UK, US Officials Confirm Plans for Trade Pact in Post-Brexit Era
Officials from the UK and US held a series of both technical and high-level political meetings last week on trade relations post-Brexit, including the fourth session of a bilateral “Trade and Investment Working Group,” as well as leaders’ level discussions between US President Donald Trump and UK Prime Minister Theresa May.
Trump and May both expressed interest last week in striking a trade accord following Brexit, though the early days of Trump’s visit to the UK saw the US leader issue mixed messages over May’s proposed approach to Brexit negotiations with the EU and what this might mean for trade deal prospects.
The series of meetings came as the British government published a highly-anticipated “white paper” on the future UK relationship with the European Union. The document, numbering at over 100 pages, was endorsed by May’s cabinet following a meeting at the prime minister’s country residence at Chequers, and is described in a foreword by the UK leader as an approach that “strikes the balance we need – between rights and obligations.” (See Bridges Weekly, 12 July 2018)
The chapters cover topics such as economic and security partnerships with the EU, along with other forms of cooperation, as well as institutional arrangements for putting such an approach into practice. It also highlights trade deals with Australia, New Zealand, and the US as goals for the post-Brexit era as the UK seeks to establish “an ambitious bilateral trade agenda.”
Trade between the US and UK is worth over US$230 billion per year, and bilateral investment flows add up to over US$1.2 trillion, according to US government statistics.
UK-US working group
Trade officials from the UK Department for International Trade and the US Trade Representative’s office, among others, held a two-day meeting last week to advance technical talks on the UK-US trading relationship.
The group’s focus is on “providing commercial continuity” for producers and consumers on both sides of the Atlantic, particularly during the Brexit negotiating process and in its wake. It was set up one year ago by the trade chiefs of both countries, and officials say that these talks, while not formal negotiations, could also “lay the groundwork for a potential, future free trade agreement.”
Last week’s talks had a hefty agenda, officials said, covering farm trade and manufacturing, services and investment, as well as intellectual property and digital trade, according to a brief summary circulated by the UK government afterward.
The officials also held the second small and medium-sized enterprises (SME) dialogue ahead of the working group meetings, bringing together company representatives and government officials to focus on opportunities and challenges for these smaller companies in the trade space. These include, for example, addressing regulatory issues or limitations on finance.
Leaders highlight trade deal’s potential
Speaking to reporters after their discussions, May confirmed that the two countries would pursue an “ambitious US-UK free trade agreement” once the UK leaves the EU. May and Trump also discussed at length issues related to governance, security, and economic cooperation.
“The Chequers Agreement reached last week provides the platform for Donald and me to agree an ambitious deal that works for both countries right across our economies, a deal that builds on the UK’s independent trade policy, reducing tariffs; delivering a gold standard in financial services cooperation; and, as two of the world’s most advanced economies, seizing the opportunity of new technology,” she said.
Trump similarly welcomed the prospects of a UK-US trade pact, saying that “the United States looks forward to finalising a great bilateral trade agreement with the United Kingdom. This is an incredible opportunity for our two countries, and we will seize it fully.”
The UK cannot negotiate trade deals independently before it exits the EU next year. It will, however, be able to begin formal talks during the “transition” period that begins at the end of March 2019 and concludes in December the following year, so long as these new accords do not take effect until after the transition period ends.
Trump, meanwhile, indicated that Washington would welcome whatever Brexit deal that the UK and EU reach, saying that “whatever you do is okay with me.”
“That’s your decision. Whatever you’re going to do is okay with us. Just make sure we can trade together; that’s all that matters,” he said.
Setting up an “independent trade policy”
The “white paper” issued last week by the UK government sets out the concrete proposals for the future British trade relationship with the European Union, though it has been greeted with a mixed reaction by different EU stakeholders. The UK has confirmed previously stated plans to leave the EU’s single market and the customs union, along with ending the free movement of persons across borders with the bloc.
A new “deep and comprehensive economic partnership” proposed in the document has a free trade area for goods at its core, alongside new arrangements for services and digital domains. The proposed cooperation framework would allow the UK to negotiate new international trade deals with non-EU partners whose scope would include goods and services trade, investment and public procurement, data, and more.
“Under the terms of the Withdrawal Agreement with the EU, the UK would be free to negotiate, sign, and ratify FTAs during the implementation period, and to bring them into force from January 2021. When concluded, these would be the first FTAs signed by the UK in its own right since the European Free Trade Association in 1960,” the document reads.
While noting that trade deals with the US, Australia and New Zealand are top on this UK trade agenda, the document confirms that London is weighing whether to ask to join a Pacific Rim trade deal known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The CPTPP is a trade grouping of 11 economies, who have all signed the deal and are currently at different stages of ratifying it domestically.
Australian trade minister Steven Ciobo welcomed the Chequers “white paper” ahead of his visit to the UK, which is also due to see discussions on the planned UK-Australia accord.
“The Turnbull Government welcomes the Brexit White Paper that confirms a free trade agreement with Australia remains a priority for the UK. Australia has been preparing for negotiations through the Trade Working Group established in September 2016,” said Ciobo in a press release.
Australia and the EU are already negotiating a trade accord of their own, having formally launched negotiations last month. (See Bridges Weekly, 21 June 2018)
ICTSD reporting; “Donald Trump told Theresa May how to do Brexit ‘but she wrecked it’ – and says the US trade deal is off,” THE SUN, 13 July 2018.