UK takes step towards independent trade policy as Government presents Trade Bill

UK takes step towards independent trade policy as Government presents Trade Bill

The first of two further key pieces of Brexit legislation is set to be presented to Parliament today, as the Department for International Trade (DIT) unveils its Trade Bill, with the Treasury’s Customs Bill to follow shortly. The substance of both bills was set out in two White Papers jointly released last month, the contents of which have informed the legislation which, once enacted, will form the legal basis of the UK’s independent trade policy after Brexit.

The Trade Bill itself is primarily focused on ensuring continuity and giving a basis in UK law for those aspects of trade policy which are currently based on EU law or administered by EU institutions, rather than the future Free Trade Agreements the UK will be able to sign once it has left the European Union. The accompanying Customs Bill will contain the legal provisions for the UK to set its own customs tariff, but this will not in itself grant the government the full ability to negotiate new free trade deals around the world – that is expected to come in a separate piece of legislation at a later date.

Specifically, today’s Trade Bill will achieve three main things.

Firstly, it will enable the UK to ‘roll over’ the forty or so trade agreements which the EU has signed with so-called ‘third countries’, such as the CETA deal with Canada. The UK has been a driving force behind many of the EU’s existing trade agreements, hence it makes sense for the UK to replicate these arrangements immediately after leaving the EU, at least on an interim basis.

While the process of replicating these trade agreements has not yet formally begun, the Department for International Trade has held discussions with each of the relevant countries, which have all reportedly indicated their willingness to roll over the existing deals on essentially the current terms. Any immediate changes will be limited to technicalities, such as the references to relevant institutions and the names of the countries involved, with any more substantial renegotiation beyond the scope of the limited powers set out in the Bill.

Once these existing agreements have been renewed, the UK will then be able to expand and upgrade these deals further down the line (contingent on further legislation), freed from the need to placate the diverse mass of vested producer interests which have historically hamstrung the EU’s attempts to secure deep and far-reaching trade agreements with global partners.

After Brexit is complete, the UK will be able to recalibrate these deals to suit the unique make-up of the British economy, rather than being beholden to the EU’s protectionist trade barriers which often serve the interests of French farmers and other continental producers at the expense of British consumers and producers in the developing world. 

While there have been suggestions that the presence of Most Favoured Nation or so-called ‘ratchet’ clauses in some existing EU trade deals could hamper the UK’s efforts to upgrade such deals, this is not something which DIT is significantly concerned about itself.

Secondly, the Bill will also enable the Government to negotiate independent membership of the Government Procurement Agreement (GPA). This is a WTO agreement which ensures that UK companies have fair access to government procurement contracts across 47 countries, amounting to £1.3 trillion worth of government contracts altogether. The UK is currently a party to the GPA by virtue of its EU membership, but will need to rejoin as an independent member after Brexit, something which the DIT is confident of achieving.

Thirdly, the Bill will give the Government the power to apply trade remedies to counter anti-competitive trade practices, such as ‘dumping’. The Bill will create a new independent body, the Trade Remedies Authority, which will have the power to investigate reported cases of unfair trade practices and recommend any appropriate actions for Ministers to take in response, a process currently conducted by the European Commission on the UK’s behalf. It will also contain provisions for relevant data such as trade statistics to be collected and shared between government departments to support its efforts in this area.

In many ways, this Bill is the trade equivalent of the EU (Withdrawal) Bill – it is essentially a procedural Bill concerned with legal housekeeping and ensuring a smooth transition out of the EU in terms of the UK’s existing trading arrangements, rather than setting a new policy agenda in itself. However, it is nonetheless a vital legal building block as the UK embarks on the process of operating an independent trade policy once again.