The roles of provinces and devolved administrations in the negotiation and implementation of a Canada-UK trade agreement

Lead Research Organisation: University of Strathclyde
Department Name: Economics

Abstract

Following the vote on Brexit in 2016, the British Prime Minister Theresa May stated that its government hoped to reach a new trade agreement with Canada rapidly, to be modeled after the Canada-EU "Comprehensive Economic and Trade Agreement" (CETA) of which the UK will be excluded once it leaves the European Union. This agreement, interestingly, was the first Canadian free trade deal for which Canadian provinces were directly involved at every stage of the negotiations. In addition to trade talks have been initiated in good part by Quebec's Premier Jean Charest, provinces were deeply engaged, from the onset, in formulating the Canadian negotiating mandate itself. By contrast, it remains unclear what role the UK's devolved governments and parliaments (Scotland, Northern Ireland, and Wales) may have in negotiating, influencing or implementing such a future trade deal with Canada. Whilst there were mechanisms for the involvement of devolved nations in making European policy, the UK constitution has no clear principles or doctrine as to the roles that devolved nations should play in making trade policy. Moreover, the asymmetric nature of UK devolution complicates the involvement of the devolved governments and parliaments in trade negotiations.

Since the UK and Canada do not function under the same constitutional principles, a comparative analysis of the roles subnational governments have played and could play in such trade negotiations is in order. It will offer important insights about the advantages, practicalities and conflicts that can emerge from the multi-level governance of trade policy, and about its implications for devolved responsibilities indirectly linked to trade (e.g. agriculture subsidies). It will also provide insights as to how a bilateral Canada-UK trade negotiation could produce new and innovative approaches with regards to the involvement of substate actors. The goals of this knowledge synthesis, accordingly, will be twofold: first, to allow for a better understanding of the differences between the two models, of their theoretical and practical justifications, of their strengths and weaknesses, and of the ways in which they could be reconciled in the wake of bilateral negotiations; and second, to draw lessons as to how the participation of provinces and devolved regions in future trade negotiations between Canada and the UK might unfold, but perhaps most importantly as to how it could be improved and maximized, within the realm of possibility, in both cases.

Planned Impact

Our knowledge synthesis on the potential roles of subnational governments in the negotiation and implementation of a future, post-Brexit Canada-UK trade deal will be elaborated in cooperation with many stakeholders and practitioners, and its results will be shared widely, both in academic and non-academic settings. The main research users of this synthesis will be trade negotiators, policymakers and senior officials from trade organization and Ministries, as well as academics and students of international relations and trade. Accordingly, we plan to engage with each type of user in various ways.

At the outset of the project first of all, and during the elaboration phase of the report, Drs. Paquin and Rioux will collaborate and meet with a least four high-ranking practitioners at the provincial and federal levels in Canada. Two representatives from Quebec's Ministère de l'économie, de la Science et de l'Innovation will be consulted and involved throughout the process: Mr. Jean-François Raymond, from the Trade Policy division, and Mr. Jean Séguin from the External Trade & Export Québec section. Executives from the Ontario Ministry of International Trade (Mr. Hugo Cameron) and from the intergovernmental team at Global Affairs Canada (Mr. Bruno Hamel) will also be closely involved and consulted, so that a complete, up-to-date and empirical synthesis of knowledge and practices on the Canadian case can be achieved.

Similarly, Drs. Roy, Wooton and Eiser intend to meet regularly with stakeholders in the Scottish government and parliament throughout the project, given that the aim is not only to disseminate the outputs of the research, but to enable them to help shape the areas that we focus upon. Key contacts from the Scottish Government who have agreed to participate include Kevin Quinlan, Director of International Trade & Investment, and Karen Watt, Director of External Affairs from the Scottish Government. In addition, representatives of the Scottish Parliament such as Iain McIver, Senior Researcher for Europe and International Affairs, and Jim Johnston, Clerk at the Finance and Constitution Committee, have agreed to collaborate.

