15 February 2018

Rob Amos, Research Fellow in Law, Sussex Sustainability Research Programme, University of Sussex. Rob is conducting a project on Sustainable Trade Post-Brexit in collaboration with the UK Trade Policy Observatory.

As the UK begins to devise its independent trade policy, it is essential that any new trade agreements it negotiates are subject to Parliamentary, as well as public, oversight and scrutiny. To facilitate such oversight, the UK should undertake Sustainability Impact Assessment (SIA) for these agreements. If the UK is serious about sustainable development, it must ensure that any future trade agreements do not negatively impact the environment and communities either at home or abroad.

During the referendum, the Leave Campaign presented a vision of Britain’s renewed place on the global stage. Core to this message was a British renaissance as an independent trading power. Will this promised prosperity be shared by all of the UK? Meaningful SIA would provide a tool to help achieve this goal.

Building on the EU’s Model:

Whilst the EU has a sophisticated procedure for SIA, the UK should develop its own bespoke framework that best suits its global trade ambitions. As SIA is already integral to the EU’s trade negotiation process there is an opportunity to learn from its experiences – both positive and negative. During the EU SIA process, independent consultants assess potential environmental, economic, social and human rights impacts of key provisions in the agreement, and propose ways in which positive impacts can be enhanced and negative ones reduced. Sectors of the EU’s and partner country’s economies and demographics likely to be particularly impacted are subject to additional analysis. For example, if an agreement aims to reduce tariffs on particular products, the SIA will focus on what this would mean for jobs in those industries and how it would affect consumer prices.

SIA is a dynamic process. Information is fed from the negotiators (i.e. the European Commission) to the consultants so that they have the most current information regarding the agreement. Consultants engage with stakeholders and communicate views to the negotiators for consideration in the drafting process. Such stakeholders typically include public bodies, NGOs, academia and other experts, businesses and industry groups, trade unions and representatives of particular groups in society. Finally, the Commission publishes a position paper setting out its view on the SIA’s findings and how they, as well as stakeholder feedback, have been taken into account.

What should the UK do?

The UK does not have its own SIA framework at present because it is part of the EU’s centralised trade negotiation. However, it is committed to pursuing sustainable development, and so needs to develop a SIA capacity in future. A UK SIA process would need to involve similar bodies to the EU one, with Government departments, notably the Department for International Trade and the Foreign Office, taking the role of the Commission. Independent consultants should be used to avoid the Government’s obvious conflict of interest in ensuring that the assessment was positive.

There are areas in which the UK could improve upon the EU’s approach to SIA, discussed further below. There are also features that it should emulate. Like the EU, the UK should seek to maximise flexibility. Whilst the EU has developed a basic SIA model, in the most recent version – the 2016 Handbook – there is no strict format which all SIAs must follow. Consultants develop a bespoke methodology and consultation plan adapted to the requirements of the trade agreement in question.

Furthermore, the UK should undertake broad assessments of the likely impacts of a trade agreement. Trade impacts on a range of environmental, economic and social issues both at home and abroad, and the UK will not be able to claim to be pursuing sustainable development in its trade policies without accounting for this.

In addition, the UK should ensure frequent communication between negotiators, consultants and stakeholders. There is a significant body of literature supporting broad stakeholder participation in decision-making (for example, see Lee and Abbot, 2003; Steele, 2001). Different stakeholders will contribute different types of knowledge and experience to the process, allowing for more informed decisions to be made. Furthermore, decisions are more likely to be accepted by those affected by them if they have been involved in the decision-making process.

Potential Areas for Reform in a UK SIA Framework:

Preliminary research has identified several areas where SIA would benefit from reform. The opportunity for the UK is to build on these areas.

The accountability of the negotiators should be enhanced. For example, a specific parliamentary vote could be held over whether to accept the Government’s position paper, i.e. the document in which it sets out its response to the SIA and explains how it was taken into account, prior to the agreement being signed. It is not possible here to examine the merits of this suggestion in detail, but it would clearly introduce a degree of political accountability. It could also provide an additional safeguard for vulnerable communities that would be particularly affected by the trade agreement in question. This vote would be separate to the Parliamentary ratification process of the final trade agreement itself.

Second, assessing trade agreements after they have entered into force (ex post) is an important feature of SIA, but the way in which it is used by the EU can be improved. For example, to ensure independence, assessments should be conducted by consultants rather than the Commission or UK Government. This could either be the original consultants, who would be familiar with the agreement and the type of impacts that had been anticipated, or new consultants, who would bring their own insights into the process. Ex post assessments could also be structured to allow for more direct comparisons between SIAs. Finally, consultants should be required to take ex post evaluations into account when developing the methodology and consultation plan for new SIAs. This would strengthen SIA as a continuous learning process for both the Government and consultants.

To conclude, SIA is a valuable tool in ensuring that the benefits of a Free Trade Agreement are shared by the majority of citizens within the states party to the agreement. It can, therefore, help to realise some of the potential of having one’s own trade policy. The EU has developed a sophisticated methodology for SIA, with appropriate emphasis on ensuring that each assessment is targeted towards the agreement being negotiated and broad stakeholder engagement. The opportunity for the UK as it begins to negotiate its own trade agreements is to build on and strengthen the EU’s approach. Particular areas of focus should be accountability in relation to the SIA and ex post evaluation.

 

Disclaimer:

The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory.