Chapter 10: Looking ahead
127.In concluding, we provide some observations about the process by which CEPA will be implemented, and its effectiveness monitored and improved.
Implementing legislation
128.Section 5 of the Government’s Explanatory Memorandum (EM) sets out the legislation, specifically secondary legislation, needed to implement CEPA once it is ratified. For example, the agreed tariffs will be implemented via regulations under the Taxation (Cross-border Trade) Act 2018. That section also notes where primary legislation will be necessary, although in this case that primary legislation has already been introduced in the shape of the Trade Bill. The EM does not give a likely timetable for this legislative programme of implementation. Nor does it provide information about how the devolved administrations will need to legislate to implement CEPA, in those areas where it touches on devolved competences.
129.We recommend that in future the Government should provide a detailed table of planned implementing legislation, including the powers being used for secondary legislation and the expected timetable for that legislation to be introduced and to come into force. This should also indicate where the devolved legislatures will need to legislate in areas of devolved competence.
CEPA’s governance
Dispute settlement (CEPA Chapter 22)
130.CEPA replicates the effects of the dispute settlement provisions in JEEPA, but we offer a short analysis of the dispute settlement mechanism here, as it forms part of the governance of CEPA post-implementation. The dispute settlement mechanism applies unless a chapter or part of a chapter is expressly excluded. For example, the standards and phytosanitary standards chapter (Chapter 6) is excluded from the dispute settlement mechanism (Article 6.16), as we note above.
131.In short, CEPA provides for dispute settlement by way of consultations, mediation and arbitration, depending on the nature of the dispute. The parties should endeavour to resolve any disputes through “consultations in good faith with a view to reaching a mutually agreeable solution” (Article 22.5). Where measures adversely affect trade or investment between the UK and Japan, either may request that the other enter a mediation process (Article 22.6). Where consultations are attempted but are unsuccessful, CEPA provides for an arbitration procedure (Article 22.7) with an arbitration panel whose decisions are “final and binding” (Article 22.15). The dispute settlement mechanism also provides for temporary remedies in the event of non-compliance, such as the suspension of concessions or other obligations under CEPA (Article 22.22).
Joint Committee and other bodies (CEPA Chapter 23)
132.As is typical for trade agreements, CEPA provides for the establishment of a Joint Committee, comprising representatives of the parties, which is designed to ensure that the Agreement operates “properly and effectively” (Article 23.1). The Joint Committee will have powers to review and monitor the implementation and operation of CEPA and resolve disputes between the parties. The Joint Committee will make decisions and recommendations by consensus, and its decisions will be binding on the parties (Article 23.2).
133.In addition, CEPA establishes nine specialised committees (Article 23.3), four working groups (Article 23.4), and a Joint Committee on Mutual Recognition, with responsibility for specific areas as set out in the relevant portions of CEPA. For example, the Committee on Trade in Goods has specific functions, as well as the general requirements to “review and monitor” the implementation and operation of Chapter 2 and report its findings to the Joint Committee (Article 2.33). These specialised bodies all operate under the supervision and coordination by the Joint Committee, which may also establish (and dissolve) further specialised committees, working groups or other bodies as needed (Article 23.1.5(a)).
Amendments to CEPA (CEPA Chapter 24)
134.CEPA’s amendment provisions (Article 24.2) also replicate those of JEEPA. The main amendment procedure is via Exchange of Notes, which would be subject to the scrutiny provisions set out in the Constitutional Reform and Governance Act 2010. However, Article 24.3 provides that certain amendments (as set out in Article 24.2.4) can be adopted by the Joint Committee, and so would not be subject to further parliamentary scrutiny. The Parliamentary Report contends that this is in order to ensure that “technical amendments can be done efficiently.”149 The EM accompanying CEPA also notes that any amendment that would require changes to UK law would require the changes to be implemented domestically, and so be subject to parliamentary scrutiny.
