Preparations for Post-Brexit Trade Deals Continue with US, Australia
Trade officials from the United Kingdom have been meeting with their US and Australian counterparts over the past fortnight to continue setting the stage for deeper economic ties and possible trade agreements in the post-Brexit era.
The meetings come after the EU and UK clinched a “transition deal” through 31 December 2020 that would allow London to enter formal negotiations for new foreign trade agreements upon leaving the European Union next year. (See Bridges Weekly, 22 March 2018)
SMEs, tariffs on US-UK working group agenda
US Trade Representative (USTR) Robert Lighthizer met with his UK counterpart, Secretary of State for International Trade Liam Fox, on 14 March for continued bilateral talks on crafting a deeper US-UK trading relationship, which was followed by working group meetings on 21-22 March.
Among the key announcements from last week’s discussions was a new forum dedicated to small and medium-sized enterprises (SMEs), with the launch of a special SME dialogue and several related publications.
For example, on 14 March, British and American officials released a toolkit for SMEs focusing on protecting intellectual property rights (IPRs). Both toolkits include information on patents, copyrights, and trademarks along with other key IP topics to support the export of creative and innovative products and services between the countries.
On 20 March, an inaugural SME dialogue was held between UK and US business representatives and government officials. The UK and the US jointly released a brochure on doing business in their respective countries. The comprehensive document gives strategies and information touching on a variety of issues, from e-commerce to financing.
"The launch of both the SME Dialogue and the Toolkit on IP Protection for SMEs are two practical outcomes of our discussions so far. We look forward to continuing to expand opportunities for our businesses and workers, including for small and medium sized enterprises,” said Lighthizer.
The next round of the SME Dialogue will be held in the United Kingdom, though dates were not publicly available at press time. Other topics discussed in Washington last week included agricultural goods, intellectual property rights, and regulatory issues, the USTR said.
While not normally on the working group agenda, the US’ new tariffs on steel and aluminium were also raised at last week’s meeting, according to a joint statement, given their potential implications for London. The UK is currently exempted from these tariffs through at least 1 May, as part of the EU-wide exemption that Washington announced last week.
Whether this exemption could be extended remains uncertain, pending additional EU-US negotiations, and the prospect that these tariffs could eventually take effect have stoked tensions between Brussels and Washington. (For more on the tariffs, see related story, this edition)
FTA talks in focus
Also high on the working group’s agenda were preparations for the potential launch of formal trade talks, which is an idea that has gained political traction in recent months under the current administration of US President Donald Trump. For example, at the World Economic Forum meeting in Davos in January, US Treasury Secretary Steven Mnuchin said Britain would be at the “front of the queue” to negotiate a free trade agreement.
The open interest in a UK-US trade deal is a change in tack from past statements by Trump’s predecessor, Barack Obama, who had suggested that the UK would not be a top priority for a new trade deal should the island nation decide to leave the European Union. While the Obama Administration said that it preferred multi-country accords, the Trump Administration has said that bilateral agreements with individual countries are its favoured approach.
The working group was set up last year, and one of its objectives was to begin early discussions that could facilitate formal trade talks shortly after Britain’s exit from the EU. As trade between the countries is already worth approximately US$215 billion per year (£150 billion) with each side having around US$1 trillion invested in each other’s economies, proponents say that the deal could be commercially significant for both sides.
The working group met twice last year, with the first meeting in July tackling topics such as trade strategy, WTO issues, financial services, data and e-commerce, and industrial tariffs, according to the meeting agenda released under a US Freedom of Information Act. Both sides expressed optimism about the group’s ability to make big strides in strengthening ties following this initial meeting.
The two sides held a second meeting in November 2017. “The Working Group will cover a range of topics, including industrial and agricultural goods; services, investment, financial services and digital trade; intellectual property rights and enforcement; regulatory issues related to trade; labour and environment/sustainable development; and small and medium-sized enterprises (SMEs),” the UK Department for International Trade press release said.
Australia’s Ciobo: Trade talks to kick off immediately after Brexit
Australian officials, meanwhile, have confirmed that they want to move swiftly to formal UK trade talks as soon as Brexit takes effect next year.
During the week of 26 March, Australia’s Minister for Trade, Tourism, and Investment, Steven Ciobo, met with UK’s Fox and the UK Secretary of State of Environment, Food, and Rural Affairs, Michael Gove, to discuss next steps for the planned accord, building on progress in their bilateral working group.
That working group on the subject was established in September 2016 to prepare for a future free trade pact between the nations. The group meets biannually at the senior level along with consultation and outreach to stakeholders, the governments said at the time. This past November, ministers instructed the working group to identify practical steps to enable companies in both countries to do business with one another more easily.
“The aspiration between both Australia and the UK is that we will commence negotiations basically on day one of the commencement of the interim period with the view to having a high quality, comprehensive free trade agreement between us ready to go essentially on the first of January 2021 so that that way we have a seamless transition from UK being part of the EU and then when the UK sits outside of the EU for us to have that relationship,” Ciobo told reporters in the UK on Monday, according to a transcript provided by his office.
Ciobo hinted at a lengthy agenda for his meetings with UK officials. Topics included agricultural products, US steel tariffs, and the bilateral free trade agreement. He also suggested that the new EU-UK transition deal was providing welcome clarity on the evolution of the Brexit process and its potential outcomes, which would in turn facilitate talks between London and Canberra.
“What we see is strong alignments in terms of the desire for both Australia and the UK on a bilateral FTA. What we want to do is grow trade and investment between Australia and the UK. If we grow trade and investment, we grow the economy, and we grow jobs,” Ciobo said.
A potential UK-Australia FTA would also fly in the face of inward-focused trade pressures that have emerged in recent months, according to Ciobo. “This is a great opportunity for Australia and the UK to, in many respects, be the torchbearers when it comes to liberalised trade investment,” he said.
The countries’ bilateral trade was valued at A$29 billion (US$22.4 billion) in 2016, according to Australian government statistics, with the two countries trading significantly in gold, alcoholic drinks, cars, and medicines, among others. They also trade heavily in services and are leading sources of foreign direct investment for each other’s countries.
Meanwhile, Australia is also heading into formal negotiations with the European Union, with the goal of clinching a comprehensive trade accord between them. Ciobo noted that the Australia-EU process is more advanced, and the formal launch of trade talks is pending the finalisation of EU domestic procedures. He also expressed his hope that this could occur within the next few months. (See Bridges Weekly, 25 January 2018)
ICTSD reporting; “Brexit: US ready for an ‘attractive’ UK trade deal,” BBC, 25 January 2018.