Scotland's role in the development of future UK trade arrangements

Chapter Four – Deficiencies in Current and Proposed Parliamentary Scrutiny

115. This chapter considers the deficiencies in the current arrangements - the democratic deficit created by the absence of any real scrutiny of trade agreements and the development of trade policy by the UK Parliament, devolved legislatures and the devolved administrations - described in chapter 2. It also outlines the wider policy ambitions the Scottish Government would seek to protect and promote in any future trading arrangements.

116. As discussed earlier, the current arrangements for scrutiny of trade agreements at Westminster are based on the provisions of the Constitutional Reform and Governance Act 2010. These arrangements are limited, in that Parliament does not have to debate or vote on ratification and has no power to amend a treaty or be involved in treaty negotiation.

117. The Secretary of State for International Trade's statement to the House of Commons on 16 July 2018 outlined his proposals for the future role in agreeing trade policy of the UK Parliament, the devolved administrations, the public, business and civil society. The Secretary of State made a distinction between new free trade agreements - to which his statement applied - and continuity trade agreements which are being legislated for in the Trade Bill (and the EU (Withdrawal) Act 2018). He said that the UK Government was committed to providing Parliament with the ability to inform and scrutinise new trade agreements " in a timely and appropriate manner". He went on to say that the UK Parliament will be given the opportunity to consider the level of ambition of the Government's approach to negotiations and the potential implications of any agreement, possibly through a general debate. The Government would keep both Houses updated on the progress of negotiations through statements and updates to the International Trade Committee as the negotiations progress. He said this will include timely analysis at appropriate points to support decision making.

118. While these commitments are welcome, they appear largely intended to inform the UK Parliament, rather than give it an active role in the development of policy and subsequent agreements. In outlining the proposals to keep Parliament informed, Dr Fox included the caveat that a certain level of confidentiality would be necessary, and that these updates will be given with that in mind.

119. As outlined by Dr Fox in his statement, at the end of any negotiation process (and the completion of the proposed new arrangements described above) the provisions of CRAGA 2010 will continue to apply. Under those provisions, the Government will lay before Parliament any treaty it intends to ratify alongside an Explanatory Memorandum which will summarise the content of each trade agreement. However, as discussed previously, the current CRAGA arrangements provide only that the Government must lay a treaty it plans to sign before Parliament and give MPs and peers 21 days to object to it. There is no legal obligation to hold a parliamentary debate and, while the ratification process can be delayed, it is highly unlikely that the House of Commons would be able to delay ratification indefinitely.

120. The proposals outlined by Dr Fox do not therefore amount to any significant increase in scrutiny of trade deals at Westminster, let alone by the devolved administrations. The day after his statement, during the third reading debate on the Trade Bill on 17 July, the UK Government voted against amendments which would have required the Government to publish texts of proposed trade agreements prior to ratification, required the consent of devolved authorities to UK Government trade negotiations after Brexit and required all free trade deals after the UK leaves the EU to be subject to Parliamentary scrutiny and consent.

121. In the absence of amendments of this nature, the UK Government's plans, in effect, mean that the House of Commons will have less scrutiny and influence over the UK's post-Brexit independent trade policy than that currently enjoyed by MEPs, where all EU trade negotiations are subject to the European Parliament Trade Committee's democratic monitoring, scrutiny and oversight, and a final European Parliament assent motion.

122. The UK Government has so far been less specific about the future role of the devolved administrations and others. Dr Fox said on 16 July that his department was taking steps to draw on the knowledge and expertise of devolved administrations and key stakeholders, recognising their role in helping to deliver the objectives of the UK trade policy and future trade negotiations. The Scottish Government was not consulted on the Secretary of State's proposals for the future role of devolved administrations, nor on the Department for International Trade's subsequent four public consultations on possible future trade deals with USA, Australia, New Zealand and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership ( CPTPP) ^[55] . These are high level exercises with little or no background information about, for example, why the UK has chosen these as priority areas or the underlying policy the UK Government is seeking to deliver through the deals themselves. The consultation process also appears to treat the interests of the devolved nations as on a par with specific sectoral interests. During the 14 week consultation period, consultees, including the devolved administrations, are asked the following questions in relation to each potential agreement:

• What would you want the UKG to achieve through a free trade agreement (or related trade talks), and why?
• Which of a number of listed areas (including tariffs, rules of origin etc.) in free trade agreements best describe the priorities that you have outlined?
• What concerns, if any, do you have about a free trade agreement (or related trade talks), and why?
• Which of a number of listed areas in free trade agreements best describe those concerns?

