What's the deal? US presidential elections and UK-US trade.

If there was one thing the US-UK talks over a post-Brexit trade deal did not need, then it was a presidential election on November 3 – an event that looks destined to muddy the already-murky waters swirling around the transatlantic negotiations.

US and UK handshake illustration with union jack and stars and stripes flags
Think Global People Autumn 2020 issue
This article is taken from the first issue of Think Global People, the new home of Relocate Magazine.
Click on the cover to access the digital edition or read all of the articles on our website.

Would a Biden or Trump victory in the US election make it easier or more difficult for the UK to reach a trade deal?

Nobody is sure if a Donald Trump victory would result in his toughening the American stance in the talks, the fourth formal session of which got underway in September. Similarly, nobody knows if a Joe Biden victory would make it harder or easier to reach an agreement.On the one hand, Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics in Washington, believes a Biden administration would be more inclined to make compromises over issues such as food safety standards and the controversial digital services tax.On the other hand, James Kane, an associate specialising in trade at the Institute for Government in London, does not believe US negotiators would drop many, if any, of their current demands, even if there were to be a change at the White House."The US objective will remain to get US agricultural products into the UK. That will still mean removing tariffs and non-tariff barriers like the ban on hormone-treated beef and chlorinated chicken," he told Business Insider recently. "The US tried to do that with the European Union under Obama, and I don't see why they'd do it any differently under President Biden."As for President Trump, he – along with both Republicans and Democrats on a Senate committee that would have to ratify any deal – clearly remains furious over the digital services tax that became law in Britain over the summer. This will tax the earnings of tech giants such as Amazon, Facebook and Google, which, of course, are American.Au20-in-text-bannerMr Trump has threatened to impose tariffs on UK car exports if the tax became law and, in August, Senator Chuck Grassley, the Republican chair of the Senate finance committee, and Senator Ron Wyden, the committee’s senior Democrat, issued a joint statement saying that the tax “unnecessarily complicates the path forward for a US-UK trade deal” and urged the UK to “reconsider this punitive action against its ally”.

UK/US trade deal: chlorinated chicken and the continuing impasse over agriculture

If that were not a large enough stumbling block, there is a continuing impasse over agriculture, with London refusing to allow more imports of US meat products because of concerns over animal welfare, the veterinary drugs used by US producers and decontamination methods used on slaughtered poultry.The UK “has been clear it will not sign a trade deal that will compromise our high environmental protection, animal welfare and food safety standards” said a government spokesman, adding that, under existing EU regulations, chlorinated chicken and hormone-injected beef are not permitted for import into the UK – a ban that will be enshrined in UK law at the end of the Brexit transition period on December 31.
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Is the NHS up for grabs in a US/UK trade deal?

Then there is the problem of Britain's National Health Service (NHS), which currently uses its dominant market position to buy pharmaceuticals cheaply from the US and whose services the Americans want to open up to competition from private companies.Future-fit-in-text-banner3

Wall Street Journal: A US/UK trade deal has become harder to reach "for all the wrong reasons"

Yet are these really the issues that should be proving such a headache in the negotiations? Certainly not, according to an outspoken editorial in the Wall Street Journal in late August, which said a deal has become harder to reach "for all the wrong reasons".The opinion piece added, "What should be causing the hold-up are the contentious elements involved in any high quality, free trade pact. The two sides should be haggling over banking regulations that would facilitate free trade in financial services. They ought to be ironing out mutual recognition of professional qualifications so British and American architects, engineers, accountants and the like can work freely on either side of the Atlantic. There should be reciprocal recognition of product-safety rules and inspections."Yet nary a word is heard about those issues. Instead, the problems are political own-goals on both sides, but primarily in the UK. Agricultural trade remains a needless sticking point."Brexit was supposed to let Britain deviate from the European Union’s unscientific, trade-killing resistance to American imports. Instead, Boris Johnson and Trade Secretary Liz Truss promise British voters these American goods will never appear in UK supermarkets. This kowtow to British farmers and environmentalists could scuttle a trade deal."And on the deadlock over the NHS, the newspaper said, "London’s resistance to any liberalisation, market forces or private investment in healthcare will make it that much harder for Washington to sign a deal – even though the NHS delivers awful healthcare outcomes compared to the rest of Europe, and calls out for reform."

US Chamber of Commerce wants the UK to reach a bilateral trade deal with the EU ASAP

Meanwhile, the US Chamber of Commerce – the nation's largest business lobby group – has another concern: it wants to see the UK reach a bilateral trade deal with the European Union as swiftly as possible, saying a failure to do so could limit investment flows and pose risks to US-UK trade talks.In a statement earlier this year, the organisation advised the UK to redefine its relationship with the EU before embarking on trade deals with other nations. It said eliminating tariffs between Britain and the EU would boost the long-term outlook for both Britain and the United States at a time when both economies were suffering from the coronavirus pandemic.The chamber wants to see an EU-UK deal reached before the end of the year, saying American exporters and investors “are keen to avoid” a no-deal Brexit, adding, “A strong partnership agreement between the UK and EU will boost the resiliency of both economies – more crucial than ever in the wake of the pandemic and economic crisis."

Biden might look to Asia-Pacific for a trade deal before looking at the UK

And if the US Chamber of Commerce believes the UK should be looking at Europe before it looks at America, then many believe that, should Mr Biden emerge triumphant in November's poll, he might well look towards Asia-Pacific for a trade deal before he looks towards London.Ian Shapiro, Sterling Professor of Political Science at the Yale School of Management, believes a Biden administration would be more enthusiastic about resurrecting “Obama's big unfinished piece of business” and sealing a deal with the Far East ahead of reaching any agreement with the UK.

What about the Comprehensive and Progressive Agreement for Trans-Pacific Partnership or CPTPP?

That could mean the US rejoining the 11-nation Trans-Pacific Partnership trade agreement (now renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP), which Mr Trump scrapped by executive order early in 2017.Coincidentally – or maybe not – the UK wants to join the CPTPP too, and Liz Truss recently put the importance of the government’s efforts to join the bloc on a par with a deal with the US. “The assumption in Whitehall is that if Biden wins, we won’t need to do a bilateral trade deal because we might both end up in CPTPP. That is already committed to high standards of animal welfare. Some of the sting will be removed from those issues,” a Conservative Party insider told the Sunday Times.However, a spokesman for the Biden presidential campaign told reporters that if the Democrat won, he would not go into office in January and "start talking about re-entering or about entering new trade deals before he has done the work at home to make the investments in American job creation, American competitiveness and American communities".

No specific time frame for a US/UK trade deal

Even so, it has been reported in The Times that Boris Johnson dispatched delegates in the summer to discuss with members of the Biden campaign the possibility of progressing trade talks in the event of Mr Trump's re-election bid failing.There again, if you go back to September last year, both London and Washington were distinctly bullish about the two nations' chances of reaching a speedy trade agreement, possibly as early as July this year. But all that has changed and even the most optimistic are talking about 2021 at the earliest.“It’s going to take time, to be honest,” Robert Lighthizer, the current US trade representative, told an Economics Club of New York event in the summer.“We’ve been clear that there is no specific timeframe [for a deal],” said a Department for International Trade spokesman in London. “Our focus is on getting a deal that works in the best interests of the UK.” Or, as Ian Shapiro puts it, “The extreme unpredictability of American policy until after the election means what might or might not be available from the US to the UK is just inherently unknowable.”
Think Global People Autumn 2020 issue
This article is taken from the first issue of Think Global People, the new home of Relocate Magazine.
Click on the cover to access the digital edition or read all of the articles on our website.

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