Recommendations & Conclusions
12 items
3
Recommendation
Forty-Fifth Report - Progress with trad…
Accepted
The Department is not doing enough to help businesses, particularly SMEs, to take advantage of opportunities offered by new trade agreements. Businesses need to understand and take advantage of the opportunities arising from trade agreements if agreements are to deliver their predicted benefits. However, UK businesses’ use of existing agreements …
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The Department is not doing enough to help businesses, particularly SMEs, to take advantage of opportunities offered by new trade agreements. Businesses need to understand and take advantage of the opportunities arising from trade agreements if agreements are to deliver their predicted benefits. However, UK businesses’ use of existing agreements may be relatively low. For example, less than a third of surveyed UK businesses knew whether the goods they most frequently exported were eligible for reduced customs duties. We raised concerns in 2020 that the Department was not doing enough to support small and innovative businesses to export. The Department’s November 2021 export support strategy sets out a new approach, aiming to bring its export support services together in one place. To promote the new agreement with Japan, the Department conducted a virtual trade mission with around 250 businesses, but it could not tell us if this event had led to new export opportunities. Recommendation: The Department should write to the Committee within 12 months to set out how it has supported businesses, particularly SMEs, to take full advantage of existing and newly negotiated trade agreements. It should: i) regularly measure and report the preference utilisation rate for UK exports (the rate at which exporters use preferential tariffs) for each of its trade agreements; ii) consider how it can reduce burden and costs for SMEs; and iii) set out initial progress with its new export strategy.
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Government response AI summary
The government agrees to write to the Committee within 12 months to set out how it has supported businesses, particularly SMEs, to take full advantage of existing and newly negotiated trade agreements, including measuring preference utilisation rates, reducing burdens for SMEs, and detailing progress on …
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HM Treasury
5
Recommendation
Forty-Fifth Report - Progress with trad…
Accepted
Parliament and the public are not being provided with clear and transparent information to understand the impact of trade agreements. Business associations and consumer groups are concerned that it is unclear how trade policy aligns with other policy objectives, and how any trade-offs required may impact on the groups they …
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Parliament and the public are not being provided with clear and transparent information to understand the impact of trade agreements. Business associations and consumer groups are concerned that it is unclear how trade policy aligns with other policy objectives, and how any trade-offs required may impact on the groups they represent. The consumer group Which? has found that consumers have limited awareness of the status and implications of trade negotiations. Although the Department says it has found that the public is highly supportive of its trade agenda, we are not convinced that the public has significant knowledge and interest in trade agreements. The Department does recognise that it faces a challenge in how it communicates important information to Parliament and the public on what it is doing on trade agreements and why. In addition, the Department could not explain why, in its impact assessments of the agreement with Australia, the projected value of UK exports to Australia increased by more than 600% between June 2020 and December 2021 (from £900 million to £6.2 billion). It thought that the rise was probably driven by a change in the methodology it uses to forecast economic benefits, but could not be more specific. Recommendation: The Department should improve transparency and communications around trade agreements and their impacts, to aid understanding and inform scrutiny. As part of this exercise, it should: i) explain clearly to Parliament and the public the policy trade-offs, particularly in relation to human rights and environmental priorities, in new FTAs and the potential impact for sectors, businesses and individuals; and ii) set out clearly the factors and underlying assumptions driving any changes in the forecast benefits. 8 Progress with trade negotiations
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Government response AI summary
The government agrees and says it publishes materials before negotiations, after they conclude, and is highly consultative, publishing explanatory information on the impact of agreements. It constantly reviews its economic analysis methodologies and seeks views of the public through tools including the Public Attitudes to …
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HM Treasury
6
Recommendation
Forty-Fifth Report - Progress with trad…
Accepted
The Department has not done enough to support effective Parliamentary scrutiny of trade agreements. Despite the Department making additional commitments beyond the statutory framework, the International Trade Committee has not been provided with information from the Department in sufficient time to enable it to perform its scrutiny function effectively. For …
