UK-USA Free Trade Negotiations
The UK continues to seek a Free Trade Agreement with the USA, but negotiations initially stalled over concerns about Northern Ireland and the safeguarding of the Good Friday Agreement post-Brexit.
With the agreement of the Windsor framework in February 2023, the potential for relations between the US and UK to improve seemed to have increased, but it now looks as if the US is not prioritising the negotiation of a deal with the UK. However, there are hopes of a narrower pact with the UK centred around trade in critical minerals.
The UK is currently in the process of signing Memoranda of Understanding with individual US states. These are not technically trade deals - although they are occasionally billed as such. Five Memoranda of Understanding are currently in place - with Utah, Indiana, Oklahoma, South Carolina and North Carolina.
Commission Session on UK-USA Trade
On 8th September 2022 the UK Trade and Business Commission took evidence on prospective UK free trade agreements with Canada and the USA.
Evidence taken from:
Emanuel Adam, Chief Trade and Policy Officer, British American Business
Nick Crook, Head of International Relations, Unison
Congressman Brendan Boyle, Member of the US House of Representatives
UK-USA Trade Analysis
Despite the United Kingdom and the United States having been in negotiation talks since May 2020, the US is unwilling to conclude negotiations of the UK-US free trade agreement while the Northern Ireland Protocol Bill remains on the table.
Negotiations of the UK-US free trade agreement are unlikely to proceed even in the event of a change of US administration, as opposition to the Northern Ireland Protocol Bill enjoys bi-partisan support.
The ongoing friction between the UK and the EU over Northern Ireland including the Northern Ireland Protocol Bill is hindering diplomatic relations between the UK and the US beyond the negotiations of a UK-US free trade agreement.
State Level agreements such as the UK-Indiana agreement are not equivalent or comparable replacements for a UK-US free trade agreement as US states are not able to set tariffs.
What is the current status of trade negotiations and what value is placed on them?
Negotiations regarding a UK-US Free Trade Agreement have stalled, with no meaningful negotiations taking place since the Autumn of 2020. The UK Government has admitted that there is little chance of these restarting in the near future because of the issues the US has with the UK’s actions around the Northern Ireland Protocol.
The Commission heard that the stalling of negotiations was also due to general hesitance towards FTAs from the US side. The UK Government has presented a Free Trade Agreement with the US as an early priority following the UK’s exit from the EU. However, the US sees less value in the Free Trade Agreementthis, with Congressman Brendan Boyle emphasising that it was not a priority for theis US administration. The previous US administration has instead focused instead on negotiating trade deals with China and its Northern American neighbours, Mexico and Canada.
While negotiations between the UK and the US federal government have stalled, the British Government has undertaken talks with individual US states, leading to the signing of a Memorandum of Understanding (MOU) with the states of Indiana and North Carolina. Since only the US Federal Government can sign trade deals, these MOUs are not legally binding and do not replace a Free Trade Agreement Nick Crook suggested that these MOUs were being pursued by the UK as part of a public relations campaign to cover for the lack of progress on a UK-US Free Trade Agreement.
What impact would a potential trade deal have on the UK?
The witnesses differed on the opportunities a potential Free Trade Agreement would create. The Commission heard that a deal could lead to an increased partnership between UK and US institutions and tech hubs. Emmanuel Adam also noted that there would be significant benefits in production and regulatory alignments. However, there were some questions about the size of impact a Free Trade Agreement would have on UK trade and exports. The UK and US are already strong economic partners and yearly trade between them is around £223billion. Nick Crook highlighted that according to estimates from the Department of International Trade a Free Trade Agreement would increase this trade by £15billion.
However, here it was emphasised that there is no prediction from the Department on the time period in which this benefit would be realised. For reference, trade between the UK and the US increased £23billion between the four quarters to the end of Q1 2022 from the four quarters to the end of Q1 2021. As highlighted already, the UK-US Free Trade Agreement has often been touted as the most significant post-Brexit trade deal for the UK. However, Nick Crook noted that the increase in bilateral trade by £15billion would do little to replace the loss of British exports caused by the UK leaving the EU.
UK-USA Trade News
Relevant Sessions
US Congressman and member of the influential Ways and Means Committee Brendan Boyle (Dem) has today slammed Liz Truss’ Northern Ireland Protocol Bill, claiming it would be a violation of international law opposed by the White house and both parties of Congress.