The Trade Bill has made news because of the potential for a government defeat over EU customs union arrangements. But the Bill illustrates broader problems of legislating for Brexit: trying to hit a moving target, and to legislate piece-by-piece when core legal and constitutional principles are in play. Parliament’s treaty-making role is also at issue.
For the third successive week, the Leader of the House of Commons, Andrea Leadsom, was unable at the most recent Business Questions - on 8 March - to announce a date for the report stages of the Trade Bill and the Taxation (Cross-Border Trade) Bill (often known as the Customs Bill).
Trade Bill delay
The Bills passed through their second reading and committee stages uneventfully by the start of February, with no amendments and the government’s majority holding firm.
But then government backbenchers began to table report-stage amendments to both Bills which would seek to keep the UK in either a customs union with the EU or the EU Customs Union after Brexit (or after the post-Brexit implementation period) - contrary to government policy.
And at the same time, the Labour Party finally confirmed its shift to a pro-EU customs union position (albeit one apparently conditional on the UK securing more autonomy on external trade agreements than is normally available inside a customs union).
The possibility of Conservative backbench rebels joining forces with a whipped Labour vote raised the prospect of the government being defeated. This would mean that the government was unable to carry a central plank of its Brexit policy through the House of Commons.
With neither Bill now expected to return to the floor of the House until after Easter, and possibly into May, there is a long way to go before any amendments are put to a vote, if they ever are. In the wake of the Prime Minister’s 2 March Mansion House speech, some Conservative signatories to the Trade Bill’s proposed new clause 5 (the most high-profile pro-EU customs union amendment) have indicated that they might be open to withdrawing their support for it, if the government is able to provide reassurance in time that its proposed alternative customs arrangements will secure near-frictionless UK-EU trade, provide a solution on the Ireland-Northern Ireland border and are politically and practically deliverable, in the UK and with the EU.
It is also possible that pro-Brexit backbenchers might table their own amendment(s) constraining the provisions which potentially enable the UK to form a customs union - Clause 2 of the Trade Bill and Clause 31 of the Taxation (Cross-Border Trade) Bill – so that they may not be used to form one with the EU.
Legislating for Brexit: broader challenges
The delay to their report stages might not make that much difference to the timing of the two trade bills’ eventual arrival on the statute book, given that the House of Lords’ legislative time is entirely taken up with the EU (Withdrawal) Bill until beyond Easter.
Leaving aside the policy question about customs arrangements, there are in any case several broader legal, institutional and process issues that are raised by other proposed amendments to the Trade Bill, and that could usefully be addressed – indeed, may have to be addressed – before it could complete its parliamentary proceedings.
In this respect, the Trade Bill illustrates some of the broader difficulties of legislating for Brexit:
1. The moving target problem
Legislating for the outcome of an international negotiation still in progress was always going to be one of the trickiest aspects of Brexit.
There is a particular challenge in the case of the Trade Bill because government policy changed after committee stage.
To ensure continuity, the government originally planned to reach, before Brexit, bilateral UK trade agreements with those countries with which the EU has signed trade agreements before exit day. The relevant part of the Trade Bill (Clause 2) gives ministers delegated powers to implement such agreements.
As set out in the Bill’s Explanatory Memorandum, the Clause 2 Trade Bill powers are needed to cater for two types of potential situation: one in which the legislation implementing EU agreements is not made before exit day, and thus does not become retained EU law under the EU (Withdrawal) Bill; and one in which the post-Brexit implementation of new UK bilateral agreements requires legislative changes that cannot be made using powers in the EU (Withdrawal) Bill, because those powers cover only matters arising directly from the UK’s EU withdrawal.
However, on 8 February, the government announced that it was no longer assuming that it would have the relevant UK bilateral trade agreements in place before Brexit. Instead, it is now seeking to remain covered by the EU’s existing international agreements.
This at least raises a question about its need for the Clause 2 powers now.
The government will still need powers to implement UK bilateral trade agreements at some point. But it has promised a new long-term policy framework (presumably, another Bill) for UK trade agreements with ‘new’ countries – that is, those which have not signed a trade agreement with the EU before the UK leaves. The government hopes that the terms of the post-Brexit implementation period will allow it to sign (albeit not bring into force) such agreements – alongside, now, UK bilateral agreements with ‘old’ countries. The time slippage for reaching UK bilateral agreements with ‘old’ countries thus means that the UK could be pursuing bilateral agreements with them at the same time as with ‘new’ countries. This could make anomalous the legislative distinction between the two groups of countries which underpins the Trade Bill.
The government will also still need powers to implement EU trade agreements for as long as it remains bound by them, after the European Communities Act is repealed.
But it is not clear that Clause 2 of the Trade Bill is the most appropriate vehicle for this.
For one thing, Clause 2 might need amending, since it covers only EU agreements signed by exit day, and only agreements to which the UK is a signatory. This potentially excludes agreements which the EU signs in its own right and after Brexit (but during the implementation period).
More significantly, the fact that the post-Brexit UK remains temporarily bound by EU trade agreements may be specified in the EU-UK Withdrawal Agreement (as per the European Commission’s current draft). If so, it may be that the powers needed to implement such EU agreements could be provided in the government’s promised EU (Withdrawal Agreement and Implementation) Bill. If the implementation period is a ‘standstill’ one, requiring the UK to continue to take on new EU law, some such provision - in effect re-creating the relevant parts of the European Communities Act - would appear to be required.