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The Department has not done enough to support effective Parliamentary scrutiny of trade agreements. Despite the Department making additional commitments beyond the statutory framework, the International Trade Committee has not been provided with information from the Department in sufficient time to enable it to perform its scrutiny function effectively. For example, although the Department shared the final agreement with Australia three months ahead of the statutory process for Parliamentary scrutiny, this still makes it difficult for that Committee to consider and produce a report for Parliament in time for it to have an impact. It would also be easier for Parliament to scrutinise trade agreements if it had sight of the negotiating objectives at the outset. There is a precedent in Parliament where government has provided privileged information to the Committee and to other select committees. The House of Lords International Agreements Committee has also called for Parliament to have a stronger formal role earlier in the process and for provision of the agreement text prior to signature. Recommendation: The Department should make further commitments that would support robust and timely Parliamentary scrutiny. These should include providing the International Trade Committee and the House of Lords International Agreement Committee with the negotiating objectives, under privileged access, at the outset of the negotiations, providing oral updates at regular points on a trusted basis, and sharing any other key information in sufficient time for scrutiny. Progress with trade negotiations 9 1 The trade negotiations programme
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Government response AI summary
The government agrees and states that it publishes and provides its strategic approach to each new FTA at the outset of negotiations to relevant select committees, including negotiation objectives, and offers oral updates to the relevant select committees.
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HM Treasury
8
Conclusion
Forty-Fifth Report - Progress with trad…
Accepted
The Department aims to secure agreements with countries representing 80% of total UK trade by the end of 2022. This aim is stated in the Department’s 2020–21 annual report and accounts and is a government manifesto commitment. The National Audit Office (NAO) report stated that 64% of total UK trade …
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The Department aims to secure agreements with countries representing 80% of total UK trade by the end of 2022. This aim is stated in the Department’s 2020–21 annual report and accounts and is a government manifesto commitment. The National Audit Office (NAO) report stated that 64% of total UK trade is covered by trade agreements, including agreements in principle, and the UK’s Trade and Cooperation Agreement with the EU which represents 47% of UK trade.18
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Government response AI summary
The government agrees with the implicit recommendation to meet the 80% trade agreement coverage target by April 2023, outlining its negotiation pipeline and committing to provide an update within 12 months.
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HM Treasury
9
Conclusion
Forty-Fifth Report - Progress with trad…
Accepted
We noted that the Department is quite a long way from reaching the 80% target and asked the Department when it expects to meet it. The Department told us that it thinks it will reach the 80% target but that the timescale will be challenging.19 The NAO found that joining …
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We noted that the Department is quite a long way from reaching the 80% target and asked the Department when it expects to meet it. The Department told us that it thinks it will reach the 80% target but that the timescale will be challenging.19 The NAO found that joining the CPTPP and a new agreement with India would represent 0.4% and 1.5% respectively.20
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Government response AI summary
The government accepts the implicit recommendation to meet the 80% trade agreement target by April 2023, outlining its ambitious negotiation pipeline, and commits to update the Committee on progress within 12 months.
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HM Treasury
10
Conclusion
Forty-Fifth Report - Progress with trad…
Accepted
A deal with the US would contribute 16.8% towards achieving the 80% target as the US is the UK’s largest trading partner.21 However, negotiations with the US are not currently progressing. The Department told us that in the meantime it is concentrating 10 Q 31 11 Q 36 12 Q …
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A deal with the US would contribute 16.8% towards achieving the 80% target as the US is the UK’s largest trading partner.21 However, negotiations with the US are not currently progressing. The Department told us that in the meantime it is concentrating 10 Q 31 11 Q 36 12 Q 41 13 Q 6 14 Q 9; C&AG’s report 3.38 – 3.40 15 Q 9 16 Q 39 17 Q 40 18 Q 6; C&AG’s report, paras 20, 4.2 19 Chair’s opening remarks, Q 6 20 C&AG’s report, para 4.6 21 Q 6; C&AG’s report, para 4.6 Progress with trade negotiations 11 on improving market access to the US.22 In particular, the Department said that the Government has negotiated to end the US ban on UK beef and lamb, and is also pursuing a state-by-state approach to allow the UK to trade more at a state level with large economies such as California. The Department added that this activity also keeps the onus on a free trade agreement with the US as a whole.23
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Government response AI summary
The UK is ready to progress with a UK-US FTA when the US is ready and continues to work with the US on state level MOUs, securing the removal of Section 232 tariffs.
