19 July, 2018

Brexit - Latest News on Trade Democracy

Theresa May
by Helen Dennis

A week, as the quote goes, is a long time in politics…

Having essentially been in Brexit limbo for months – with no response from the government on trade democracy (the consultation closed 9 months ago), and no movement on the Trade or Customs Bills (last readings in committee were on the 1st February) – both Bills returned to the House of Commons, squeezed in before the summer break and with just an afternoon each for debate.

Trade Democracy

Around 3000 of you emailed your MP over the weekend asking them to stand up for trade democracy – thank you! The Fairtrade Foundation has been campaigning on this issue alongside other members of the Trade Justice Movement because we are all too aware of how trade deals can have significant impacts on domestic laws and regulations as well as on developing country market access. Controversies in recent trade deals include the privatisation of public services, access to medicines and the inclusion of corporate courts allowing private investors to sue national governments. For some time we have been waiting for the government response to its own White Paper consultation on ‘inclusive and transparent’ trade policy and in the absence of any proposals, we have called for amendment of the Trade Bill to ensure proper parliamentary scrutiny and approval of trade deals, and transparency in negotiations.

Pre-empting this debate, Liam Fox made a statement to the House of Commons on Monday, setting out the department’s proposals for brand new trade deals. The statement was full of warm words but sadly lacking in detail – consultation was emphasised and it was confirmed that impact assessments would be published – but no mention of when and how these would be conducted, and nothing on access to negotiation documents (MEPs currently have to enter a ‘secret reading room’). Crucially, Liam Fox confirmed that new trade deals would continue to pass through parliament in accordance with the Constitutional Reform and Governance (CRAG) Act 2010, which won’t require any debate or vote on either the negotiation mandate or the final deal.

When it came to the eventual debate on the Trade Bill, a good number of MPs, unconvinced by the Fox plan, did still vote for an amendment tabled by Caroline Lucas MP, setting out a plan for trade democracy. This vote was lost 284-314 so it was a close-run thing! Our hope is that the House of Lords will now give more time to the Bill, and that trade democracy improvements could still be won. In the meantime, the government has already announced consultations on trade negotiations which they hope to start in 2019 – with the United States, Australia, New Zealand and with the The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). No doubt they want to show that they are “getting on with things” but there is a risk of them putting the cart before horse, especially given that any new deals will be dependent on the one that the UK strikes (or not) with the EU.

It is important to acknowledge some improvements that have been made to the Trade Bill thanks to the work of Jonathan Djanogly MP. The Trade Bill as drafted is focused on ‘rolling-over’ existing EU deals, including the Economic Partnership Agreements (EPAs) with Fairtrade-exporting countries like Kenya and the Dominican Republic, and other Free Trade Agreements (FTAs) with countries including Colombia and Panama. In total, there are around 40 of these agreements covering 70 countries, but we haven’t had much information from the government on how this roll-over process is going. There have been some reports of countries wanting to renegotiate on some issues, and disagreements on how to split up some of the existing EU quotas, so there is a risk that some of these deals might change. The government has now agreed that any changes to deals requiring amendments to legislation will be subject to an ‘affirmative’ procedure so will automatically be debated by MPs – so no more ‘Henry VIII’ and a small step in the right direction.

Chequers

Two weeks ago, the Cabinet supposedly agreed key elements of a UK position on Brexit at Chequers. This was a carefully worded document aimed at delivering a number of government promises – including to end free movement and deliver an independent trade policy – whilst responding to concerns about supply chains and jobs.

The Chequers’ agreement proposed something called a ‘facilitated customs arrangement’ (FCA) which would enable the UK to set its own tariffs, but require the collection of import duties on the EU’s behalf, to prevent companies from avoiding taxes owed to other EU member states. A ‘common rule-book for all goods with the EU’ (this would include agricultural products) was also put forward – an attempt to avoid friction at the UK-EU border, including Northern Ireland – this would essentially mean that the UK would stay aligned with the EU on plant health and food safety standards. In layman’s terms, the UK consumer would continue to get the same quality bananas as consumers in the EU 27.

Customs Bill Controversies

From a Fairtrade perspective, we are especially interested in the Customs Bill as it supports the establishment of a ‘UK preference scheme’ i.e. a way of offering reduced or zero tariffs to developing countries, without requiring anything in return. The current UK proposal mirrors the EU scheme which is already in place and more detail will be brought forward at a later date (watch this space!) Our main concern with the Bill has been that it would allow the Treasury to set tariffs more broadly, without considering the consequences for sustainable development, including impacts on developing countries. We were very grateful to Gareth Snell MP who tabled a last-minute amendment to the Bill on this issue, but sadly this was not selected for debate. This continues to be an important issue as there are MPs who are vocal in support of unilateral tariff reduction or even elimination, but who are often unaware of how this might impact on poorer countries whose development is supported by preferential market access (i.e. it’s no longer a preference if everyone has it!) Sadly the Lords will not have power to bring this amendment back, but we will continue to raise this with point with the government.

Of course the big controversies were always likely to be elsewhere, and in this case, all the gossip was about four amendments tabled by the European Research Group (ERG), a grouping within the Conservative Party who are pushing for a hard Brexit. Two amendments appeared to fly in the face of the Chequers’ agreement – one on VAT alignment, and another on the FCA – but they both passed albeit with reduced majorities of just three, leaving commentators to question whether the Chequers’ Agreement was actually a moveable feast. The certainty required by Fairtrade licensees, and by developing country exporters (as well as EU negotiators), still seems a long way off, and there is increasing concern about a ‘no deal’ scenario…

Where Next?

Theresa May appears to have weathered this storm, but confusion still reigns over the UK’s position on key issues and accounting for summer recess and the party conferences, very few parliamentary days are left before the crunch EU Summit on the 18th and 19th October. Given the twists and turns of the last few days, it’s unclear where we are going to end up, but the Fairtrade Foundation will keep speaking up to try and get the best possible outcome for producers and workers in developing countries.

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Photo 'Theresa May, Prime Minister, United Kingdom' by Arno Mikkor (EU2017EE). CC by 2.0 License details.


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