The United Kingdom Introduces its Trade Bill

The United Kingdom has introduced its Trade Bill. It was announced as an important element of the UK’s post-Brexit independent trade policy. The Trade Bill covers the following fields: (i) government procurement; (ii) implementation of trade agreements; (iii) trade defence; and (iv) data collection and sharing. Overall, the Trade Bill contains measures that are intended to provide continuity and certainty for UK businesses and consumers in a post-Brexit scenario.

The Trade Bill seeks to ensure that the UK will be able to implement its obligations as an independent party of the Agreement on Government Procurement (“GPA”) of the World Trade Organization (“WTO”). The implementation power contained in the Trade Bill is intended to ensure that all elements in trade continuity agreements can be fully implemented by means of the UK’s domestic law (via secondary legislation). The Trade Bill further establishes the Trade Remedies Authority (“TRA”) which will protect UK businesses from injury caused by unfair trade practices or unforeseen surges in imports. Moreover, it ensures that the government will have the legal abilities for gathering and sharing trade data and information. Each of these main provisions of the Trade Bill will be explained in further detail below.

Government procurement

The GPA is a plurilateral agreement of the WTO entered into by 20 of its Members. Parties include Hong Kong. It aims at opening government procurement amongst its parties. By entering into the GPA, UK businesses will be provided with access to public procurement opportunities worth approximately £1.3 trillion per year. Other parties to the GPA (such as Hong Kong) will be granted access to UK public contracts covered by the GPA.

The UK will accede to the GPA as an independent party at the end of the Brexit transition period. The Trade Bill further provides for competences to implement the UK’s obligations as an independent party of the GPA into the UK’s domestic procurement law.

Implementation power of trade agreements

Seeking to ensure continuity for businesses and consumers, the UK will transition existing EU-third country Free Trade Agreements (“FTAs”) into UK agreements with those third countries. These FTAs are referred to as trade continuity agreements in the Trade Bill. The implementation power in the Trade Bill is a measure intended to enable the UK to ensure that mutual recognition provisions in these agreements can be fully implemented into UK domestic law (via secondary legislation). These implementation powers are meant to be used only to implement the trade continuity agreements where a third country had signed an equivalent FTA with the EU before 31 January 2020. Therefore, the Trade Bill cannot be used to implement a future FTA with countries which do not have an FTA with the EU, such as the USA. Any secondary legislation necessary to implement a trade continuity agreement will be subject to the affirmative procedure, requiring debates, in both Houses of Parliament.

Trade defence

Hong Kong traders might recall that countries can protect domestic industry from injury caused by unfair trade practices or unforeseen surges in imports by the use of trade defence measures.

These trade defence measures normally take the form of additional duties or quantitative restrictions to the amount of imports, to specific goods where:

• imported products are being ‘dumped’. A product is considered to be dumped, -i.e. introduced into the commerce of another country at less than its normal value- if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the exporting country;
• imported products have benefited from a subsidy granted by a foreign government or public body. Measures imposed in such cases are normally referred to as countervailing measures; and
• there has been an unforeseen surge of imports which seriously injure the domestic industry of the importing country. Measures imposed in such cases are known as safeguards.

While the UK was a member of the EU, its trade defence system was managed by the European Commission. Now the UK will operate its own trade defence policy through the TRA. The EU currently has over 100 trade defence measures in place against around 25 countries. The UK is transitioning over 40 of these measures.

Data sharing and collection

The data collection power contained in the Trade Bill will further assist the UK in identifying those businesses that are involved in export practices. This information will aid in the development of exporting promotion activities to help businesses of all sizes to take advantage of the available opportunities.

The data sharing measures included in the Trade Bill will allow the Revenue and Customs authority to share data with other departments and agencies of the UK government that require access to the information in order to carry out a range of public functions relating to trade, thus allowing them to undertake functions formerly carried out by the European Commission.

The Trade Bill will need to pass through all its parliamentary stages before it becomes law. Its passage through the House of Commons and the House of Lords is not expected to be hindered after Prime Minister Boris Johnson – who is currently in hospital after testing positive for Covid-19 – won a parliamentary majority in December.