09 February 2018

The government introduced the Trade Bill 2017-19 (the “Bill”) to Parliament on 7 November 2017 and it received its second reading on 9 January 2018.

The main purpose of the Bill is to ensure that the UK has the necessary measures in place in order that it can build future trade policies after it has left the EU.

The Bill confers powers to:

• ensure that the UK can implement procurement obligations arising from the UK being a member of the Government Procurement Agreement in its own right;
• implement agreements with partner countries corresponding to the EU’s free trade agreements; and
• set up a new Trade Remedies Authority.

Government Procurement Agreement (“GPA”)

The GPA currently has 19 members, including the EU, Norway, Japan and the US. The main aims of the GPA are to provide for the mutual opening of government procurement markets among its members, and to address trade barriers in the government procurement sector.

The UK currently participates in the GPA through its EU membership, and the government notes in its Explanatory Notes that it “is estimated to provide UK business with annual guaranteed access to over £1.3 trillion of public procurement opportunities”. The government intends that the UK will remain party to the GPA at the point that the UK leaves the EU (“Exit Day”), and in order to achieve this it will be necessary for the UK to join the GPA as an independent member.

As noted previously, the European Union Withdrawal Bill (“EUWB”) will preserve EU law that has been fully implemented at Exit Day, however the EUWB does not provide for the legislative changes required for the UK to become an independent member of the GPA. The government will seek parliamentary approval for ratifying the UK’s membership of the GPA through the Constitutional Reform and Governance Act 2010, rather than through the Bill.

If the UK does become an independent member of the GPA, clause 1 of the Bill will provide the government with powers to make any appropriate changes to domestic legislation required to implement the UK’s GPA obligations.

Transitional agreements

The UK currently enters into commitments in international trade agreements through its membership of the EU. The UK implements these agreements through the European Communities Act 1972 (“ECA”) which is to be repealed by the EUWB. The government anticipates that the implementation of most obligations within the new trade agreements negotiated by the UK can be achieved through the EUWB, however in some cases, where a trade agreement has not been fully implemented before Exit Day and changes to domestic legislation are needed, new legislation is required to deal with this.

Clause 2 of the Bill provides the government (or a devolved administration) with the power to make such provision as considered appropriate by secondary legislation to ensure that transitional agreements are fully implemented in domestic legislation and can be ratified.

The reasoning behind granting this power to the government is firstly to ensure continuity in the UK’s existing trade and investment relationships with third countries (i.e. non-EU countries); and secondly because the UK cannot negotiate and enter into trade agreements while it is still a member of the EU.

The scope of the government’s power to implement trade agreements under the Bill is wide, as it covers free trade agreements (“FTAs”) and any other international agreements that mainly relate to trade. The government has stated that this will also include mutual recognition agreements.

The power to implement trade agreements will extend to any agreements that a third party and the EU may sign prior to Exit Day in addition to existing agreements between the EU and third countries. The duration of this power is 5 years from Exit Day, and can be renewed by up to 5 years at a time with the approval of the Houses of Parliament.

The government has stated that its aim is “to establish a UK trade agreement with each partner country based, as closely as possible, on the corresponding trade agreement that country has with the EU." The government does recognise that new UK-third country agreements will be legally distinct from the EU‐third country agreements on which they are based, and accordingly these UK-third country agreements may need to be revised in order that they conform to UK law after Exit Day.

It is also important to note, however, that the adoption of trade agreements will require the relevant third country party to give its agreement and consent to each new individual trade agreement it enters into with the UK. It is possible that partner countries to existing EU FTAs may not be inclined to enter into an agreement with the UK on the same terms as they have with the EU.

Trade Remedies Authority

The European Commission currently handles all anti-dumping, anti-subsidy and safeguard investigations for Member States. Clause 5 of the Bill establishes a new Trade Remedies Authority (“TRA”) and clause 6 sets out how the TRA will provide the Secretary of State with advice, support and assistance in connection with decisions on trade remedies and international trade disputes. The TRA will be assisted by new powers granted to HMRC under clause 7 of the Bill, which allows HMRC to collect information from companies, partnerships and sole traders in order to establish the number and identity of people exporting goods and services from the UK.

Impact of the Trade Bill 2017-19

Should you need advice on how the Bill could impact your organisation, please do not hesitate to contact us. The BTO Corporate team offers a full range of services and is experienced in handling a wide variety of corporate transactions. Our client base ranges from national and international organisations, to owner managed companies, funders, entrepreneurs, major construction companies, banks, commercial.

Contact: Jeremy Glen, Partner jsg@bto.co.uk T: 0141 221 8012.