123. There is not currently, and nor is there proposed to be, any legal requirement to consult the devolved administrations and legislatures, stakeholders or the public. The MoU and Concordats provide the only articulation at present of Scotland's rights and responsibilities in protecting and promoting its interests in the field of international relations and international trade.

124. In its interim report on what was then the EU (Withdrawal) Bill ^[56] , the Scottish Parliament's Finance and Constitution Committee considered the ways the Scottish Government and Scottish Parliament currently input into EU policy, and how that might need to change in the future, if the UK, including Scotland, leaves the EU and Customs Union. The Committee noted that a number of witnesses had queried the input the devolved administrations would have into negotiating the international agreements needed if the UK leaves the EU, emphasising the vital role of existing EU mechanisms in allowing sectoral organisations and devolved administrations to influence EU policy.

125. The Committee found that the

" EU policy-making process is relatively open and based on a number of treaties agreed by the Member States. Both the devolved institutions and devolved stakeholders have the opportunity to influence the process both directly with the EU institutions and indirectly via the UK Government. The European Parliament also has a scrutiny function".

126. However, there is no guarantee that this sort of input into international matters will continue after the UK's exit from them EU. In her evidence to the Committee, Professor Aileen McHarg articulated this concern, emphasising that it is important that the current mechanisms which ' allow the devolved Governments to influence EU policy making are replicated in relation to international trade policy, because this will become so much more important as an issue' ^[57] . The Committee reported that a number of witnesses were concerned that no similar policy-making process to the internal, substantial EU-policy making process currently exists within the UK, and suggested that something similar - within the UK – will be required, in order to ensure that the devolved administrations, as well as wider interests, are able to have a role in the negotiation of international trade agreements. The Committee reached three conclusions in this area:

102. The Committee also believes that significant further work is required in considering arrangements to replace the current EU policy-making processes across the UK. Consideration will also need to be given to addressing the governance gap in relation to the monitoring, implementation and enforcement of common UK frameworks.

103. Consideration will also need to be given to the interaction between the Bill, common frameworks and the negotiation of new international agreements including trade deals. In the first instance it is anticipated that the Committee will have a role in scrutinising the Trade Bill LCM.

104. The Committee also intends to examine further the impact of the new international obligations including trade agreements on the devolved settlement with regard to the role of the devolved institutions, stakeholders and the wider public in influencing and informing the UK Government's negotiations.

127. The Scottish Government welcomes and supports these conclusions, as we made clear in our response to the Committee's report. While it will be important to retain any strengths of the current arrangements, it is clear that they are not adequate for ensuring that Scotland's interests are taken into account in the development of EU trade agreements and the UK's formulation of its policy input into them. These inadequacies, already damaging, could have a disastrous impact following the UK's exit from the EU if they are not addressed through the greater involvement of the devolved administrations, stakeholders and others in policy formulation. Current arrangements must be enhanced now to meet future challenges.

128. For example, the UK failed to consult on or put forward any current UK protected food names ( PFNs) for inclusion in the EU-Canada Comprehensive Economic and Trade Agreement with Canada, with the result that CETA protects many European PFNs but none at all from the UK. Nor did the UK consult the Scottish Government in the trade negotiations with Japan and Mexico with regard to PFNs for inclusion in those deals. Protected Food Names play an important role as exemplars of fine produce, and Scottish Farmed Salmon and Scotch Beef are two of the most valuable PFNs in the EU. This pattern has been repeated more recently, with a lack of discussion between the UK Government and Scottish Government over the EU Trade negotiations in relation to the Mercosur countries. We welcome the Secretary of State for the Environment, Food and Rural Affairs' commitment to ensure that the devolved administrations will be consulted fully on similar agreements in the future, but such consultation must be entered into at an early stage and must be meaningful.