A number of concrete research outputs are also considered during and after the elaboration of the knowledge synthesis report. An international conference on economic nationalism and (Canadian) trade policy, organized in Montreal by Drs. Paquin and Rioux for October 2018, will also be a good opportunity to present and discuss results before well-known experts from all over the world. Conferences on preliminary results and presenting the final report are also planned at the new Centre d'analyse politique - Constitution et fédéralisme (CAP-CF) in Montreal in November 2018, at the Centre interdisciplinaire de recherche et d'information sur les entreprises collectives (CIRIEC-Canada), and at the Center for International Governance Innovation (CIGI) in Waterloo, Ontario. In parallel of the December 2018 workshop in London, moreover, our team will organize another workshop in Scotland, bringing together researchers and stakeholders from England, Wales and Northern Ireland as well, so as to discuss findings and ways to maximize the report's impacts.

p-eds, research papers, book chapters and other peer-reviewed publications in journals such as Regional & Federal Studies, Publius and the Canadian Journal of Political Science will complete the effort of knowledge mobilization and diffusion, along with web postings of research results on the GÉRIQ and ÉNAP A+ websites. A series of blogs will also be published throughout the process via the Fraser of Allander Institute's website, which receives widespread pick-up in Scottish policy circles and media. To reach an even wider audience, short videos summarizing research findings will also be recorded and published on the Fraser of Allander Institute's website as well.

Publications

10 25 50
 
Description Our report contained three sections.

The first was devoted to the Canadian case, and explored the evolving prerogatives of provinces in trade negotiations. It compared 3 recent agreements: the Comprehensive Economic and Trade Agreement between Canada and the EU; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership of which Canada is a signatory along with ten other countries, and finally the North American Free Trade Agreement and its successor, the United States-Mexico-Canada Agreement. We conclude that the actual level of Provincial involvement varies across each set of negotiations, with the federal level remaining in charge of final decisions, and all arbitration and decisions on delicate issues in all but CETA. The difference can be explained by the fact that the EU insisted on provincial involvement in the CETA negotiation.

The second section is devoted to the UK case, and explores the potential prerogatives of devolved administrations - with a specific focus on Scotland - in post-Brexit British trade policy. Its main finding is that the existing arrangements for scrutinising trade deals, and ratifying them, are inadequate. The devolved administrations have no formal role, and it remains unclear the extent to which the UK is genuinely committed to enabling stakeholders influence, as oppose to simply be informed about, trade agreements. If the devolved institutions are to have real, meaningful involvement in the development and scrutiny of future trade deals, this will require a step-change in inter-governmental relationships. There is an urgent need to progress these issues if further constitutional crises are to be avoided.

The third section is devoted to the cases of subnational trade and investment promotion organizations (TIPOs), both in Canada and the UK - with a specific focus on Quebec and Scotland. It explores their scope of activities, and their efficiency in promoting exports and attracting investment. Its main findings are that subnational trade and investment promotion networks are well-developed in both Canada and the UK (especially in Quebec and Scotland); that all major provinces and devolved administrations are represented, respectively, in the UK and Canada through trade and investment offices; that TIPOs are highly useful for market information and networking purposes; that they have positive impacts on trade and investment; and therefore that they would be best placed to inform governments and negotiators of the market gaps and/or opportunities that a future UK-Canada trade agreement should address in priority.
Exploitation Route Policy Recommendations

1. The Canadian Council of the Federation should meet to discuss the roles and prerogatives of provinces and territories in trade negotiations, and agree on a set of principles for future trade talks.

2. In future Canada-UK trade negotiations, Canadian provinces and UK devolved regions should meet, discuss and agree a set of common demands regarding their involvement in negotiations, particularly areas of provincial or devolved responsibility.

3. As part of a general strengthening of the UK intergovernmental relations, a Joint Ministerial Committee on Trade (JMC Trade) should be established. A key role of the JMC(Trade) should be to share independent advice -to both central and devolved governments - on the implications for devolved competencies of trade deals.

4. Building on the Canadian experience, we recommend involving devolved administrations in the preparation of negotiating mandates and in trade negotiations themselves, particularly where the devolved administrations have particular interests.

5. Scrutiny arrangements need to be strengthened at both the UK and devolved parliamentary levels, in order that there is transparency around trade agreements and their implications. An inter-governmental trade committee should be established and play a role similar to Canada's C-Trade Committee.

6. In the case of a Canada-UK trade negotiation, provincial/regional trade and investment promotion organisations and their representatives should be consulted more systematically, in order to ensure that nationally-established priorities are consistent with the needs of provincial/regional markets.
Sectors Government, Democracy and Justice

 
Description Engagement with the Scottish Government 
Form Of Engagement Activity A formal working group, expert panel or dialogue
Part Of Official Scheme? No
Geographic Reach National
Primary Audience Policymakers/politicians
Results and Impact Members of the research team and Dr Huber Rioux, ÉNAP (Montréal), met with international specialists at the Scottish Government in Edinburgh on 11 December 2018 to brief them on Canadian experience of negotiating trade agreements, with particular reference to the interaction between provinces and the federal government. This allowed for reflection as to how the Scottish Government might play a role in any future trade deal being negotiated by the UK Government.
Year(s) Of Engagement Activity 2018