what can post-Brexit Britain hope to achieve?


The possibility of striking new trade deals was a key promise of the Brexit campaign, even before the UK left the EU. But progress toward a deal with the United States has been tentative. There were originally high hopes that a deal could be ready when the Brexit transition period ends on December 31, 2020. So what is the delay and what can the UK reasonably expect to achieve in such a deal ?

Trade between the UK and the US hit a record high of more than US$140 billion in 2019, according to UN COMTRADE, and has grown steadily over the past two years. Meanwhile, there was a slow decline in trade between the UK and the EU in 2019 – although still much higher in value at $560 billion.

Trade between the United Kingdom and the United States, 1996-2019.
Provided by the author, Author provided

But, as expected, UK exports and imports fell sharply in May and June 2020, with some recovery in July and August. It is clear that the growth in UK-US trade in 2019 has reversed, largely due to the pandemic. This makes negotiations between the UK and the US on further trade liberalization increasingly important.

Talks on a deal officially began in May 2020, and after several missed deadlines, no arrangement has materialized so far. President-elect Joe Biden’s recent interview with The New York Times suggests the US is unlikely to strike a comprehensive trade deal with the UK in the near term. And when the US Trade Promotion Authority expires in July 2021, it will no longer be possible to fast-track a deal through Congress.

However, recent comments by Robert Lighthizer, the current US Trade Representative, to the BBC have raised hopes of a mini-deal, which could focus solely on lowering tariffs.

Slow start

There are several reasons for the lack of progress: the US election got in the way and the UK negotiated with several partners at the same time. While the UK has one of the largest teams of trade negotiators, they are still new to this process, as all of these arrangements were in the hands of EU trade negotiators until very recently. There are also substantial differences of opinion.

Regarding healthcare, access to the UK market would be a good outcome for US negotiators, as representatives of the US healthcare industry are keen to expand into the UK. However, UK negotiators said: “The NHS will not be on the table. The price the NHS pays for drugs will not be on the table. Services provided by the NHS will not be on the table. The NHS is not, and never will be, for sale to the private sector, whether foreign or domestic.

That being said, a U-turn is possible, especially if there is no other way to get a deal done. The NHS is so important to a deal with the US that it may need to be reconsidered.

NHS staff with unredacted documents from secret talks between the US and UK governments, November 27, 2019
Documents from the first trade talks raised fears the NHS was on the table.
Andy Rain/EPA

UK exporters already have significant access to the US market; the United States is the most important exporting country for UK merchandise exports. On the other hand, there are more opportunities for better access to the UK market for US products. The American negotiators particularly want the opening of the agricultural and food sectors. That said, the UK public is increasingly aware of the potential problems with US food products being sold at prices below European standards. And, naturally, British farmers are not in favor of increased competition.

From a UK perspective, there just doesn’t seem to be much to be gained from a trade deal in economic terms; the UK government’s own modeling estimates increases of 0.07 to 0.16% in long-term GDP depending on whether the deal leads to partial or full trade liberalisation. For the US, a deal would only start to look more economically advantageous if the UK were willing to open up food or health markets, both of which are politically very difficult. However, a deal would be highly symbolic for the UK as it tries to find its place in a post-Brexit world.

While it’s unlikely we’ll see a full UK-US trade deal in the near future, it’s possible that a mini-deal will emerge in the final weeks of the Trump administration. This could see the two countries agree lower tariffs on products such as whiskey and cashmere. Alternatively, under the next US administration, Biden’s drive to build alliances against China could also encourage a UK-US mini-deal.


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