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HM Treasury
14
Conclusion
Forty-Fifth Report - Progress with trad…
Accepted
We asked what the Department was doing to measure the actual benefits of trade agreements. The Department told us that it is committed to monitoring and evaluating the impacts of agreements.33 For example, it has committed to publishing monitoring reports for the Australia and Japan agreements two years after they …
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We asked what the Department was doing to measure the actual benefits of trade agreements. The Department told us that it is committed to monitoring and evaluating the impacts of agreements.33 For example, it has committed to publishing monitoring reports for the Australia and Japan agreements two years after they enter into force and 26 C&AG’s Report, para 4.2 and Figure 13 27 Q 81 28 Qq 34, 81 29 C&AG’s report, para 4.2; Qq 16, 30, 73 30 Qq 4, 10 31 Q 4 32 Qq 27, 30 33 Q 30, 34, 54 Progress with trade negotiations 13 evaluating the agreements within five years.34 The Department said it recognises that it will be challenging to deliver the forecast impacts and ensure the agreements are being used by businesses.35 Use by businesses
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Government response AI summary
The department publishes detailed impact assessments and will publish monitoring reports to inform on progress and actual benefits of FTAs.
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HM Treasury
23
Recommendation
Forty-Fifth Report - Progress with trad…
Accepted
When we asked the Department about its overarching trade strategy it told us that it aims to have “an open trade environment that promotes jobs and wages and reduces poverty”. The Department plans to achieve this through trade negotiations and the right protections against unfair practices at both bilateral and …
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When we asked the Department about its overarching trade strategy it told us that it aims to have “an open trade environment that promotes jobs and wages and reduces poverty”. The Department plans to achieve this through trade negotiations and the right protections against unfair practices at both bilateral and multilateral level, while promoting exports and investment.62 However, the NAO found that it was unclear how trade policy aligns with other policy objectives, and how any trade-offs required may impact on business associations, civil society and consumer groups. For example, it is unclear how the government’s international trade ambitions help to achieve domestic and wider policy objectives in areas including agriculture, the environment, international development and human rights.63 Evidence we received from Which? supported the NAO’s recommendation that the Department should set out an overarching trade strategy so that it is clear how its trade policy supports wider policy objectives and how it will use trade negotiations, alongside other levers to achieve its objectives.64
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Government response AI summary
The government agrees and says it is committed to a high level of transparency, publishing materials before and after negotiations, consulting prior to and during, publishing explanatory information, reviewing economic analysis methodologies, and seeking public views through tools like the Public Attitudes to Trade Tracker.
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HM Treasury
26
Conclusion
Forty-Fifth Report - Progress with trad…
Accepted
The Department said that it is its job to explain, engage and communicate and that when communicating information about trade agreements, it tries to set out what this might mean for consumers.72 We asked the Department why its forecast of the value of UK exports arising from the agreement with …
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The Department said that it is its job to explain, engage and communicate and that when communicating information about trade agreements, it tries to set out what this might mean for consumers.72 We asked the Department why its forecast of the value of UK exports arising from the agreement with Australia had increased by 600% from £900 million in June 2020 to £6.2 billion in December 2021. The Department could not tell us what the difference was, and we considered the lack of clarity to be a failing of some of the Department’s documentation and its communication to parliamentarians. It thought that the majority of the rise was due to changes in its approach to modelling the forecast economic benefits, as part of continuous improvement, and that this is set out in publicly available documents.73 The NAO also underlined the need for the Department to provide greater transparency in the impact assessment for the UK-Japan trade agreement. The report said that the Regulatory Policy Committee, academics and the two Parliamentary committees leading scrutiny have highlighted that the costs to businesses and environmental impacts are areas where better quality information is required.74 Parliamentary scrutiny of trade deals
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Government response AI summary
The government accepts the call for greater transparency, detailing its commitment to publishing materials and stakeholder engagement. It explains the updated modelling methodology for the Australia FTA forecast, noting its continuous review and scrutiny.
