Any UK-US trade deal "likely to be limited"

Any post-Brexit trade deal struck between the UK and US "would likely be limited in scope", according to an assessment by a leading global law firm.

Handshake over US and UK flag image
American and British business leaders are also advised in the report from Kelley Drye & Warren to start formulating their own ideas now about what they would demand from a future Transatlantic agreement.

President Trump and Prime Minister May's meeting appeared to boost the prospects of an FTA 

The assessment, written by Sophie Berner-Eyde, an associate in the firm's Brussels office, said the meeting between President Donald Trump and Prime Minister Theresa May in New York last week appeared to boost the prospects of an FTA after the two leaders declared their “mutual desire to form a wide-ranging trade deal”.However, Ms Berner-Eyde stressed that the US remained by far the dominant market, giving it a much stronger bargaining position. She pointed out the UK takes only three per cent of US exports, while the US accounts for 15 per cent of British goods exports and nearly 22 per cent of the UK’s total exports of services."In negotiating a free-trade deal, Washington will want to eliminate non-tariff measures restricting trade and push the UK toward US regulatory standards," said the article published this week on the Lexology legal website."This could involve deregulation in several areas typically covered by EU legislation, particularly on agri-food."Ms Berner-Eyde suggested the US might seek to cut restrictions on American exports of hormone beef, chlorine-washed poultry, pork containing feed additives, and genetically-modified organisms.

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"The UK would likely be hesitant to cave in to such US demands given the dominance of EU trade for UK agricultural business and the necessity to avoid a hard border in Northern Ireland," she wrote."Indeed, the UK government’s expressed intention is to not reduce food and animal welfare standards after Brexit. May’s Brexit plan clearly states that the UK will continue to align itself with EU standards for goods, including on technical barriers to trade (TBT) and sanitary and phytosanitary (SPS) measures."It follows that, regardless of the outcome of Brexit, and even in the case of a no-deal with the EU, the existing hurdles to a US-UK trade agreement would remain."

The scope of the FTA agreed between London and Washington could be narrow

The article said that while such difficulties did not "eliminate the prospect" of an FTA agreed between London and Washington, its scope could be narrow."As a result, it might cover reduction or elimination of tariffs in the automotive or agricultural sectors, protection of foreign direct investments, cross-border data flows and digital trade, intellectual property rights, and rules on small- and medium-sized enterprises."The UK would push for trade deals covering the service sector, as this accounts for 70 per cent of UK trade with the US."The article pointed out that EU-US trade negotiations had made progress - before they were suspended last year - on reducing regulatory divergence in several areas, including pharmaceutical goods, cosmetics and telecommunications.Ms Berner-Eyde suggested that these earlier negotiations could yet form the basis for future trade talks between Britain and America."Actual US-UK trade deal negotiations are not expected to begin until the UK’s future relationship with the EU has been clarified," she added."US and UK businesses are well-advised to start considering the terms of a free-trade agreement that would best serve their interests."
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