Home: Opinion

On trade, post-Brexit Britain is less transparent than ever

OPINION: Australia deal and Energy Charter Treaty show why we must be able to hold government accountable for trade

Leah Sullivan
22 September 2022, 11.27am

Liz Truss's government must reintroduce accountability into the negotiation of trade deals

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PA Images / Alamy Stock Photo

The events surrounding the Queen’s death have in the past couple of weeks diverted attention away from issues that might, in more normal times, have attracted more media coverage. The killing of an unarmed 24-year-old Black man in London by the police. Floods that continue to devastate Pakistan. The UK government’s plans to grant up to 130 new oil and gas licences in the North Sea and resume fracking, while the planet swiftly approaches disastrous climate tipping points.  

There’s much more that has been almost entirely overlooked – including highly significant developments on trade. Trade policy impacts so many aspects of our lives, and yet often flies under the radar.

In the short time since Liz Truss was declared prime minister, the Department for International Trade’s performance in dealing with Freedom of Information requests has been deemed to be so poor that it has been issued with an enforcement order from the Information Commissioner's Office, and a new trade deal with Australia that sacrifices UK food and farming standards being pushed through Parliament without debate.

But perhaps the most shocking recent development has been the leak of secretly negotiated amendments to a trade treaty that, if approved by the government, will lock the UK into possible multi-million-pound pay-outs to fossil fuel corporations over the next decade.  

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A call to action 

The leaked text confirms the fears that we at War on Want, a London-based anti-poverty charity, have about the climate-wrecking Energy Charter Treaty (ECT). The ECT is an international agreement, first signed in 1994 and with more than 50 member states, which allows corporations to use investor-state dispute settlements (ISDS) to sue countries over policies that affect their profits.

This means fossil fuel firms can sue over policies designed to limit climate change – as was the case in the Netherlands, when German energy giant RWE demanded the Dutch government pay €1.4bn in compensation over a plan to phase out coal. Elsewhere, UK corporation Ascent Resources is currently suing the government of Slovenia for more than €500m over the country’s fracking ban. 

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The Energy Charter Treaty allows fossil fuel companies to sue governments for taking action on climate change. It must be stopped before it’s too late

The proposed ‘modernisation’ of the rules would do nothing to change the fundamental problem with the ECT – that ISDS is incompatible with the urgent changes we need to make to limit climate breakdown. Under the ‘modernised’ version of the ECT, countries would be signing up to at least another ten years of corporate court (ISDS) claims by fossil fuel companies. According to one study, the UK is already at risk of a £11bn bill in corporate court claims from the treaty.

The new secretary of state in charge of climate policy, Jacob Rees-Mogg, has just announced his intention to extract “every last cubic inch” of fossil gas from the North Sea by issuing new licences. This would only add to the risk of future claims, by corporations that are already raking in record profits.  

Deals in the dark

That we have had to depend on the unofficial leak of a trade treaty to know what is going on with trade policy is deeply unfortunate, given the extent to which trade deals impact our lives and the fight against climate breakdown. It’s regrettably not an unfamiliar feeling. In post-Brexit Britain, the negotiation of international trade deals has become more secretive, with less accountability.

When the UK was still part of the EU, the opaque and highly secretive processes around EU trade policy-making were rightly criticised, along with the domination of EU trade policy by the European Commission, which is often accused of being undemocratic and unaccountable. The role of the European Parliament was limited to the nuclear option of saying either ‘yes’ or ‘no’ to an already-negotiated deal.

Since those days, members of the European Research Group (some of whom now hold the highest offices in the country), who sold their vision of a ‘Britannia Unchained’ to voters with the notion of ‘taking back control’ from the EU, influenced successive governments in favour of a hard Brexit. One result has been to deprive parliamentarians of even this limited power – MPs can now only delay, rather than reject, the ratification of a trade deal.

Parliament was still assured, however, that every effort would be made to allow a debate on the deal prior to ratification. The past few weeks have seen the further denigration of even this deeply inadequate process, as the government has ignored its previous pledge to allow a debate. With the UK-Australia deal, we have the first post-Brexit trade deal negotiated from scratch, passing quietly into law without parliamentary scrutiny.  

In the UK, 55,000 people have signed a petition calling on the government to leave the treaty

This means that whether the deal is a good one or not is almost moot – the people affected by it, and our representatives in Parliament, haven’t had a proper chance to have their say on it. The lack of transparency and accountability would have been deeply regrettable even if the trade deal protected people and planet and enjoyed support from all sides.

As it turns out, the UK-Australia deal is deeply damaging. It has provisions that could undermine the fight against the climate crisis, hurt UK farmers, and undermine our food and farming standards. The deal will allow food produced with toxic pesticides – banned in the UK – to be imported from Australia, and for meat imports that fail to reach UK standards on animal welfare. Unlike the UK, Australia permits the use of hormones and antibiotics to speed up the growth of farm animals, exports millions of live animals per year for slaughter in appalling conditions, and carries out a practice called ‘mulesing’, which involves cutting skin from live lambs.

Australia also has the worst record on climate of any wealthy nation, and burns more coal for electricity per head than anywhere else in the world. As the Australia-UK trade deal is the UK’s first post-Brexit trade deal negotiated from scratch, both the content and the process in which it was negotiated and agreed are worrying indicators of things to come, with deals with the Gulf Cooperation Council and India in the pipeline. It’s clear we need an urgent rethink of the way we develop our trade policy. 

Exit the ECT

In the more immediate future, we can do something about the ECT – leave it.

Indeed, other countries are already doing so. The Polish government has prepared a draft law that sets the country on course to withdraw from the treaty – citing the potential ‘chilling effect’ of ISDS on energy policy and the significant cost of membership to the taxpayer among its justifications. The Spanish government has called on the EU to withdraw from the treaty, and may be willing to leave unilaterally. The Dutch parliament has also passed a motion urging withdrawal.

There is a growing sense that the ECT’s future is in doubt. In the UK, 55,000 people have signed War on Want’s petition calling on the government to leave the treaty – but so far, even the Labour Party, which says it will lead the world in fighting climate change if elected, has failed to agree on a position of withdrawal. 

Rethinking the way we do trade policy is urgent, but it may take some time. We must reintroduce accountability and debate into the process of trade deal negotiations. However, the opportunity to leave the ECT stands before us right now. With climate-induced destruction devastating the Global South, and a winter at the mercy of price-gouging energy companies ahead of us, It’s an opportunity we can’t afford to miss. 

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