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HM Treasury
27
Recommendation
Forty-Fifth Report - Progress with trad…
Accepted
The Department has made additional commitments beyond the statutory framework under the Constitutional Reform and Governance Act 2010 (CRAG) for Parliamentary scrutiny of trade agreements, but the Parliamentary committees responsible for trade agreements scrutiny have called for Parliament to have a stronger formal role.75 We expressed concerns that the Department …
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The Department has made additional commitments beyond the statutory framework under the Constitutional Reform and Governance Act 2010 (CRAG) for Parliamentary scrutiny of trade agreements, but the Parliamentary committees responsible for trade agreements scrutiny have called for Parliament to have a stronger formal role.75 We expressed concerns that the Department did not share proper information in a timely manner given that scrutiny of trade agreements is important to ensure that people understand trade deals and that members of Parliament can justify them to constituents. For example, sharing of the text of the Japan agreement by the Department was delayed and the International Trade Committee did not have the full time it expected to scrutinise the agreement.76 Although the Department shared the final agreement with Australia three months ahead of triggering CRAG, we did not feel that it was generous enough given that that the International Trade Committee needs to produce a report alongside.77
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Government response AI summary
The government publishes its strategic approach to each new FTA at the outset of negotiations, provides oral updates to the relevant select committees and will continue to review arrangements.
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HM Treasury
28
Recommendation
Forty-Fifth Report - Progress with trad…
Accepted
The opportunity for Parliament to view negotiating objectives at the outset would aid its scrutiny of trade agreements.78 There is a precedent in Parliament to share privileged information between government and select committees. For example, this Committee routinely sees privileged information and the Intelligence and Security Committee sees documents on …
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The opportunity for Parliament to view negotiating objectives at the outset would aid its scrutiny of trade agreements.78 There is a precedent in Parliament to share privileged information between government and select committees. For example, this Committee routinely sees privileged information and the Intelligence and Security Committee sees documents on a confidential basis. The Department said that it is not refusing to share the text of the agreement and is increasing the time that it allows for scrutiny, but it understands that it needs to improve.79 71 Letter from Permanent Secretary, DIT, to the Chair of the Public Accounts, 4 February 2022 72 Qq 14, 61 73 Qq 67–69, 79 74 C&AG’s Report, para 4.10 75 C&AG’s Report, para 19 76 Qq 70–73 77 Qq 71 78 Q 73 79 Q 72 18 Progress with trade negotiations
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Government response AI summary
The government agrees and states that it publishes and provides its strategic approach to each new FTA at the outset of negotiations to relevant select committees, including negotiation objectives, and offers oral updates to the relevant select committees.
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HM Treasury
29
Conclusion
Forty-Fifth Report - Progress with trad…
Accepted
We also note that the House of Lords International Agreement Committee reported that the statutory framework under CRAG is insufficient to facilitate robust and effective scrutiny of international agreements. As stated in the NAO report, the International Agreement Committee has called for Parliament to strengthen its formal role earlier in …
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We also note that the House of Lords International Agreement Committee reported that the statutory framework under CRAG is insufficient to facilitate robust and effective scrutiny of international agreements. As stated in the NAO report, the International Agreement Committee has called for Parliament to strengthen its formal role earlier in the process and for provision of the agreement text ahead of signature, and that Parliament’s consent should be required prior to ratification through a new mechanism beyond CRAG.80 80 C&AG’s Report, para 3.19 Progress with trade negotiations 19
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Government response AI summary
The government agrees with the implied recommendation to strengthen parliamentary scrutiny, stating it already implements measures like publishing strategic approaches and providing updates to committees, while committing to continuously review arrangements.
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HM Treasury