The UK has opted in to a proposal authorising the EU to open negotiations on the conclusion of a protocol to the convention on international interests in mobile equipment on matters specific to mining, agricultural and construction equipment (the MAC Protocol).
The convention on international interests in mobile equipment, or Cape Town Convention (‘CTC’) as it is commonly known, is an international private law treaty which aims to reduce the cost of raising finance for certain high value mobile equipment. Three protocols to the CTC have been adopted covering aircraft, rail and space assets. The UK ratified the aircraft protocol in 2015. Adoption of such protocols is viewed as boosting growth in the relevant manufacturing industries (hence the UK adoption of the aircraft protocol).
A key feature of the CTC is to reduce the cost of raising finance through the operation of special insolvency provisions aimed at giving finance and leasing companies greater certainty and control over recovering assets subject to security or leasing agreements in the event of payment default or insolvency.
The CTC project is undertaken under the auspices of UNIDROIT, the intergovernmental organisation focused on harmonisation of private international law. UNIDROIT is currently in the process of concluding a new protocol covering mining, agricultural and construction assets.
On 23 August 2017, ahead of the meeting of the second session of the Committee of Governmental Experts on 2 to 6 October 2017, the Council presented a draft Council decision to authorise the Commission to open negotiations on the conclusion of the MAC Protocol together with draft negotiating directives.
We fully recognise the importance of international efforts to reduce the cost of raising finance for equipment vital for economic growth, particularly in lower and middle income countries where financing costs can significantly inhibit investment and development. Reduced financing costs will also lead to increased demand, providing a boost to manufacturing including UK businesses in the mining, agricultural and construction sectors. The three sectors are all major exporters from the UK with certain niche manufacturers selling up to 95% of their production overseas. Between them the three industries employ over 50,000 people in the UK. They are vital elements of our industrial strategy. Preliminary economic assessment of the MAC Protocol suggests the benefits may amount to $32 to $48 billion annually for developing countries and $36 to $50 billion annually for developed countries.
After due consideration the Government have decided to opt in to the negotiating mandate as proposed by the Council.
As the negotiating mandate is currently restricted so as to preserve the EU negotiating position it is not therefore depositable within Parliament.
The Government will continue to work with the scrutiny Committees if and when they consider whether to opt in to a Council decision to sign and conclude the MAC Protocol. I will also update Parliament on the Government’s opt-in decisions at these stages.