[CTC] USMCUKA? Boris Johnson wants to join NAFTA, but isn't holding his breath

[Arthur Stamoulis]

A collection of articles speculating on the future of a US-UK trade deal are below …


https://on.ft.com/3AAsvug <https://on.ft.com/3AAsvug>

UK pins hope on joining US, Mexico and Canada trade pact

The UK hopes to join a trade pact between the US, Mexico and Canada as hopes fade for an imminent bilateral agreement with Washington. 

The USMCA trade pact was signed by Donald Trump, then US president, with Canada and Mexico last year after a long renegotiation of the existing 1994 Nafta deal between the three countries. 

The agreement, which was widely backed by Democrats on Capitol Hill, included tightened environmental and labour standards, a new digital chapter and strict rules of origin requirements for the automotive industry.

British officials said on Tuesday shortly before Boris Johnson, UK prime minister, was to meet President Joe Biden that the UK was considering applying to join USMCA. “There are a variety of different ways to do this,” noted one senior official. “The question is whether the US administration is ready. The ball is in the US’s court. It takes two to tango.”

Britain already has trade agreements with Canada and Mexico, so the main gains would be linked to the US element of the deal.

However, the Biden administration has made clear that trade deals are not a legislative priority as it focuses on its domestic economic agenda.

Trade experts questioned whether it was realistic for the UK to join the pact and, even if it could, whether the price of entry would be worth paying.

Dmitry Grozoubinski, a trade consultant who is visiting professor at the University of Strathclyde, said any accession process would leave the US, Mexico and Canada with the whip hand, free to name their price for joining what is essentially a regional trade pact.

“It’s certainly ambitious,” he said, “And it’s also not clear how this would resolve the fundamental challenges to a US-UK free trade deal, which is firstly that the US has no appetite for it and, secondly, there remain significant areas, like agrifood standards, on which the two sides fundamentally disagree.”

David Henig, director of the UK Trade Policy Project, said it remained “someone else’s trade agreement with the rules made by someone else”.

Henig estimated that joining USMCA might add perhaps only 0.1-0.2 per cent of gross domestic product to the British economy while still leaving Britain open to some of the problems associated with a possible bilateral US trade deal.

“Are the benefits really worth it?” he asked.

USMCA also has limited coverage of many of the UK’s competitive advantage in exports, notably services, and would subject many UK companies to two competing sets of regulations.

But Sam Lowe, research fellow at the Centre for European Reform, said that it would be “quite an occasion” if Britain were to join USMCA, even though he was sceptical that it would happen.

“You would have all the issues with a bilateral US relationship — they don’t go away,” he said. “But from an economic point of view a deal would not be negligible.”

Pro-Brexit politicians in the UK have long pointed to a trade deal with the US as one of the great upsides of leaving the EU. Leading figures in the Trump administration early last year promised that a US-UK trade deal was at the “top of the list” of priorities.

However, the UK’s hopes of clinching a bilateral trade deal with the US have faded since Biden came to power in January.

The two sides have not resumed formal talks, and Katherine Tai, the US trade representative, has been carrying out an assessment of the state of the negotiations.

British officials have previously expressed hopes that the US would join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership trade bloc, opening a back door to closer US-UK trade ties since London is also seeking to become a member of the CPTPP.

They are understood to have raised concerns with their US counterparts that trade links are stronger between the UK, Canada and Mexico than between the UK and US.

Speaking to Sky News before a meeting with Biden in the White House on Tuesday, Johnson evaded a question on whether he might secure a trade deal with the US by 2024.

“We will keep going with free trade deals around the world including in the United States. I have plenty of reason to be optimistic about that. But the Americans do negotiate very hard.”

“We’re going to go as fast as we can.”

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Boris Johnson downbeat on speedy U.K.-U.S. trade deal
By Emilio Casalicchio, Politico Pro
9/20/2021
 
NEW YORK — Boris Johnson admitted he has little hope that stalled trade negotiations between London and Washington will restart soon, as he prepared to visit his U.S. counterpart Joe Biden.

The U.K. prime minister said the president had “a lot of fish to fry” on the domestic front at the moment, with infrastructure plans and efforts to rebuild after the coronavirus pandemic leaving Biden little space to focus on trade talks.

“We want to do it, but what we want is a good free trade agreement, a great free trade agreement,” Johnson explained in response to a question from POLITICO on the plane from London to New York for the U.N. General Assembly.

