Finance, Farming Are Focus of U.K.-U.S. Trade Talks, Fox Says

July 23, 2017 06:59 PM

Removing commercial barriers with the U.S. could generate an additional 40 billion pounds ($52 billion) in trade with the U.K. by 2030, Trade Secretary Liam Fox said Sunday as he warned that reaching a deal won’t be easy. 

Fox, in Washington for preliminary talks on a post-Brexit U.S. trade agreement, said the projected economic gain is based on recent government calculations. Economists and trade specialists say any deal will be hard to deliver, since the Americans have more experience and could bulldoze the U.K. on issues such as agricultural and financial regulation.

“It will be a difficult discussion, but we’ve got great support from the United States and the administration,” Fox said on the BBC’s “Andrew Marr Show” on Sunday. “Agriculture’s always a very difficult issue” but “we’ll want to look at a whole range of other things, on financial services for example, and other parts of the service economy,” he said.

The U.K. is already viewing a pact as a way for London-based banks to secure easy access to Wall Street, which might require the U.K. to accept weaker rules on financial services less than a decade after global financial markets collapsed. The U.S. also could demand looser sanitary rules on food, such as allowing hormone-treated beef to be sold in Britain.

Transatlantic Snag

The U.K. can’t sign trade deals with other countries until it leaves the European Union in March 2019, but can prepare the groundwork for accords to be ratified soon after. Many of the same issues the EU and U.S. experienced in attempting to negotiate a trade deal could resurface. Those transatlantic talks have been on hold since Donald Trump took power in January, amid differences over data privacy and the rolling back of financial regulation.

Also speaking on the BBC, opposition Labour Party leader Jeremy Corbyn challenged the U.K.’s willingness to strike a U.S. trade deal when Trump intends to withdraw the U.S. from the Paris agreement on climate change. The EU has said it won’t enter deals with governments that haven’t signed up to the accord.

“That calls into question the whole of this government’s strategy on a one-off trade deal with the United States, which sounds awfully like the Transatlantic Trade and Investment Partnership to me,” Corbyn said.

While Fox said the agenda can be pushed forward with the U.S., the same can’t necessarily be said for negotiations with the EU. The second round of talks between Britain and the bloc ended with disagreements over the Irish border, the cost of the divorce and citizens’ rights -- issues that must be resolved before the two sides can turn to trade.

Transition Timetable

Prime Minister Theresa May has less than two years to secure her promised wide-ranging free trade arrangement with the bloc. Many businesses have urged the government to set a transition period to any new relationship once the allotted time for exit talks is completed in March 2019.

Even the Cabinet’s most hard-line Brexit supporters have been dropping opposition to such a period. “I don’t think that there’s any great ideological blockage on the concept of a transition or an implementation period,” Fox said, backing away from a position he took two weeks ago. It could be as long as 23 or 25 months, he said, and the U.K. should be allowed to negotiate new trade deals during that time.

“I think we’d have to be very clear that it was time-limited, and limited in scope,” he said. “I don’t think people would want to have it dragging on, but I think it’s perfectly reasonable to have a transition that makes it as smooth as possible.”

On July 13, Fox said in a Bloomberg TV interview he would be “very happy” with a transition period of just “a few months.”

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