U.S.-U.K. Trade Talks Open on a Friendly Note

The U.S. and United Kingdom formally launched negotiations toward a trade agreement on Tuesday, an effort to draw the two economies together as the U.K. exits the European Union and the coronavirus threatens the world economy.

President Trump and U.K. Prime Minister Boris Johnson have made the negotiations a priority as Mr. Johnson seeks close trading relationships outside of Europe and Mr. Trump looks to build a network of two-way deals that he feels can offer better advantages to the U.S. than multinational or global tie-ups.

In a joint statement, both governments said a deal “would contribute to the long-term health of our economies, which is vitally important as we recover from the challenges posed by Covid-19.”

The shared goals on both sides stood in contrast to earlier efforts of the Trump administration to force trade negotiations with China, Mexico, Canada and South Korea by imposing major tariffs or threatening to cancel existing agreements.

Unlike China, which has a huge trade surplus with the U.S., trade between the U.S. and the U.K. is relatively balanced, with the U.S. exporting $69.1 billion in goods to and importing $63.2 billion from the U.K. in 2019.

Significant U.S. exports to the U.K. include aircraft, machinery and crude oil, while the U.K. sells aircraft engines, pharmaceuticals and cars to the U.S.

Still, the coronavirus pandemic is adding its own challenges to the talks. The governments of Messrs. Trump and Johnson, who contracted the coronavirus and has since recovered, are deeply involved in the countries’ domestic health efforts and economic challenges.

Negotiations among trade officials are proceeding in coming days by videoconference rather than through in-person gatherings.

Trade negotiations, which involve tariff levels, quotas and myriad commercial rules, are inherently complex and involve not only periodic meetings of top officials but also specialized groups of experts who typically gather nearby to hash out thorny issues, often with the help of industry, lawmakers or nonprofit groups.

“I think it would be very much more difficult” to negotiate virtually, Sen. Chuck Grassley (R., Iowa), the chairman of the Senate Finance Committee, told reporters Tuesday. “It’s not quite as good as sitting across the table from them,” he said, adding that senior U.S. and Chinese officials did frequently use videoconferences in fast-paced negotiations with Chinese officials on a “phase one” deal signed in January.

Unlike the Trump administration’s deal with Beijing, which left punitive tariffs on many U.S. imports from China and the most difficult issues unresolved, a U.K. deal is expected to include a panoply of issues of importance to both governments and lawmakers.

Tariffs between the two economies are already relatively low due to existing agreements at the World Trade Organization, so talks are expected to focus on eliminating most remaining tariffs and setting rules of the road for everything from labor and the environment to agriculture and food sanitation.

“The U.K. is a champion of free trade, and this deal will make it even easier to do business with our friends across the pond,” said the U.K.’s secretary of state for international trade, Elizabeth Truss.

Robert Lighthizer, the U.S. trade representative, said in a statement: “The United States will negotiate an ambitious and high-standard trade agreement with the U.K. that will strengthen our economies, support good-paying jobs and substantially improve opportunities for trade and investment between our two countries.”

Mr. Lighthizer has several blueprints available, including from a never-completed set of negotiations between Washington and EU officials, as well as the Trump administration’s updated North American pact, which is set to take effect in July.

Labor groups don’t have the type of concerns about worker rights or the environment that they did in recent talks with Mexico.

Yet some issues are expected to be quite difficult. Mr. Grassley said he is concerned about European rules on supplements used in raising livestock, the treatment of genetically modified organisms and the use of restricted geographical indications for cheese and other foods and beverages from a certain area.

“The one that irritates me the most is that we can’t get GMOs into Europe,” Mr. Grassley said.

British officials say they are developing their own set of food and farm rules as a part of leaving the EU but don’t want to lower or fundamentally change their approach.

Another irritant for Washington is London’s new tax, which Washington officials see as aimed at big U.S.-based technology and web-based firms that are active in the U.K.

Meanwhile, British officials have complained about Mr. Trump’s global tariffs on steel and aluminum imports on national security grounds. The U.S. and U.K. have one of the closest security relationship with the U.S., and the tariffs led European nations to retaliate against American exports.

Both sides have indicated urgency in the U.S.-U.K. talks, but major trade agreements are difficult to accomplish during presidential election years, when the concessions that inevitably occur can generate political problems in affected states and regions.

Officials would need to wrap up talks within a year to submit any deal to Congress under special legislation for expedited consideration, trade experts say. The 2015 legislation, known as fast-track or trade-promotion authority, expires mid-2021.
Source: Dow Jones