He said American negotiators were “pretty ruthless, and I would much rather get a deal that really works for the U.K. than get a quick deal.” It’s a change in tone since the Donald Trump era when the two sides launched into intensive talks in the hopes of brokering a fast agreement.

Johnson will travel to Washington from New York on Tuesday for meetings in the White House with the president and Vice President Kamala Harris, as well as other senior lawmakers on Wednesday.

“The discussions and negotiations for a comprehensive U.K.-U.S. free-trade agreement have visibly moved down on the political priority list, particularly for the U.S. government,” said Emmanuel Adam, executive director of British American Business. “But this does and should not mean that no further progress on the transatlantic economic agenda can be made.”

Johnson insisted that despite the FTA talks having stalled, “our relations with the U.S. are about as good as they have been at any time in decades.” He pointed out that Britain and the U.S. have resolved trade differences over Scotch whisky, subsidies to aircraft makers Airbus and Boeing and managed to get U.K. beef sailing into American ports. The two sides also announced a new nuclear pact with Australia last week.

But there have been tensions over the NATO withdrawal from Afghanistan, and it appeared Johnson was left blindsided that Washington was about to lift its COVID travel ban on the U.K. and EU for vaccinated passengers. Johnson had told reporters on the plane he did not expect a breakthrough on that issue during his U.S. visit.

To coincide with the visit, Johnson is unveiling £850 million of new U.S. investment in life sciences research in Britain. Blackstone, the parent firm of BioMed Realty, is pumping the cash into 800,000 square feet of purpose-built lab and office space in Britain’s Cambridge for health and science research, estimated to create around 2,700 jobs.

“It’s no surprise that when American companies look to expand and collaborate internationally, they so often look to the U.K., and vice versa,” Johnson said in comments released overnight. He will host a reception for U.S. investors in New York on Tuesday morning.

Adam, from British American Business, said the U.S. and U.K. governments could still focus on services such as tech, as well as trade promotion, in an effort to “set out new cornerstones for a transatlantic economic agenda.”

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U.S., UK discuss how a trade deal might align with ‘Build Back Better’
By Madeline Halpert, Inside US Trade 
9/20/2021
 
U.S. Trade Representative Katherine Tai and her British counterpart, Anne-Marie Trevelyan, on Monday discussed how a U.S.-United Kingdom free trade agreement might support the Biden administration’s domestic agenda, according to a readout from USTR.

Tai met virtually with Trevelyan, whom the UK announced last week would replace Liz Truss as UK Secretary of State for International Trade. Tai began the discussion by congratulating Trevelyan on her new role, USTR said in the readout <https://insidetrade.com/sites/insidetrade.com/files/documents/2021/sep/wto2021_0444.pdf>. She also emphasized her commitment to “deepening bilateral trade and investment ties” between the two sides, according to USTR.

As a part of those conversations, Tai “discussed USTR’s ongoing review of the U.S.-U.K. free trade agreement negotiations to evaluate how a potential agreement could support the Biden-Harris Administration’s broader Build Back Better agenda,” the readout states.

The U.S. and the UK during the Trump administration launched but did not conclude negotiations on a comprehensive agreement. The UK had hoped to reach a deal early in Biden’s term, but Truss acknowledged in July <https://insidetrade.com/node/171753> that the two sides were unlikely to finalize an agreement this year. The Biden administration has said it will place domestic initiatives ahead of new trade agreements. It has not yet said if it will resume talks with the UK.

During the meeting with Trevelyan, Tai discussed the administration’s “strong support” for preserving the Good Friday Agreement “that has brought peace to Northern Ireland and the importance of finding a durable solution to implementing the Irish Protocol,” the USTR readout said. National Security Adviser Jake Sullivan in June cautioned <https://insidetrade.com/node/171511> that any trade agreement with the UK should not “imperil” the Good Friday Agreement.

“I would just say that our concern runs very deep on the Northern Ireland issue, and we want to make sure that the work that the UK, Ireland and the United States have all done – in addition to the key parties in Northern Ireland – that that work has got to be honored and respected and protected as we go forward,” he said at the time. “That's the thing we're going to be most focused on.”

Great Britain and Ireland signed the Good Friday Agreement in 1998, ending a long and violent dispute between those pushing for a unified Ireland and those in Northern Ireland loyal to Great Britain. During Brexit negotiations, the European Union and the UK agreed to the Northern Ireland protocol, which came into force in January and keeps Northern Ireland in a customs territory with the EU.

