Alarm over Tories’ Trade Bill


The Trade Bill is part of a suite of legislation that the government is bringing forward to prepare the ground for UK withdrawal from the European Union. This includes the controversial European Union (Withdrawal) Bill, which brings all EU law that currently applies in the UK directly into UK law (see Labour Research, January 2018, pages 16-18). 


The main objective of the Trade Bill is to implement into UK law any new trade deal the government manages to negotiate with non-EU countries, replacing an agreement these countries currently have with the EU and which the UK will no longer be party to post-Brexit. 


The Bill only covers these “replacement” agreements, and not any new deals with countries that are not already covered by an existing EU trade agreement. 


Alongside the Bill, the government has also introduced the Taxation (Cross-border Trade) Bill which will enable a separate UK customs regime to be established once the UK exits the EU. 


Both bills received their second reading in the House of Commons in January.


Trade Bill gives government unchecked powers

Like the EU withdrawal Bill, the Trade Bill would enable the government to introduce legislative changes through delegated legislation without proper parliamentary scrutiny. This would include the use of so-called “Henry VIII powers” to use delegated powers to make changes to primary legislation


Public services union UNISON is working with the Trade Justice Movement (TJM), a coalition of campaign groups, development charities and unions, in backing amendments to make the Trade Bill more transparent and democratic. 


Nick Crook, head of UNISON’s international department, told Labour Research that the coalition was seeking to ensure that the Trade Bill sets out “a proper transparent process for negotiating, agreeing and scrutinising the content of trade agreements. 


“This is essential given specific problems within existing and proposed trade agreements, such as provisions giving excessive power to investors and the lack of protection for labour rights.” 


Currently, the government has unchecked powers to negotiate and ratify trade agreements in secret without public or parliamentary oversight. This is a “huge democratic deficit that must be corrected”, the TJM says. 


The TJM is therefore calling for the right of Parliament to set a thorough mandate to govern each trade negotiation, the right of the public to be consulted as part of setting that mandate and full transparency in negotiations. 


It says that Parliament should be able to amend and to reject trade deals, with full debates and scrutiny guaranteed and a remit for the devolved administrations. Parliament should also have the right to review trade deals and withdraw from them.


TUC international policy officer Rosa Crawford said that the delegated powers in the Trade Bill could create particular problems, given that the UK may be in a weak position when negotiating with some of the countries it is seeking a replacement deal with. 


She added: “For example, countries like South Korea already have a trade deal with the EU and won’t feel under pressure to come to a quick deal with the UK. So they could extract concessions from the UK in order to make a deal.” 


The delegated powers memorandum, published by the government with the Bill, says that these powers could also be used to enable the implementation of “substantial amendments, including new obligations”.


In a TUC blog following the publication of the Bill, Crawford outlined the TUC’s concerns that “these renegotiated deals might allow lower employment rights or other standards, lead to unfair competition against UK businesses employing workers in Britain or open our public services to further privatisation”, and that this could occur without proper parliamentary scrutiny. 


Trade remedies for UK industry weakened

The TUC is also concerned that the Trade Bill does not set up adequate mechanisms to protect UK industry from unfair trade distortions. 


It has joined forces with general unions Unite, GMB and Community, and industry bodies in seven sectors, including UK Steel, the Chemical Industries Association and the British Ceramic Confederation (BCC) to form the Manufacturing Trade Remedies Alliance (MTRA). 


A joint MTRA submission last November to the government’s White Paper, Preparing For Our Future UK Trade Policy, called for the adoption of an effective trade remedies system to protect UK industries from unfairly subsidised imports or the “dumping” of imports below their true market value.


It raised particular concerns about imports from China which, it said, should not be treated as a “market economy”. Subsidised imports from other countries, including Russia, are also a concern. 


The Trade Bill was published in November 2017 within hours of the deadline for views to be submitted on the White Paper. This led to denunciations about the sham nature of the consultation from unions and others. 


An MTRA statement said that concerns it had raised about the need for effective trade remedies had been ignored by the government, and that UK manufacturers would not have adequate protection under the “very liberal” trade remedies system being proposed. 


Unite assistant general secretary Tony Burke warned that this “ultra-liberal approach” would “open the floodgates to cheap and illegally-dumped imports such as steel, tyres, ceramics, glass and fertilisers”. And, he said, this would bring “a real risk our UK manufacturing industries will be devastated, costing thousands of well-paid and high-quality jobs”.


Tom Reynolds, public affairs director at the BCC and co-ordinator of the MTRA told Labour Research that proposals put forward by the government in the Taxation (Cross-border Trade) Bill would “water down the action that can be taken against countries guilty of dumping imports” when compared to the actions that can be taken currently as a member of the EU. This would involve the UK operating a mandatory “lesser duty rule” (whereby anti-dumping duties are imposed at a lower level than the margin of dumping but are theoretically adequate to remove injury). 


The EU is moving to a “conditional lesser duty rule” which would only apply where there are no price distortions (meaning the likes of China and Russia could face higher duties based on the dumping margin).


The EU has also adopted a new system which takes into consideration other distortions to trade such as the absence of labour and environmental standards. But the UK government was not spelling out how it would calculate the dumping margin and whether it would include such standards, Reynolds said. 


The UK government is also proposing an “economic interest test”. This test would weigh up the cost to consumers of levying anti-dumping measures, but would potentially ignore the impact on domestic producers of allowing an anti-competitive environment to persist, Reynolds added. No other member of the World Trade Organisation, which deals with the global rules of trade between nations, currently does this. 


“The government doesn’t want to pursue trade remedies that might displease multinational business interests so is pursuing an ultra-liberal regime,” Crawford said. 


GMB European officer Kathleen Walker Shaw said that the Trade Bill reflects the “dogmatically non-interventionist and pro-liberalisation” approach of trade secretary Liam Fox. She told Labour Research: “Our question is, where is British manufacturing going to be if they are not prepared to put in place mechanisms that are going to protect our industries against aggressive dumping and the effects from highly subsidised non-market economies like China on steel?” 


The government had previously argued against higher EU anti-dumping duties on Chinese steel that would have afforded greater protection to the struggling UK steel industry. This approach was tied up with a desire to promote greater inward investment in the UK economy from China. 


A hope that some kind of preferential trade deal with China may be in the offing post-Brexit may also be behind the government’s reluctance to take a more aggressive approach to import dumping. 


Representatives from unions and MTRA members signed a joint letter to the Financial Times last month calling for a rethink on the Taxation (Cross-border Trade) Bill. The letter said the Bill would set up a lighter-touch approach to illegal dumping than any other major economy, with much of the detail deferred into secondary legislation where there will be little or no parliamentary scrutiny. 


And it warned that the UK’s manufacturing base “and tens of thousands of jobs around the country” would be at risk if Parliament “gets the Bill wrong”. 


The MTRA has proposed a series of amendments to both the Trade and the Taxation cross-border Bills which, it says, could help to ensure a “truly level playing field for UK manufacturers”. 


This also involves an amendment to the Trade Bill to ensure that membership of the proposed Trade Remedies Authority, which will advise the government on international trade disputes and proposed remedies, will include representatives of manufacturing industries and unions.