The UK and US will open negotiations over a post-Brexit trade agreement next month, posing an early test of Britain’s ability to strike such deals, and of its relationship with President Donald Trump.
“There are some very, very big markets that we will be able to take advantage of,’’ UK Trade Secretary Liam Fox told BBC TV’s Question Time programme. “I’ve got news for you – that we are beginning our actual discussions on July 24.’’
Britain cannot formally sign trade deals with other countries until it leaves the European Union in March 2019, but it can prepare the groundwork for them to be ratified soon after. Such accords are key to Prime Minister Theresa May’s ability to deliver what she calls the “promise of Brexit”.
Continued Trade
The UK exports about £37 billion ($48 billion) more in goods and services to the US than it imports, highlighting the importance of a deal for the British. Last year, after then President Barack Obama warned that the UK would be at the “back of the queue” for a trade pact if it voted for Brexit, Trump has been warmer.
He told The Times in January, “[The US is] gonna work very hard to get it done quickly and done properly.” He subsequently told May that the UK would be able to continue to trade with the US on at least the same terms as it does now after Brexit.
Still, The Times reported in April that, after talks with German Chancellor Angela Merkel, Trump might ultimately prioritise talks with the EU. That would be a blow for May.
Soft Brexit
When talks do begin, the UK will lack leverage, given that it likely needs a deal more than its transatlantic partner. The US might try to force Britain’s financial services to sign up to Wall Street regulations and push the UK to open up industries such as health to American competition. It might also try to weaken the UK’s food standards.
Fox’s comments suggest that May’s government is still planning to withdraw from the EU’s tariff-free customs union, which prevents trade accords with third parties. There has been speculation that it may try to stay in the arrangement as part of a soft Brexit, which would raise questions about Fox’s job.
“Ninety per cent of global growth in the next ten years will be outside Europe,” said Fox. “If we, as a country, want to generate the wealth that we will need for all those things that everybody wants in terms of spending on public services, that growth is going to come from somewhere else.”
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