The UK in September 2020 considered rewriting some of its obligations <https://insidetrade.com/node/169590> set forward in the protocol in a bill that would give the British government the power to “disapply” certain withdrawal-deal provisions applying to the Irish border. The move drew the ire of some Democrats, including House Speaker Nancy Pelosi (D-CA), who contended that any U.S.-UK deal would have “no chance” if the UK violated the accord.

During a trip to the UK last week, Pelosi repeated concerns about potential violations, contending a trade deal with the British would be “very unlikely” if the UK were to terminate the Good Friday Agreement.

"This is not a threat, it’s a prediction," she said, according to an AP report <https://apnews.com/article/business-united-states-london-global-trade-europe-4ee128eea043694d2cafa1090c62afcd>.

During their Sept. 20 meeting, Tai and Trevelyan also discussed a G7 trade ministerial scheduled for October as well as U.S.-UK “bilateral trade issues.” The officials also “agreed to continue the productive conversations between the two countries to address the shared challenges posed by the market distorting practices of China and other non-market economies,” the readout said.

Trevelyan last week was appointed to the position of trade secretary in a reshuffle of Prime Minister Boris Johnson’s government. She previously served as minister of state for business, energy and clean growth at the Department for Business, Energy and Industrial Strategy. Truss was promoted to foreign secretary.

In a speech on Monday <https://www.gov.uk/government/speeches/london-tech-week-trade-secretary-announces-5-point-plan-for-digital-trade>, Trevelyan laid out a “five-point plan <https://www.gov.uk/government/publications/digital-trade-objectives-and-vision/digital-trade-objectives>” for UK digital trade. The agenda, she said, includes opening up digital markets; securing cross-border data flows; advancing high intellectual property standards; and supporting modern digital systems. Trevelyan said the UK also hoped to use free trade deals, the UK’s G7 presidency and its membership in the World Trade Organization “to push the rules of global trade into the 21st century.”

The UK’s free trade agreements have a “key role to play” in advancing international trade policy, Trevelyan said. The UK in June entered into negotiations for a digital economy agreement with Singapore, she noted. “That is the type of modern deals we can and should be striking,” she said.

The UK also has begun formal negotiations to join the Comprehensive Agreement for Trans-Pacific Partnership.

“By embracing new opportunities on the global marketplace,” Trevelyan said, “we will level up the country through trade and investment.” 

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https://apnews.com/article/business-united-states-london-global-trade-europe-4ee128eea043694d2cafa1090c62afcd <https://apnews.com/article/business-united-states-london-global-trade-europe-4ee128eea043694d2cafa1090c62afcd>

Pelosi warns UK not to imperil N Ireland peace with Brexit
9/18/2021
 
LONDON (AP) — House of Representatives Speaker Nancy Pelosi warned Britain on Friday that there will be no U.S.-U.K. trade deal unless the British government solves post-Brexit disagreements with the European Union that risk destabilizing Northern Ireland’s peace.
 
Britain and the EU are at odds over trade arrangements that have imposed checks on goods coming to Northern Ireland from the rest of the U.K. They were agreed by both sides in their divorce deal, to keep an open land border between the north and EU member Ireland — a key pillar of Northern Ireland’s peace process.
 
Britain says the new checks are onerous and wants to rewrite the agreement, but the EU says it will not renegotiate.
 
The United States, which played a key role in securing Northern Ireland’s 1998 Good Friday peace accord, has cautioned Britain against doing anything to undermine the peace settlement.
 
Pelosi, who is visiting the U.K., met Prime Minister Boris Johnson at his 10 Downing St. residence on Thursday. Johnson’s office said the prime minister “outlined the U.K.’s concerns with the way the (Northern Ireland) Protocol is being implemented and the impact it is having on the people of Northern Ireland.”
 
Pelosi told an audience at the Chatham House think-tank that a trans-Atlantic trade deal was “very unlikely” if the Good Friday Accord was destroyed. She said “this is not a threat, it’s a prediction.”
 
Pelosi welcomed the fact that Britain and the EU have agreed to keep talking in an attempt to resolve their differences.
 
“I’m so glad that more time has been given for the negotiations and the discussion, because they have to reach an agreement,” she said.
 

Arthur Stamoulis
Citizens Trade Campaign
(202) 494-8826




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