Transatlantic Business

It Finally Happened On the 2nd of March 2020, it finally happened: After a long wait, the United Kingdom (UK) published its objectives for a future UK-US Free Trade Agreement (FTA). Spanning over 180 pages, the document consists of an impressive bundle, laying out the UK Government’s strategic approach, objectives, as well as comprehensive evidence supporting the case for an FTA with the United States (US).

The Case For UK-US Economic Integration Is Strong Despite critics pointing out that the economic benefit of a UK-US FTA would not outweigh the economic damage should the UK and the EU not reach a trade agreement by the end of the year, the case for future deeper economic integration between the US and the UK is strong.

For the UK, the US is already the single most important destination for exports. Over 30,000 British businesses export to the US. British businesses are present in every single US State, employing over 1.5 million Americans. For American businesses, the UK is the 7th most important trading partner. Over 40,000 US businesses export to the UK; over 7,500 businesses have a presence in the UK, equally employing well over a million people.

Building on such an important trading relationship makes sense. Looking beyond the numbers, every single simplification, whether it be less processing time in customs or increased market access can make a difference to a company and to local and regional communities.

Time Is Short With the UK objectives for a UK-US FTA now released, negotiations are likely to start soon. Historically, when starting negotiations for a (comprehensive) trade deal, one would look at least several years of negotiations to find compromise, draft and then implement the texts. It is true that both UK and the US have done a lot of work over the past two years towards this. Earlier this year, US Secretary of the Treasury, Steven Mnuchin, said that the US would dedicate a lot of resources to secure a deal. Yet, when looking at successful policy

making through the necessary interplay of policies and politics, time seems rather short. In particular, the UK has to balance its trading interests with the EU and the US, two economic entities with fundamental differences in some areas. While understandable and economically reasonable, this delicate balancing act will delay decision-making on policy issues between the UK and the US. This is in addition to areas where the UK and the US will most likely have to spend a significant amount of time to iron out differences, such as food safety, sustainability, or online harm protection.

Administration in how to pursue trade deals. Should the new TPA be different from the current version, a negotiated text may have to be amended, if not re-negotiated.

Let’s Use it Wisely In my view, we are looking at a trade honeymoon of 5+ months. That is short. The good news is that there is enough common ground between the UK and the US negotiating objectives to be optimistic about an agreement. Areas like digital trade or trade facilitation are particularly relevant to smaller businesses, and can help the UK and the US lead the way. It is these areas where there is common ground that should set the direction. While ambitious, the UK and the US should focus on these areas of commonality so that something can be agreed before the summer. To acknowledge and celebrate the release of the UK negotiation objectives, BritishAmerican Business published a White Paper making a case for making labour mobility between the UK and the US easier. We know that immigration issues are challenging to include in trade talks, but if the UK and the US can agree on tangible issues like this, then we have truly reason to be optimistic about the future transatlantic economic relationship.

Second, the UK Government has ruled out a scenario in which both the UK and the EU would allow more time to negotiate post2020 should they not come to an agreement. This will mean that after summer, business attention in the UK will move back to ‘no-deal’ preparation, taking away momentum and resources from supporting a UK-US deal.

Even if negotiations between the UK and the EU were to make quick progress, the focus of the US will soon be squarely on the upcoming election. No matter who is in the White House come November, political standstill on policy issues is likely towards the end of the year.

This takes us to a final signpost that defines the timeframe the UK and the US have got. By July 2021, the US Congress will need to renew the Trade Promotion Authority (TPA), the laws that guide the US