Part 1: Implementation of international trade agreements Section 2: Implementation of international trade agreements
International trade agreements are agreements between two or more countries aimed at reducing the barriers to trade in goods or services between them. The UK was signed up to many international trade agreements with other countries through its membership of the EU, and this continued throughout the transition period.
	The Government’s policy has been to seek continuity in the UK’s existing trade relationships following the UK’s departure from the EU. To achieve this, it has worked to establish a UK trade agreement with each existing partner country based, as closely as possible, on maintaining the effects of the trade agreement that that country already had with the EU.
	Although the Government’s policy intention is to ensure continuity as far as possible of the effects of the UK’s current trading arrangements, the new UK-partner country agreements that are implemented using this power will be legally distinct from the original EU-partner country agreements on which they are based. It may be necessary to amend the text of the previous EU agreements, for example so that the new agreements can work in a UK legal context.
	Before an international trade agreement can enter into force, the parties to that agreement must ensure that the agreement is implemented domestically, to avoid breach of the agreement on entry into force. This means they must ensure their domestic legislative framework is consistent with the commitments within the trade agreement. It is a convention within the UK that an international treaty is not ratified until it has been implemented. Not all obligations within a trade agreement require a change to the law. It is envisaged that the main area where a change to UK law is required, for the purposes of the international trade agreements in the scope of this Act, is in implementing the procurement obligations of these international trade agreements and mutual recognition agreements.
	Now the UK has left the EU, the ECA 1972 has been repealed, but the effects of sections 2(1) and 2(2) were preserved for the transition period. Following the end of the transition period the Government needs a legislative framework that enables it to implement obligations flowing from international trade agreements which the UK is making with countries with which it had trade agreements via its membership of the EU in domestic legislation.
	As a general rule, the European Union (Withdrawal) Act 2018 preserves in UK law the EU law existing at the point at which the UK left the EU, and allows it to be amended to make it work in a UK context following the end of the transition period. In most cases, the implementation of any already existing obligations within these new UK-partner country trade agreements will have been preserved by the operation of the European Union (Withdrawal) Act 2018 and the powers under it.
	However, not all obligations in EU-partner country trade agreements had been fully implemented by the EU in EU law (or by the UK implementing EU obligations into UK law) by the end of the transition period. In such cases, the European Union (Withdrawal) Act 2018’s preservation provisions, and its powers to correct deficiencies in retained EU law arising from the UK’s exit from the EU, do not assist. Section 2 of the Trade Act is therefore needed to ensure that these trade agreements can be fully implemented within UK law. The Government expects that these obligations will primarily relate to procurement, mutual recognition (as a consequence of transitioning Mutual Recognition Agreements) or in respect of enforcement or compensation provisions should any dispute or other issues arise.
	It is also possible that adjustments may be required to ensure that the new UK-partner country trade agreements work outside the original EU context. If implementing those adjustments requires a change to UK law, section 2 provides a vehicle to make those legislative changes to ensure that the UK is not in breach of its international obligations.
	In addition, it is important that UK-partner country agreements remain operable and up to date following the end of the transition period. Where appropriate changes to the agreement are necessary, it is important that these can be implemented efficiently. This could include, for example, implementing decisions made by a joint committee of the parties set up under a trade agreement or implementing the results of an arbitration/alternative dispute resolution decision.
	To ensure that the UK’s trade agreements with EU partner countries can be fully implemented, section 2 gives the Government and devolved authorities the power to make regulations to implement non-tariff provisions in any international trade agreements that the UK makes with partner countries, provided that those countries had signed a trade agreement with the EU before 31 January 2020. Section 2 can be used to implement provisions in the agreement that are mandatory or discretionary in character.
	The section 2 power allows for provisions of trade agreements to be implemented in the UK through secondary legislation made under the affirmative resolution procedure. If, for example, a trade agreement requires countries to treat businesses from their respective countries equally when they bid for government procurement contracts, this must be reflected in the domestic legislative framework of both countries to enable that obligation to be met by each. The Government and devolved authorities could use the section 2 power to make secondary legislation to introduce any appropriate changes.
	Where continuity UK-partner country agreements need ratifying (which means a form of formal indication that a state intends to be bound by the agreement), they will be subject to Parliamentary scrutiny in accordance with the Constitutional Reform and Governance Act 2010.
	The types of agreement that are in scope of this section are ‘international trade agreements’ signed by the UK. The types of agreements within scope of the definition of "international trade agreements" are a) free trade agreements (as defined in section 5(1) – see paragraph 55 below) and b) other international agreements which are not free trade agreements, but which mainly relate to trade. These other agreements which ‘mainly relate to trade’ include, but are not limited to, ancillary agreements, bilateral procurement agreements and mutual recognition agreements on product conformity assessment.
	Subsection 2(3) provides that the power cannot be used to implement one of the UK’s free trade agreements unless the other signatory/ies already had a signed free trade agreement with the EU immediately before 31 January 2020. Subsection 2(4) similarly provides that the power cannot be used to implement other international trade agreements not falling within the definition of a "free trade agreement" unless the other signatory/ies already had a signed international trade agreement (whether in the form of a free trade agreement or otherwise) immediately before 31 January 2020.
	Subsections (5) to (8) provide substantive restrictions on which trade agreement provisions can be implemented using the section 2(1) power. Subsection (5) provides that section 2 can only be used to implement international trade agreements in a way that is consistent with maintaining UK publicly-funded clinical healthcare services. ‘UK publicly-funded clinical healthcare services’ is defined in subsection (12).
	Subsections (6) and (7) further provide that section 2 can only be used to implement international trade agreements in a way that is consistent with maintaining UK levels of statutory protection in listed areas, including human, animal or plant life or health; animal welfare; environmental protection; employment and labour; data protection; and the protection of children and vulnerable adults online.
	The section 2 power will be used only to implement non-tariff provisions. Tariff provisions – that is, the elements of a trade agreement that set tax and duties on imports and exports – are addressed separately in the Taxation (Cross-Border Trade) Act 2018. Subsection (8) specifically provides that regulations made under subsection (1) may not make provisions that could be made by regulations under section 9 of that Act. Section 9 allows regulations to be made to give effect to preferential tariff rate arrangements between the UK and the government of a country or territory outside the United Kingdom.
	Subsection (9) establishes what sort of provision may be made by regulations under subsection (1). Regulations may (among other things): modify retained EU law (as defined in the European Union (Withdrawal) Act 2018) including primary legislation that is retained EU law and retained direct EU legislation; confer functions on the Secretary of State, or any other person, including conferring a discretion; provide for the delegation of functions (other than law-making functions); and provide for civil penalties. Subsection (9) does not allow for regulations to make or extend criminal offences, charge fees, amend primary legislation other than retained EU law, or create new public bodies.
	Subsection (10) makes the power in subsection (1) subject to a sunset requirement. This means that five years after the end of the transition period the power will cease to have effect. However, subsections (10)(b) and (11) provide that this period can be extended by the Government on review, with the approval of both Houses of Parliament (see Part 4 of Schedule 2 for procedural requirements), for further periods of up to 5 years at a time.