On 20 April 2017 Paul Ryan, Speaker of the United States (US) House of Representatives made an address during his trip to London with a bipartisan Congressional delegation that was noted with interest among many in the transatlantic trade and investment community:
“[…] the United States will continue to work closely with our EU friends, and chart a path forward on T-TIP negotiations. At the same time, we are committed to work with President Trump and your [the UK] government to achieve a bilateral trade agreement between the United States and Great Britain.”
Ryan’s statement was welcome in a time where the future of the transatlantic economic relationship seems much in question. It signalled willingness in US Congress to move ahead with the Transatlantic Trade and Investment Partnership (TTIP); a comprehensive trade and investment agreement negotiated between the European Union (EU) and the US since 2013 and meant to create a global ‘gold standard’ in trade and investment. Only a few months ago, TTIP had still been called ‘dead and buried’.
The UK was among the countries said to benefit most from a successful TTIP agreement. Britain, with much support from its business community, was among the strongest advocates for its timely conclusion.
A future TTIP agreement, however, would not apply to the United Kingdom (UK) once it left the EU. Ryan’s second comment on the ambition to negotiate a bilateral trade agreement between the US and the United Kingdom (UK), was therefore equally important. It resonates with the new US Administration who had emphasised early on that the UK would be not “at the back of the queue”.Yet, despite the current momentum for a UK-US deal; an agreement may not be there for some time. London cannot negotiate any trade deal with Washington until it has left the EU and until an agreement is in place that defines the future relationship between the UK and the EU; something that may take additional years to be fully completed. So why does it make sense for
Yet, despite the current momentum for a UK-US deal; an agreement may not be there for some time. London cannot negotiate any trade deal with Washington until it has left the EU and until an agreement is in place that defines the future relationship between the UK and the EU; something that may take additional years to be fully completed. So why does it make sense for business to think about a UK-US Free Trade Agreement?
First, that Britain is leaving the EU is no longer “unthinkable” and since the successful visit of the UK Prime Minister with the US President in January 2017, the political momentum for a UK-US deal in the future is strong. Second, the UK and the US enjoy an unquestioned special economic relationship. The US is the number one destination for UK goods and services. Over 7.500 US companies have operations in the UK. Anything that can help to strengthen this relationship is welcome. This can be a UK-US trade agreement down the line, but also mid-term solutions for businesses as highlighted in BritishAmerican Business (BAB) position paper ‘Moving Forward’ published in April 2017. Third, past experiences taught us that negotiating a trade agreement takes a long time – just think of how long it took to prepare the ground for a EU-US deal. So better to think early on about where the stumbling blocks would be, where UK-US-specific opportunities could be in terms of scope, and not to forget, how to build public support for such an agreement.
Finally, Ryan’s statement hides an important complexity. Neither a TTIP deal without the UK, a UK-US deal without the EU, or inconsistent deals from the UK and the EU with the US would be desirable for either side. Because given the unique economic integration of the UK and the EU, any unwanted discrepancies in trade deals between those two and the US could have unwanted negative side effects for business and the economies they operate in. With that, the most important reason to think about a UK-US Trade Deal is how we can design a structure that ensures that the transatlantic block, with the EU, US and UK, remains strong and sturdy, particularly as the winds of global competition intensify.
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