UK plan to drive a ‘hard bargain’ in US trade talks

UK plan to drive a ‘hard bargain’ in US trade talks

ARTICLE  · 02 Mar 2020

The UK Government states it will drive a ‘hard bargain’ for a free trade agreement with the United States, with talks expected to begin this month.

The discussions of the Free Trade Agreement (FTA) between the two nations will be overseen by the government’s chief negotiation adviser Crawford Falconer – formerly New Zealand’s chief negotiator and ambassador to the World Trade Organisation.

Trade with the US was valued at £220.9 billion the last year, and accounts for 19.8% of UK exports. The UK Government analysis released today shows a UK-US FTA would boost the UK economy by £3.4 billion, delivering a £1.8 billion increase to UK workers’ wages after 15 years from the implementation of the agreement.

However, some experts, such as Jonathan Portes, Professor of Economics at King’s College London, have stated that this trade deal with the US would only increase GDP by + 0.2%, compared to the economic costs of its Brexit proposals (-7.6% to -4.9%) of GDP. In any case the biggest winners of a FTA with the US are expected to be manufacturers of ceramics, cars, food and drink, and professional services, including architects and lawyers.

At this stage any positive signals around the benefits this FTA may deliver should be viewed against a backdrop of a US administration which trumpets ‘American First’ policies, which may mean an uphill battle for negotiators. Trump’s nationalist approach has previously impacted the global timber industry, with the trade war between the US and China causing American hardwood exports to China to fall by almost a third since September 2018.

In 2018, the US marginally increased volumes of softwood supplied to the UK and shipped around six times more volume of hardwood than Canada.

While there is no mention of timber or wood products in the UK’s negotiating objectives with the US, the Timber Trade Federation will be keeping a watchful eye on these trade negotiations as well as those now beginning between the UK and EU.

Trade talks are set to begin on Monday when around 100 British negotiators will travel to Brussels for four days of discussions. The UK has signalled that it may walk away from trade talks if a ‘broad outline’ of a deal isn’t reached by June.

The UK remains in a transition period with the EU until 1 January 2021.