135.We have previously considered this issue as part of our report on Treaty scrutiny: working practices. Where amendments do not require specific legislation, there is a risk of a scrutiny gap.150
136.The governance procedures established under CEPA are largely as expected, following those already established in the EU-Japan deal. While the operation of CEPA is a matter for the parties’ respective governments, we would urge the UK Government to be transparent about the deal’s operation and impacts on the UK. In particular, we encourage the Government to produce and publish detailed monitoring and evaluation reviews, to assess the economic and other impacts of CEPA post-implementation. These should include details of the steps it has taken domestically to support UK businesses and stakeholders to realise fully the benefits of CEPA’s provisions, as well as steps that have been taken in cooperation with Japan.
137.Both the UK and Japan have committed to working together to review and enhance CEPA wherever possible through its governance structure. We welcome this commitment to achieving enhancements post-implementation.
138.As we recommended in our report on Treaty scrutiny: working practices earlier this year, the Government should ensure that amendments to CEPA are notified to Parliament even when they fall below the threshold for activating the scrutiny process of the Constitutional Reform and Governance Act 2010. We are grateful to officials for confirming that this is the Government’s intention and look forward to hearing soon how this will be delivered in practice.
Negotiations to join the CPTPP
139.We noted at the beginning of this report that the Government sees CEPA as a stepping-stone towards the UK’s potential accession to the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP), and that in some instances the Government looks to the CPTPP to resolve some of the less satisfactory elements of CEPA, such as UK access to tariff rate quotas (see Chapter 2).151
140.Some witnesses stated that UK accession would benefit industry by reducing barriers and making investment easier in particular for the services sectors,152 but others expressed concern that the CPTPP adopts US-style regulation for agricultural products and that consequently the UK might be asked to increase market access for sensitive agricultural products in order to join the CPTPP,153 or modify its regulatory framework away from the existing EU model.154
141.We will follow closely the Government’s bid to accede to the CPTPP, which we expect to be launched in the new year. We note the Government’s focus on some bilateral talks—including with Japan, and the ongoing talks with Australia and New Zealand for new FTAs—as stepping-stones to CPTPP membership. In preparing for, and then conducting, accession negotiations, we hope the Government will engage constructively with all other members of the CPTPP.
Other lessons for working practices
142.The negotiations with Japan were conducted as a ‘sprint’, rather than in successive rounds. As a result, there were no regular updates to Parliament via Written Ministerial Statements. However, we spoke to, and corresponded with, the Secretary of State and Lord Grimstone at several points during negotiations. Those letters are set out in Appendix 4.
143.Overall, as we noted in our recent report on working practices, DIT has been a constructive partner in helping to determine the right processes by which parliamentary scrutiny of the Government’s new function of negotiating trade deals can be facilitated. For example, recognising the significant challenges that the scrutiny deadline under the Constitutional Reform and Governance Act 2010 poses for select committees, DIT made the CEPA text available to us in confidence prior to its being laid.155
144.Scrutiny of CEPA was thus a test case for establishing how, practically, to handle the sharing of confidential trade deal texts whilst they are being finalised and prepared for publication. The approach taken by the Government—a large number of lengthy PDFs shared directly by the Department, viewable only in a computer browser without any ability to annotate or print—was not ideal given the length and complexity of CEPA. Nevertheless, taken as a test case, it has illustrated how the process could be improved for the future.
145.We welcome the Secretary of State’s commitment to ensuring that we and other scrutiny committees can review final deals in confidence. We recommend the following process for the Government sharing confidential documents with Parliament before laying them formally in accordance with the provisions of the Constitutional Reform and Governance Act 2010:
(a)That staff of the relevant scrutiny committees be provided with documents by the Department to disseminate to members, in numbered hard-copy or electronic form, as appropriate;
(b)That password-protection be used to secure electronic documents; and
(c)That numbered hard copies be collected and destroyed after the final deal has been published, in line with Parliament’s existing process for handling confidential waste.
146.None of this should detract from the constructive work relationship we have experienced with the Department so far. We look forward to working constructively on scrutinising future deals.
149 para 38
150 Treaty scrutiny: working practices, para 107
151 We also note that 15 Asian nations, including China, have signed the Regional Comprehensive Economic Partnership during the annual summit of the Association of Southeast Asian Nations.
155 The Secretary of State’s letter, dated 12 October 2020, set out in Appendix 4, outlines the process that was followed, including the text of a Written Ministerial Statement from her on the subject.