On the other hand, the government wishes to make legislative provision for a ‘no deal’ scenario, as a contingency. If there were no EU-UK Withdrawal Agreement, the government would presumably need to have independent powers to implement UK trade agreements in place by exit day. In that case, although the limitation to only ‘old’ countries might still be anomalous, the powers in the Trade Bill would at least be a start.
2. The read-across problem I: delegated powers
The Trade Bill gives ministers powers to, among other things, modify primary legislation that is retained EU law – that is, a Henry VIII power (Clause 2(6)).
But the status of retained EU law, whether it should count as primary or secondary legislation, and the process by and extent to which it should be amendable, are all contested topics as the EU (Withdrawal) Bill makes its way through the House of Lords.
And the parliamentary scrutiny of delegated legislation arising from Brexit is also not settled.
It is not clear whether the House of Lords might further amend the sifting committee arrangements which were introduced into the EU (Withdrawal) Bill in the Commons. We at the Hansard Society have said that further amendments are needed if the elected House, especially, is to have a meaningful say over delegated legislation.
Proposed new clause 6 to the Trade Bill - put forward by former Attorney General Dominic Grieve and others - would establish greater parliamentary control over delegated legislation than is provided for in the current amended version of the EU (Withdrawal) Bill. But the powers in the Trade Bill are being created expressly to take over where EU (Withdrawal) Bill powers leave off. As we have argued previously, this demands a degree of consistency if the body of Brexit legislation is not to be marked by loopholes and anomalies.
In our September 2017 paper ‘Taking Back Control for Brexit and Beyond: Delegated Legislation, Parliamentary Scrutiny and the European Union (Withdrawal) Bill’, we argued, in cases of wide delegated powers, for a single strengthened scrutiny procedure that could be used for statutory instruments arising under any and all Brexit bills – precisely to avoid the kind of complexity and inconsistency that risks arising from a bill-by-bill approach now.
3. The read-across problem II: devolved powers
Future UK trade agreements will engage policy areas that are devolved, such as agriculture.
But the Trade Bill as currently drafted seeks to constrain the devolved administrations’ powers in devolved fields, in the interests of sustaining a unitary UK capacity to make and implement external agreements. In this area, the Trade Bill essentially follows the practice of the EU (Withdrawal) Bill.
But the current devolved provisions of the EU (Withdrawal) Bill are rejected by the Scottish and Welsh governments. Talks with the UK government - most recently at a Joint Ministerial Council meeting on 8 March - have been difficult; and long-promised UK government amendments to the Withdrawal Bill aimed at assuaging the devolved administrations’ concerns are only expected to emerge today (12 March), with the devolved administrations already indicating their continuing discontent. Pending a resolution of the Withdrawal Bill issues, the Scottish and Welsh governments are recommending that their legislatures withhold their consent to the Bill.
And pending a resolution of the Withdrawal Bill issues, the Scottish and Welsh governments are also recommending that their legislatures withhold consent to the Trade Bill.
In evidence to a Scottish Parliament committee on 21 February, a Scottish government official appeared to suggest that UK Trade Secretary Liam Fox had indicated he might mirror any changes made to the Withdrawal Bill on devolved issues in amendments to the Trade Bill. On devolved questions, therefore, the Trade Bill currently appears hostage.
Parliament and international negotiations
The Trade Bill thus illustrates the difficulties of legislating for Brexit before the EU (Withdrawal) Bill has settled major questions concerning retained EU law, delegated powers and the devolution settlements; and before it is known whether there will be a UK-EU Withdrawal Agreement providing for an implementation period, and if so, on what terms.
The Trade Bill also taps into a further issue, not as obviously requiring resolution for Brexit to proceed but still being highlighted by the Brexit process.
This is the question of how Parliament can direct the government to conduct a particular international negotiation.
As we have noted, the UK Parliament’s formal involvement in international treaty-making, such as it is, currently comes at the end of the process, with implementation and ratification.
But the most prominent pro-EU customs union amendments, to both the Trade Bill and the Taxation (Cross-Border Trade) Bill, would establish continued participation in a/the customs union as a UK “objective”.
The same issue, of Parliament’s direction of an international negotiation, underlies the tortuous question of a ‘meaningful vote’ on any EU-UK Withdrawal Agreement. For some parliamentarians, such a vote will be meaningful only if it in effect enables them to direct the government to go back and renegotiate; and - just as with the proposed amendments to the Trade and Customs Bills - they would rather that such a direction were given in legislation than in a motion.
But mandating an international negotiation is not supposed to be what legislation is for.
Proposed new clause 3 to the Trade Bill, put forward by the Greens’ Caroline Lucas with Labour, Liberal Democrat and SNP MPs, would establish new requirements for parliamentary scrutiny of and consent to free trade agreements - throughout the process, and based on resolutions of both Houses (rather than legislation). As well as engaging some of the legal and constitutional questions directly involved in Brexit, the Trade Bill thus looks set to occasion renewed debate on Parliament’s role in treaty-making.