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Why we need a UK-US Trade & Economic Council

Emanuel Adam / Feb 2022

Image: Shutterstock

 

On 19 January the UK Secretary of State for International Trade, Anne-Marie Trevelyan, US Secretary of Commerce, Gina M. Raimondo, and United States Trade Representative, Katherine Tai, announced the start of bilateral discussions to solve the transatlantic dispute over the Section 232 tariffs; an exercise that follows an agreement reached between the US and the EU on the same issue in October last year. 

An agreement between the US and the UK on how to address global steel and aluminium excess capacity, including the termination of the US tariffs applied on imports from the UK, and the UK’s retaliatory tariffs on certain US products, would remove one of the last big trade irritants that have defined discussions about the transatlantic economic corridor for a long time.  

Solving the issue will not only lift a burden off affected industries and companies, it can also pave the way for new policy solutions that build on efforts made to further integrate the UK and US economies, such as the negotiations for a comprehensive Free Trade Agreement (FTA).

Whether there is a chance for a UK-US FTA anytime soon has been a question regularly put to political and business leaders since formal negotiations were halted in October 2020. A proper assessment of political dynamics and priorities suggests that the likelihood of negotiations recommencing is rather small at this point, particularly in the context of the US domestic agenda and external events such as the tensions at the Russia-Ukraine border or the West’s adjustment in its relationship vis-à-vis China. 

These dynamics, priorities and external events may take away crucial energy and resources from substantial US-UK activity on trade policy. In addition, while feasible, addressing current scepticism in the US over the UK’s stance on the Northern Ireland protocol or the negotiation of issues where the US and the UK are less aligned, such as agriculture, would require stronger political and external momentum. Political theory and real-life experience would suggest that the ‘stars are not aligned (yet)’. 

While negotiating FTAs can certainly play a key role in enhancing trade and investment and reflect the strong political, economic, and cultural ties between countries, it is not the only way to make progress in an existing economic relationship. Rather, it can be an end goal, or the ambition for ongoing efforts. In addition, some areas of economic trade cooperation, such as mobility of talent or work around small business trade promotion support can be worked on outside of the scope of a trade agreement.

This is where the proposal of a UK-US Trade & Economic Council comes in. Using the framework of a common policy advocacy structure – something that is also being used in the US-EU context with the establishment of the US-EU Trade and Technology Council - the Council brings together a set of workstreams that reflect either existing efforts that could be further emphasized today by governments, or areas of cooperation that reflect new priorities of the transatlantic business community. By offering a pragmatic yet ambitious approach to economic cooperation, the proposal aims to help renew momentum behind the UK-US trade agenda and encourage governments to take action on things that are front of mind for the business community right now. 

For example, shorter application times for visa renewals, mutual recognition of qualifications, or expanded support for small businesses keen to expand across the Atlantic can make all the difference for ambitious businesses. Innovative and creative work on regulatory approaches to new technologies, data flows, sustainable and digital trade can set the benchmark globally. 

Engaging in this kind of work would re-emphasize the economic importance of the corridor. In fact, the UK and the US remain important trading partners, and by far each other’s most important source of Foreign Direct Investment (FDI). Moreover, putting an emphasis on, and investing political capital in this kind of work is relevant because the window of opportunity for an ambitious trade agreement may open again one way or the other. Policymakers and key stakeholders ought to be ready when the moment comes. The Trade & Economic Council, and the ideas that it stands on, can be a way and inspiration to achieve that. 

 

 

Emanuel Adam

Emanuel Adam

February 2022

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