Parliament and Trade Agreements – It’s About Democracy

When you open newspapers these days it seems that trade agreements have become the be-all and end-all of every political debate. Pretty much the only thing that almost all politicians in the UK seem to agree on is that the government should sign a number of trade deals as quickly as possible, even if they do not agree which partners should be prioritised.

Yet, amongst all the brouhaha, critical voices have begun to emerge. They demand one thing in particular: democratic oversight over the negotiation of trade treaties. The cause of their concern: in the UK, negotiating, signing and ratifying treaties falls under the Royal Prerogative and is largely (though not entirely) left to the government. Parliament has only limited influence.

The demand for democratic oversight is not just from do-gooders at NGOs, like the trade justice movement – it has reached Parliament as well. The early day motion 128 (EDM 128), demanding parliamentary scrutiny of trade deals, has now garnered 109 signatories. Even though early day motions (motions for debate on an unspecified day) are usually tabled by backbenchers and commonly not debated, EDM 128 is unusual: only two out of the currently 562 EDMs and Amendments of the 2017-19 Parliamentary session have so far attracted more signatories.

Why is Parliamentary oversight of trade agreements important? How are parliaments involved in concluding trade agreements elsewhere? And what does the UK process for concluding agreements look like? This post will tackle all of these questions.

Why is democratic oversight an issue?

Let’s start with the first: why we even need democratic oversight. A long time ago trade agreements had a rather limited scope – not many people seemed to care about them. Those times (if indeed they ever really existed) are gone for good. Free trade agreements are now long, complex and cover many areas of law, some in excruciating detail, imposing binding obligations on the parties to them:

  • The CETA agreement between the EU and Canada encompasses 30 chapters. The English version of the agreement runs through 454 pages of text. Not counting the 17 annexes, which include fun texts like 223 pages of provincial and territorial reservations for Canada, or 37 pages of its tariff schedules.
  • The TPP, negotiated among 12 partners including the US, Australia and New Zealand and recently ditched by the US, also runs to 30 chapters. Its chapter on intellectual property has 75 pages and there are 66 pages on “national treatment and market access for goods”. The ZIP file of all 30 chapters is 3.15 MB excluding annexes.

Broad trade deals constrain many legislative choices. A trade deal can oblige a country to allow private competition in public services; it can require a country to grant patents for new uses of pharmaceuticals, causing higher prices for pharmaceuticals; and it can force a country to allow the sale of chlorine washed chicken. All of these are – if we believe in representative democracy – decisions that should at least be pondered by Parliament.

How are parliaments involved in trade agreements?

If we agree that parliamentary oversight is necessary, what should this oversight look like? Let’s look at two examples to get an idea of how this is handled in other systems. And yes, let’s simplify it as much as possible and leave out all the legal jargon (forgive me if I don’t manage to do that 100%. It’s a professional defect of mine…)

Let’s start with the EU. The Treaty of Lisbon gives the Union “exclusive” competences in the area of trade, meaning that only it can negotiate and conclude trade agreements on behalf of Member-States. If you like legalese – the relevant provision is Art. 207 TFEU and you can find the Treaty here.

The treaty negotiation process of the EU includes three mandatory concrete elements of democratic legitimisation:

  1. It is the Council – the body in which all Member States are represented – that authorises negotiations and adopts negotiating directives, not the Commission.
  2. Once a treaty has been finalised the Council has to authorise the signature of the agreement. At this point the treaty is not in force, as trade treaties generally require yet another step before they enter into force, referred to as ratification.
  3. Before the Council can decide to finally conclude the agreement, however, the European Parliament has to give its consent in an up or down vote.

The fact that both the Council (i.e. Member States) and the European Parliament need to approve a trade agreement means the Commission in reality keeps both institutions abreast of all developments in the negotiations. On top of the scrutiny by EU institutions, Member States also provide additional scrutiny through their own processes scrutinising EU legislation (in the UK this involves the European Scrutiny Committee). A more thorough step-by-step description of the process can be found here. You’ll also find information there on a particularly complex form of treaty that the EU signs: treaties that cover matters falling into both EU and Member State competences and are accordingly signed and ratified by the EU and all of its Member States – resulting in both the EU processes on treaty-making and Member States’ processes being used cumulatively.

In the United States, Congress plays a vital role with respect to trade agreements. Constitutionally Art. I Sec. 8 gives Congress the power “to regulate commerce with foreign nations”. Under Art. II Sec. 2, however, it is the President who has the power to make treaties “with the advice and consent of the Senate…provided two thirds of the Senators present concur”.

Reality is somewhat different. For trade agreements, it has become a de-facto requirement for Congress to pass an act authorising the “Trade Promotion Authority” of the President. That act lays down goals towards which a trade agreement needs to make progress. It also determines procedures that need to be followed in the negotiations, such as consultation requirements for the United States Trade Representative, the government office in charge of negotiations, with Congress. I say ‘de-facto requirement’ because it is not legally required, but without this getting a new agreement the necessary congressional approval would be made much more difficult.

