|
|
With both Britain and the US under lockdown, and governments in London and Washington struggling to ramp up testing and cope with collapsing economic activity, now is not the obvious time to begin negotiating a free trade agreement. Yet bilateral talks are getting under way and for both governments there is clear political logic to this.
With economic growth plummeting and global trade collapsing, both want optimistic signals to send to the business community. US president Donald Trump, preparing to run for re-election this November, badly needs to show voters his America-first economic agenda remains on track. As for Boris Johnson, the UK prime minister, with EU trade talks mired in disagreement, he will be hoping to focus minds in Brussels on the alternatives that he claims are available.
A UK-US trade deal has long been seen as the launch pad for his “Global Britain” agenda. But how the UK chooses to engage with Mr Trump’s increasingly belligerent mercantilism could also make or break that agenda.
Realistically, there is no chance of a UK-US trade deal being agreed before this year’s US election. But both sides could instead opt for a pre-election, political “mini-deal” — a high-level declaration executed without congressional approval: as our new Harvard paper discusses, this would be possible even amid the Covid-19 crisis.
It would not take the form of a traditional free trade agreement and could include a range of general declarations, commitments, or tariff cuts — as seen with the US-Japan and US-China “phase one” deals. Still, even getting “in principle” UK-US agreements on thorny trade issues is far from easy.
Long-held American ambitions for a UK bilateral deal have not gone away, and include greater access to UK agricultural markets based on lower tariffs and US-style regulation, deregulation of NHS drug pricing and opening up public procurement to US companies. More recently, new issues have also caused friction between the US and UK on digital taxation, 5G procurement and privacy standards....more at FT