Brexit Economy

World Trade Organisation agreements and devolution: a case study analysis

There is ongoing disagreement between the Welsh and UK Governments on the extent to which the World Trade Organisation (WTO) rules (Agreement on Agriculture) is a reserved matter. This blog post outlines various international models of engagement between central and sub-national governments on trade negotiations and agreements to provide examples of the arrangements from elsewhere.

23 November 2018

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There is ongoing disagreement between the Welsh and UK Governments on the extent to which the World Trade Organisation (WTO) rules (Agreement on Agriculture) is a reserved matter. This blog post outlines various international models of engagement between central and sub-national governments on trade negotiations and agreements to provide examples of the arrangements from elsewhere.

Currently the European Commission represents all EU Member States at the majority of WTO meetings. However post-Brexit, the UK will negotiate its own schedules with the WTO. The level of involvement of the devolved administrations has become a contentious issue as part of the wider debate around UK frameworks and legislative competence post-Brexit.

The UK Government’s Agriculture Bill contains a clause which relates to WTO Agreement on Agriculture (clause 26). It gives powers for the Secretary of State to determine the classification of financial support across the UK and set limits of spending including individual ceilings of support across the devolved administrations. Further information on WTO rules and agricultural support can be found in a blog post by Dr Ludivine Petetin.

Clause 26 of the Agriculture Bill applies across the UK but currently does not require legislative consent from the devolved legislatures, reflecting the UK Government’s position that WTO provisions are entirely reserved. The Welsh Cabinet Secretary for Energy, Planning and Rural Affairs, Lesley Griffiths, has emphasised the strong relationship between WTO powers and devolved responsibilities on agricultural support. She told the Assembly’s Constitutional and Legislative Affairs Committee on 5 November that the UK Government’s position on WTO was a ‘red line’ and said she could not recommend that the Assembly gives consent to the Bill if the UK Government did not change its position. The Scottish Cabinet Secretary for Rural Economy, Fergus Ewing, has responded to the UK Agriculture Bill with similar concerns around the lack of legislative consent required for the WTO provisions.

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Case studies

This post describes three models for the involvement of devolved governments in trade negotiations:

  1. Limited role for sub-national governments; central government has exclusive power (Example: United States of America);
  2. Central government is responsible for negotiating trade deals, but detailed consultation takes place with sub-national governments (Example: Canada); and
  3. Sub-national representatives are involved directly in negotiations, in areas that are within their competence (Example: Belgium).

A detailed look at these examples is provided below. While all these countries are different to the UK in terms of their constitutional arrangements, the models may provide perspectives on a potential role for Wales in future UK trade policy.

1. Limited role for sub-national governments; central government has exclusive power (Example: the United States of America)

In the United States, state governments have almost no role in international trade negotiations. The US Congress has exclusive power to ratify trade agreements negotiated by the President and to enact legislation to enable their implementation. Although Congress is responsible for the protection of state interests, there are few institutional mechanisms to include sub-national governments in decisions. As a result, most American states have very little bureaucratic capacity to influence international trade policy.

The President nominates a US Trade Representative (USTR) to coordinate and conduct negotiations on their behalf. While the USTR has control over US trade negotiations, the Intergovernmental Policy Advisory Committee (IGPAC) provides advice to inform their decisions. This is one of the only ways for states to directly influence national trade policy.

The IGPAC is a trade advisory committee that provides general policy advice and guidance to the USTR on issues involving trade that relate to the responsibilities of state governments. The IGPAC is composed of members who have expertise in general trade, investment and development issues. Members are appointed from US states and localities, and other non-federal government bodies, and their role is to communicate state interests and priorities. Membership of the IGPAC is limited, however, and members only have access to documents and negotiation material at the discretion of the USTR.

Alongside the Committee, there is significant influence from other organisations such as firms and other lobbyists. In addition, some states look to influence US trade policy through Congressional committees, as Congress has significant oversight authority to monitor the President and USTR’s actions.

2. Central government is responsible for negotiating trade deals, but detailed consultation takes place with sub-national governments (Example: Canada)

The federal government is responsible for negotiating trade deals on behalf of Canada, but detailed consultation takes place with the Canadian provinces before trade negotiations get under way. Then, during the negotiations, representatives from the provinces are present to contribute to the negotiations.

The Canadian constitution is clear that, where obligations extend into areas under the remit of the provincial governments, compliance rests solely within provincial jurisdiction. However, provincial governments are not accountable if they fail to comply. As the provincial governments do not have to comply, while the federal government has no obligation to consult the provinces, in practice they work closely with them to try to ensure that any obligations Canada makes are subsequently fulfilled by the provincial governments.

In particular, the Comprehensive Economic and Trade Agreement (CETA) negotiations in relation to agriculture may be especially relevant to discussions about Wales’s role in negotiations about the UK’s relationship with the EU.

The Canadian provinces were included in negotiations on the CETA between Canada and the European Union. Canadian provinces were able to influence the language of the CETA in a number of key areas, and the federal government sought to accommodate the interests of different provinces, given their responsibility for ensuring compliance with key aspects of CETA, such as agriculture.

The CETA negotiations directly involved all 10 provincial governments and three territorial governments across Canada. They were consulted on the terms of the joint reports and the negotiation mandate. The provincial and territorial governments had access to overview briefings throughout negotiations, and provincial representatives maintained informal relations among themselves, and with the Canadian envoys.

Alberta is an example of how a provincial government influenced the CETA. The provincial government wanted to lower barriers and increase exports of grains to Europe, and this was ultimately reflected in the CETA agreement.

3. Sub-national representatives are involved directly in negotiations, in areas that are within their competence (Example: Belgium)

The constitutional arrangements in Belgium are complex, with the three tiers of governance—federal, regional and community—each responsible for their own area of competence, although there are some overlaps. According to the Belgian constitution, the federal, regional and community governments are responsible for the policies that are assigned to them by the constitution. Apart from a few general policies relating to foreign trade that sit at the federal level, regions and communities are responsible for international affairs related to their respective competences. The Directorate General for Co-ordination and European Affairs brings together federal, regional and community representatives to discuss and agree a common position and mandate for trade negotiations and the agreed Belgian position is then communicated to the Council of the European Union by the Federal Minister of Foreign Affairs. Where trade agreements deal with issues within the jurisdiction of the different tiers of government, all levels of government where competence lies must give their consent to the agreement. In addition, regional parliaments must also ratify such agreements.

Once again, the CETA trade agreement is a good example of how this can work in practice. The agreement required the ratification of each EU Member State, but it was temporarily blocked by Belgium in October 2016 because the regional parliament of Wallonia prevented the Belgian federal government from granting permission to proceed. The Wallonian parliament eventually gave its support to the deal, and while the CETA agreement was not changed, the Wallonian representatives ensured that 36 guarantees and clarifications were added on issues relating to agriculture and investment.


Article by Katy Orford and Peter Hill, National Assembly for Wales Research Service.
Source: Wales Centre for Public Policy, Sub-national government involvement in international trade negotiations