Where these substantive and procedural requirements are followed, an expedited procedure for implementing legislation can be used, one of the most important features of which is limiting Congress to a yes or no vote, with no amendments allowed. The outcome is similar to the EU process: Congress determines the goals of trade negotiations, it is updated constantly and it approves any deal resulting from the negotiations, in an up or down vote. Details on the Trade Promotion Authority are available here.

Both systems thus offer democratic oversight over the mandate of the negotiations (in the EU, the Council, in the US, Congress via the TPA), a parliamentary up or down vote on the agreement and parliamentary involvement in the negotiation process. The involvement of parliament in the mandate ensures parliamentary buy-in for the negotiations, strengthens the position of the negotiator and ensures that parliament has committed to the negotiations. It is important that bipartisan consensus is reached, in order to ensure that governmental change will not affect the negotiations.

Despite the existence of oversight in the negotiation process, there have been justified complaints of insufficient transparency. Congress has, for example, raised such concerns about the United States Trade Representative.

Parliamentary involvement is also just one aspect of ensuring effective and democratically accountable negotiation processes. Both the EU and the US try to make sure that the voice of industry, and also of civil society, is heard in the negotiations. The US has, famously, set up a system of advisory committees for this purpose.

What does the UK process for international agreements look like?

How will the UK’s system of entering into international agreements bring democratic oversight to trade agreements? Do we need to change procedures? The answer is yes: we need changes to fulfil the promise of democratic accountability and our expectations of the Westminster model of parliamentary democracy.

In the UK, much like anywhere else in the world, making treaties is part of the powers of the executive. In the UK it is part of the “Royal Prerogative”, those remnants of the Crown’s original powers, now existing as a matter of common law and to a large extent exercised by the government as a matter of constitutional convention.

What is unusual in the UK is that the powers of the executive include negotiating, signing and ratifying treaties, with a very limited role for Parliament. Under the Constitutional Reform and Governance Act 2010 the Government has a duty to lay treaties subject to ratification before Parliament for 21 days before ratifying. During that period either House can resolve against ratification, but there are important limits to parliamentary involvement:

  • Even the House of Commons cannot block treaty ratification, unless it passes a motion repeatedly in the run up to the 21 day deadline.
  • The Act does not provide for a mandatory debate or vote on ratification.
  • The involvement of devolved executives and legislatures is also not required by the Act.

Some of the deficiencies of the Act are remedied by practice. With respect to the involvement of devolved administrations, there are rules in the Concordat on International Relations. As for Parliament, , the Government’s practice of ensuring legislative implementation of a treaty before ratification provides for some informal involvement. The reason Parliament needs to legislate for many treaties (and will need to do so for trade agreements) is that the UK, much like the US, Germany and the EU, takes what is called a “dualist” approach to international treaties.

What is meant by dualist approach? There are two ways in which national systems deal with international law. Under a monist approach, international law and national law form one system. National courts apply treaties as well as national law. Under a dualist approach, however, international law is a separate body of law. International agreements create obligations for the state, but do not change the national law, or indeed create rights enforceable in national courts. National courts only apply national law. To make a treaty applicable for national law, legislation is needed. Where Parliament refuses to implement a treaty, the country may be in breach of the treaty, but national courts will not apply the treaty.

In the UK, when the government brings the implementing legislation to Parliament before ratification and Parliament refuses to ratify, it is unlikely the government would still want to go ahead with ratification, as that would place the UK in violation of international law for failing to implement its obligations. Even so, legislating on the implementation of a treaty should not be regarded as a replacement for a full up and down vote on ratification. More on the involvement of Parliament in treaty ratification can be found here.

How should Parliamentary oversight of trade negotiations be managed?

So what could be done to bring the procedure in line with our expectation of democratic oversight over the negotiation of trade agreements? As a first step, Parliament should have to determine the goals of a trade agreement before negotiations begin and vote on the ratification of the agreement in an up or down vote after negotiations are complete.

Parliament should also be informed about the negotiations so that it can effectively fulfil its responsibilities with respect to oversight of the government. As indicated above, this alone will not guarantee an effective, democratically accountable negotiating process, but it is an important first step.

Does the new UK Trade Bill fulfil these expectations? Not even remotely. In fact, the Bill allows the executive to implement international trade agreements – removing the need for parliament to implement and the practice of parliamentary oversight over treaties via that route.

But let’s be fair: the Bill was not intended to deliver oversight and has a very limited scope. It applies only to free trade agreements that the EU had signed before Brexit. Similarly to the EU Withdrawal Bill it is supposed to give regulatory continuity rather than provide a channel for regulatory change. As such, the trade bill shares some of the problems raised by the withdrawal bill.

But it adds problems of its own: even where quick agreement with the partners of EU free trade agreements can be reached, these agreements cannot simply be “rolled over” without any changes. The more extensive these changes become, the more worrisome becomes the power of the executive to implement the agreements.

Dr Holger Hestermeyer

@hhesterm

 

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