I am writing as Chairman of the Secondary Legislation Scrutiny Committee which this week considered, amongst other items, the Agreement Establishing the Inter-American Investment Corporation (Cm 9659). The Committee noted with concern that, although the initial Agreement was signed in 2015 and the merger took effect in January 2016, the paperwork for ratification was only laid before Parliament on 20 July 2018. Their concerns were aggravated by the fact that the first payment under the Agreement was made in March 2018, and although this is being held in an escrow account, it anticipates Parliament’s agreement to the treaty.
A number of the treaties that have come before us recently appear to have the same issue, for example: the Economic Partnership Agreement with the South African Development Corporation (Cm 9663) has been in operation since 10 October 2016 although the paperwork was only laid for ratification on 18 July 2018 and, on the following day, the Interim Agreement establishing a framework for an Economic Partnership Agreement between the Eastern and Southern Africa States (Cm 9665) was laid, which has been in “provisional” operation since 14 May 2012.
The Explanatory Memorandum to the most recent Agreement (Cm 9659) claimed that the delay in ratification was due to “pressure of other parliamentary business”. Following further inquiry, we were told that “EU Exit has significantly increased pressure on the drafting/advisory capacity of OGD legal advisers”. Although that may well be the case in the current circumstances of Brexit, that does not explain a delay since 2012.
We would be grateful if you could explain why these treaties have not been presented for ratification more promptly. Please could you also set out, more generally, the FCO’s policy approach to the ratification of all such treaties and agreements and the appropriate timetable.
Our second concern is that, having seen very few treaties or similar documents in the previous three years, the volume has significantly increased in 2018. The Committee would be grateful if you could give an indication of the following:
The Committee would be grateful to receive your response to these concerns by Wednesday 26 September 2018.
12 September 2018
Thank you for your letter of 12 September, in which you asked about the FCO role in the process of ratifying international agreements. Once the lead department has reached the stage at which it is ready to move to the ratification of an agreement, it contacts the FCO’s Treaty Section, which provides advice and assistance on the relevant procedures and manages the authorising and production of any necessary instruments. Where required, Treaty Section will also arrange for an agreement to be published and laid before Parliament as a Command Paper (with an explanatory memorandum) under the Constitutional Reform and Governance Act 2010 (CRaG).
You also asked about the recent increase in volume of Treaties and whether this indicates a backlog of Treaties requiring ratification. As you noted, 2018 has seen a relative uptick in activity on international agreements after a lull during the previous few years. The fall-off of such work during 2017 was due, in part, to the period of pre-election purdah and dissolution of Parliament which reduced the time available for Parliamentary scrutiny of international agreements. The FCO Treaty Section are aware of 32 non-EU Exit-related agreements which are at various stages of the treaty process. The point at which these will require the attention of Parliament is dependent on a number of factors including, in many cases, the speed with which the other party or parties to the agreements progress with their own domestic procedures. Beyond that, you will be aware that in the context of the UK’s withdrawal from the European Union the Government is planning to conclude new international agreements with third countries, where necessary, to replicate provisions of existing EU agreements, to apply either after the implementation period or in the event of no deal. This is likely to result in an increased number of agreements being laid before Parliament under the Constitutional Reform and Governance Act in the period from November onwards. Officials from the FCO and the Department for Exiting the European Union will engage with your Committee and others in Parliament over the coming weeks to discuss how best to approach this work together.
I address below the agreements you specifically highlighted in your letter.
Work on the Agreement establishing the Inter-American Investment Corporation (IIC) is led by the Department for International Development (DfID). I understand that officials at DfID wrote to the Adviser to the Committee in July to explain the position regarding timing of the submission of that Agreement to Parliament. As DfID explained, the Inter-American Development Bank (IADB) decided to merge its private sector operations into a single entity, now the IIC. The UK opted to join the IIC by capital asset transfer from the IADB. The transfer of the UK’s assets could not take place until certain provisions of the Agreement had been implemented in UK law and the IIC Agreement had cleared the CRaG process (because, as you observe in your letter, to do otherwise would have anticipated Parliament’s agreement to the ratification of the IIC Agreement). Neither could the UK’s funds remain with the IADB as this would have distorted the UK’s shareholding in the IADB. So to avoid both outcomes, the UK funds are, for the moment, being held in an escrow account. The alternative of repatriating the UK’s funds was carefully considered, however as the policy intention was for the UK to join the IIC as soon as possible, putting the funds into escrow was the most administratively efficient option.
You also asked why the Agreement was not laid before Parliament until July this year. DfID approved the proposal that the UK should join the IIC in 2015. The merger with the IADB’s private sector business took place in January 2016. Following that merger, DfID then decided that it should keep the effectiveness of the IIC under review for 12 months before initiating the membership process. Consequently, negotiations on the treaty documentation and related work, such as ensuring that elements of the agreement would be implemented in UK law, did not commence until January 2017. The significant increase in pressure on the capacity of legal advisers caused by work on EU exit then meant that DfID was not able to lay the agreement before Parliament as quickly as it had hoped.
In relation to the Economic Partnership Agreements, which are led by the Department for International Trade (DIT), the Government’s steps to ratify each such agreement are part of its preparations to leave the EU in an orderly fashion and to ensure that Parliament is provided with all possible opportunity to scrutinise the agreements ahead of 29 March 2019. The Comprehensive Economic and Trade Agreement (CETA), the Ecuador accession protocol and the three Economic Partnership Agreements (EPAs) (i.e. with Ghana; the South African Development Corporation; and the interim framework agreement between the Eastern and Southern Africa States) were the only identified agreements requiring ratification. DIT have confirmed that there are no further trade agreements that have already been signed and concluded, that require UK ratification before the UK leaves the EU (Council Decisions earlier in the year mean that the EU-Japan and EU-Singapore agreements have been put forward as EU-only agreements, meaning that the EU Member States will not ratify them separately).
Your letter raises the provisional application of two of these trade agreements. To clarify, provisional application of EU trade agreements has been the standard practice for all EU trade agreements which have been presented as “mixed competence” or “shared competence” agreements (i.e. agreements which require ratification by all EU Member States). This means that the provisions of such an agreement falling within EU competence can be given effect after the agreement has been signed and concluded by the Council and the European Parliament and after parliamentary scrutiny of the proposals for signature conclusion and provisional application is reviewed in each Member State. This avoids the need to wait until the last of the 28 Member States has completed its ratification procedures before the agreement can take any effect and is the most practical means of allowing for ratification by all 28 Member States whose processes move at different speeds. It should also be noted that the UK is not alone in not yet having ratified the EPA agreements. For instance, according to the EU Treaties Database, as of 24 September 2018 only eight EU countries (Czech Republic, Estonia, Spain, Hungary, Croatia, Lithuania, Latvia, Portugal) had ratified the South African Development Corporation EPA agreement and notified the EU accordingly.
I hope you and the Committee find these explanations of assistance. If you have further queries specifically regarding the above-mentioned treaties, I would be grateful if they could be direct to DfID and DIT respectively, as the best placed to provide any additional detail.
28 September 2018