129. Weaknesses in the current system already need to be addressed now. The need to do so will become all the more crucial if the UK becomes solely responsible for trade policy and the agreement of international trade deals, and subject to competing pressures from a multiplicity of interest groups around the UK. The European Commission confirms ^[58] that reaching a final agreement on a trade deal usually takes several years and involves over thirty stages including preparation and impact assessment, negotiation and reporting to the Council of Ministers and Parliament, finalising and reviewing the text, signing, decision making, application and review. Scotland's interests must be protected and promoted at all stages of the process.

Environmental and Social Protections

130. As Scotland's Place in Europe: People, Jobs and Investment ^[59] observes, the European Single Market is more than just an economic arrangement. It has also become a framework for protecting and advancing individual and collective rights, as well as a range of broader societal interests. Not only does the European Single Market protect the interests of workers through a variety of measures, it also ensures a high level of environmental protection, measures to combat climate change, and high regulatory and animal welfare standards.

131. Scotland recognises that the EU has been a key player in international efforts to secure a global, legally-binding agreement to address climate change; with EU legally-binding renewable energy and energy efficiency targets playing a defining role in stimulating the huge growth in renewable energy, which has seen significant inward investment flows into Scotland. Scotland has a strong record mitigating climate change and delivering clean energy, as well as applying a climate justice approach to tackling the effects of climate change. In 2009, the Scottish Parliament passed what was the most ambitious climate change legislation anywhere in the world at the time, setting targets for reducing emissions by 42% by 2020 and 80% by 2050. We are well on track to meet that 2020 target and, in May 2018, we introduced a new Climate Change Bill to increase our targets in direct response to the Paris Agreement, and maintain our position at the forefront of global ambition. The Bill will give Scotland the most ambitious statutory targets of any country in the world for 2020, 2030 and 2040, and will ensure Scotland is carbon neutral by 2050. Building on our success to date in meeting our electricity needs from renewables, our new Scottish Energy Strategy ^[60] , published in December 2017, commits us to delivering 50% of all Scotland's energy needs – electricity, heat and transport – from renewables by 2030. We also announced bold new plans for transport in our Programme for Government 2017‑2018 ^[61] , with a target to end sales of new petrol and diesel cars by 2032 – eight years ahead of the UK Government. Scotland has shown its commitment to international action on climate justice by committing £21 million from 2012-2021 to aid the most vulnerable people across the globe to build resilience to climate change. Future trade agreements should seek to enhance, not hinder, our abilities to deliver these targets and reap the economic benefits of the low carbon transition.

132. Action on Climate Change is just one of the reasons why the Scottish Government is determined to secure a further devolution of powers. But there are a number of other areas where we will seek to protect wider, devolved interests and to continue to promote issues such as social protection and social inclusion. But, to ensure there is no race to the bottom, we also need to ensure that ethical concerns, such as maintaining existing environmental and social protections, form part of future trade arrangements and agreements, and honour our commitment to social democracy. For example, the Scottish Government argued in relation to the Transatlantic Trade and Investment Partnership ( TTIP) - the proposed trade agreement between the EU and the US - that any potential economic benefits should not be at the expense of vital public services, like the NHS, that the right of governments to regulate should be protected, and that trade agreements should not result in any lowering of standards. The Scottish Government has also responded to suggestions that future trade deals might result in a lowering of existing standards in relation to human and employment rights and environmental safeguards, as well as areas such as food safety and consumer confidence, for example by raising concerns in relation to trade deals which could potentially allow the importation of chlorinated chicken or hormone-injected beef. To ensure that Scotland's voice is heard and respected, the Scottish Government and Scottish Parliament must have a guaranteed role in all stages of the formulation, negotiation, agreement and implementation of future trade deals and future trade policy.

133. If the next generation of free trade agreements - with CETA as a model - continues the trend to more comprehensive and wide ranging coverage, the ambit of those agreements will stray more and more into areas of (largely) devolved responsibility, or where Scotland might take a distinctly different approach. That will inevitably increase the need for Scotland to have more of a say in shaping future arrangements, not least in order that we can protect and develop those areas where Scotland leads the way.