Tackling the democratic deficit in trade

The launch of the trade democracy coalition

Unlock Democracy has joined with nearly seventy organisations from across civil society in the UK, with millions of members, to call for new rules that put democracy, scrutiny, and transparency at the heart of trade.

We’re part of the trade democracy coalition that launched in Parliament this week. With the Trade Bill having been published in November after a white paper in October, we are collectively calling on the government to establish:   

1. The right of parliament to set a thorough mandate to govern each trade negotiation, with a remit for the devolved administrations

2. The right of the public to be consulted as part of setting that mandate

3. Full transparency in negotiations

4. The right of parliament to amend and to reject trade deals, with full debates and scrutiny guaranteed and a remit for the devolved administrations

5. The right of parliament to review trade deals and withdraw from them in a timely manner

How trade works in the UK

There is nothing wrong with wanting to do trade deals with other countries, and as we leave the EU this will be a central part of how we reshape our position in the world. The modern trade deal is not just about tariffs and quotas, and they usually extend to all areas of trading goods and services.

As with many issues, Unlock Democracy is focussed on making sure that the process through which policy is made is democratic. So we’re interested in asking - how are trade deals done? Who makes decisions about what becomes a bargaining chip? Who has a say over what’s in the deal? Who has the power to sign it off?

With these questions in mind, we’ve been concerned about trade for a while. In our ‘Democratic Brexit’ report we identified a range of ways in which there is a deeply concerning democratic deficit in the way trade is currently conducted.

You may expect that such far ranging deals - that impact everything from the standards of the food we eat, the pesticides we put on our crops, and whether private companies can bid to buy out NHS contracts - would have a great deal of oversight from parliament and input from the people. Well, you’d be wrong.

You may be shocked to find that treaty-making (making trade deals) is a royal prerogative power. Prerogative powers are a hangover from the days of absolute monarchy rule. As the UK transitioned to a democracy, these powers were either abolished, or handed over to the government.

Decisions by a handful of ministers

As doing a trade deal is a prerogative power, that means it is only ministers that get a say. That’s right - it will just be Liam Fox deciding what rights and standards to place as bargaining chips on the negotiating table. He barely even has to ask the permission of MP’s . Once he likes the trade deal he has negotiated, all he has to do is place the deal in front of Parliament for 21 working days. He doesn’t have to give MPs a vote of the deal, let alone a debate.

That’s exactly what he did with Comprehensive Trade and Economic Agreement with Canada (CETA). When the Comprehensive Economic Trade Agreement (CETA) between the EU and Canada was ratified, for example, the Belgian regional Parliament of Wallonia was given a vote, in line with their constitution. In the UK, our Parliament wasn’t even allowed to debate the deal, let alone vote on it.

Liam Fox didn’t give MPs any say on CETA, and he didn’t have to - as making trade deals is a prerogative power. He was hauled in front of the European Scrutiny Committee after the fact and grilled about his decision to not give MPs any opportunity to debate the deal, instead making the unilateral decision on behalf of the whole country to sign the UK up to the deal. At the end of the day, Parliament was powerless to do anything about this.

What’s worse is that MPs can’t even outright reject a trade deal. If they don’t like what Fox has negotiated, all they can do is use an Opposition Day debate to ask the government to reconsider. And once the 21 day sitting period has lapsed the government can simply go ahead and put exactly the same trade deal to Parliament, and it will come into force after 21 days unless MPs do exactly the same.

We believe that we need to fix this now. To ensure that UK trade policy is modern and democratically accountable post-Brexit, the new trade bill must establish:

What next?

We don’t think it should be left to Liam Fox and lobbyists to decide what our future food standards are, whether or not our beaches are clean, or whether we maintain our existing environmental commitments, behind closed doors.

The UK needs a new system for making and scrutinising trade deals that will put power into the hands of parliament and the people. 

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Further reading

• A Democratic Brexit: Avoiding Constitutional Crisis in Brexit Britain (Unlock Democracy, July 2017)

• Securing democracy in UK trade (Trade Justice Movement, November 2017)

• Briefing: Parliament’s role in ratifying treaties (House of Commons Library, February 2017)

• Is democracy threatened if companies can sue countries? (BBC, March 2015)

• The obscure legal systems that lets corporations sue countries (The Guardian, June 2015)