concerns”; adding that while they have no trading rights independently it is, nonetheless, “something they are investigating”.91
104.In his oral evidence to us, the Minister was equivocal on this issue. He was clear that he thought the Government would not seek to water down what he referred to as “sustainability clauses”, but equally, he acknowledged that “the size of the EU means almost inevitably that it has teeth compared with other countries.”92 He observed that the UK “has this strong history” in this area, pointing out that “we were there with a national action plan for the implementation of the UN guiding principles on business and human rights—I think we were the first.”93 He added:
Over the years, we have had the transparency in supply chains provisions in the Modern Slavery Act, and we do really press on human rights issues. As far as the future is concerned, he made the point that we would want to continue to express our values. I would not have thought there was any risk of that not happening. Of course, there are different ways of dealing with the issue of sustainability clauses, and it may be that the wording would not be exactly the same as the European ones, but I would still think that we would want to express our values and ensure that human rights are right at the centre of our thinking.94
Conclusions
105.The EU has included human rights clauses in trade agreements for many years. In circumstances where the UK exits the EU, if it has to negotiate and enter into trade agreements with other states, the Government should, at the very least, ensure that the standards included in current agreements are maintained.
106.Any dilution of standards would give rise to a potential imbalance between UK standards and EU standards which would be extremely undesirable. There is, in principle, an argument to be made that if the UK enters into any new agreements, this is an opportunity to raise standards. This is a subject to which we will return to in our inquiry on Human Rights and Business in 2017.
83 For historic examples, see: e.g. http://www.europarl.europa.eu/RegData/etudes/etudes/join/2008/406991/EXPO-INTA_ET(2008)406991_EN.pdf
84 European Commission, ACP - The Cotonou Agreement
85 Letter from Rt Hon Elizabeth Truss MP, Lord Chancellor & Secretary of State for Justice, to the Chair of the Committee, regarding the oral evidence session, dated 12 October 2016.
86 Letter from Rt Hon Liam Fox MP, Secretary of State for International Trade, to the Chair of the Committee, regarding the announcement of a new inquiry into the implications for human rights of the UK’s planned withdrawal from the European Union, dated 11 November 2016.
16 December 2016