UK Trade Secretary Liam Fox was in Washington hunting for a trade deal, and despite the enthusiastic endorsement over Twitter by US President Donald Trump, his trip got bogged down by chlorinated chicken.
Flaunting the 'special relationship' with the Americans masks the reality that any trade deal will take years and run into all sorts of difficulties, from clashing regulatory practices to the powerful farming lobby. The media storm back in London over how US hygiene rules allow chicken to be washed in chlorine offers a glimpse of the battles in store.
The differences over chicken put Fox on the spot – he decried the “obsession” with the issue – when all he wanted to do was put away government splits over Brexit and talk up the potential of the UK leaving the European Union and being a free agent. Much of his two days was spent insisting that the UK would not be pushed around.
“We’re setting UK conditions, UK standards,” said Fox in an interview with Michael McKee on Bloomberg Television. “We’re neither going to be members of the European Union, nor are we totally bound to the United States.”
Report
Fox published an 871-page report in Washington on Tuesday, highlighting UK trade and investment in the 435 congressional districts, pointing out that Britain is one of the top five export markets for 302 of the districts. Fox said, “[The UK-US working group on trade would] work to provide certainty for businesses as the UK leaves the EU, and look to expand future trading links with the US.”
Despite Britain’s enthusiasm for a deal with the US, Fox promised that UK standards would not be relaxed. The gap between EU and US standards was one of the factors behind the failure to agree a trade deal. Britain will want to avoid a similar failure, but its consumers are mindful of food hygiene after the mad-cow-disease outbreak in the 1980s.
Agricultural interests have historically always held a big sway over US politics on environmental regulation and trade. Disputes over farm subsidies helped derail the Doha Round of world trade talks, and the US sugar programme slowed adoption of the Trans-Pacific Partnership that Trump then ditched.
Farming areas are over-represented in the Republican coalition that elected Trump, meaning that influence may be even stronger now.
‘Big and Exciting’
Moreover, when Trump tweets about a potentially 'big and exciting' trade deal, it’s worth noting that the countries have very different notions about the scale of exports to each other.
Trump frequently rails against the trade deficit as evidence that America no longer wins. Fox pointed to the “relatively good trade balance” between the two countries as a reason for optimism, saying that 700,000 US jobs are supported by trade with Britain.
Trade between the US and the UK amounted to a surplus £37 billion ($48 billion) a year as of 2015, according to Britain’s Statistics Office. By contrast, the US Bureau of Economic Analysis calculated a surplus of $11.9 billion in the same year.
Not Before 2019
The US leader has attacked the EU’s attitude to transatlantic trade, calling for it to drop barriers to commerce. Once Britain leaves the bloc, it will be free to negotiate its own trade deals with countries around the world, but that won’t be until March 2019, at the earliest.
'Working on major Trade Deal with the United Kingdom,' Trump wrote in a Tweet. 'Could be very big & exciting. JOBS! The E.U. is very protectionist with the U.S. STOP!'
Economists and trade specialists have warned that any deal will be difficult to deliver because US negotiators have more experience and could bulldoze the UK on issues such as agricultural and financial regulation. Environmentalists and lawmakers worry about Britain’s strict food regulations being relaxed.
A report by the upper chamber of the UK Parliament said that British farmers risk losing out to cheaper imported food after leaving the EU if ministers don’t retain strict standards for animal welfare. UK farms have some of the world’s highest welfare standards, but also higher production costs.
Finally, even businesses don’t want the UK to rush into a deal and forget its top priority. Carolyn Fairbairn, director general of the Confederation of British Industry, was clear: “Our members put the European Union negotiations first.”
News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.
