Brexit Institute News

(Transatlantic) Oceans Apart? The State of the Current EU-US & UK-US Trade Negotiations

Elaine Fahey (City, University of London)

At the time of writing, it seems apparent that EU-US trade negotiations have broken down in advance of the November US elections. The US was reported to have “stepped back” in recent weeks from talks aimed at defusing a longstanding dispute over aircraft subsidies. Current negotiations on elimination of tariffs for industrial goods and on conformity assessment relate to a mandate after the EU-US Summit of 2018. They represent at best a ‘TTIP-light’ form of agreement if ever reached and have been plagued by a lack of transparency, rising MS sensitivities and the complex voice of the European Parliament.

On President Trump on June 5 demanded the EU “drop” its 8% tariff on imports of American lobster “immediately” in response to US fishing-industry representatives who complained about European market barriers and threatened car tariffs.  Notably, market access issues are not stated to be discussed in the EU-US talks yet they remain highly important for agricultural exporters.[1]

The U.S. was permitted recently by the WTO to impose tariffs on $7.5 billion of European goods in retaliation over illegal government aid to Airbus with another WTO ruling likely to follow in July on a parallel EU case against American aid to Boeing. The EU-US trade negotiations have been striking for their informality and lack of transparency and general lack of engagement since the EU-US summer of 2018 and storm of tariff wars since then.

By contrast, the UK has proceeded more fulsomely and with greater openness towards the US as to its trade negotiations after several rounds since 2017. The current US administration has vociferously supported Brexit and UK’s needs and desire for a US trade agreement.

However, UK domestic concerns increasingly heighten over the place of agriculture and food standards in a trade agreement with the US. The place of a level playing field as to standards and EU values has occupied a thorny place in the UK-EU negotiations which the UK has steadfastly refused to agree to in any sense at all comparable to the EU-UK Political Declaration signed.[2] Although the place of a level playing field appears to be open to European compromise at the negotiation table, the European Parliament is increasingly raising its voice as to the understanding of level playing field existing, with reports of a veto threats circulating in media. This may come to haunt the UK on both sides of the Atlantic.

The UK stands to have many complex battles in the UK-US negotiations yet many will hinge upon its choices in the ongoing UK-EU negotiations, currently teetering towards no deal.

One area of potential direct engagement with good synergies appears to be on digital trade and data flows, of vital interest to the transatlantic area more broadly and representing an area of increasing convergence rather than divergence. There, both of the UK-US / US-UK negotiating objectives appear extremely ambitious, modern and highly aligned to potential objectives and values in the corresponding UK-EU negotiations possibly also. [3]

The trade negotiation objectives of the UK and US appear heavily centred upon the importance of Digital Trade and reflect considerable support from stakeholders and participants.[4] The place of the GDPR and Privacy Shield is likely to continue to prove to be vulnerable as between the two negotiations and force the UK to make starker policy choices as to the economy, privacy and data flows. The UK has already engaged in extensive efforts to scope the likelihood of an adequacy decision with the EU.[5] This shows the UK’s intention to protect data and digital trade to a high degree and to adhere to EU standards, practices and norms as far as possible as a third country, in particular, as to the GDPR. An adequacy Decision for the UK is, however, not a foregone conclusion, not is a trade agreement with a robust modern digital trade agreement where the EU continues to forge ahead with best international practice.[6] The synergy between the respective UK-US and UK-EU negotiations make for complex discussions in the months to come.

Elaine Fahey is Jean Monnet Chair of Law & Transatlantic Relations, City Law School, City, University of London

Image credit: European Commission, Nancy Pelosi and Ursula von der Leyen

References:

[1] The EU had sought to exclude agriculture from the EU-US talks on the basis that it is a sensitivity of the EU side.

[2] Statement of 15 June EU-UK High-Level (Video) Conference on the EU-UK relationship: https://www.consilium.europa.eu/en/press/press-releases/2020/06/15/eu-uk-statement-following-the-high-level-meeting-on-15-june-2020/

[3] Department of International Trade, ‘The UK’s approach to trade negotiations with the US: UK-US Free Trade Agreement’ (2 March 2020) available at <https://www.gov.uk/government/publications/the-uks-approach-to-trade-negotiations-with-the-us>

[3] USTR United States-United Kingdom Negotiations: Summary of Specific Negotiating Objectives (February 2019) available at <https://ustr.gov/sites/default/files/Summary_of_U.S.-UK_Negotiating_Objectives.pdf>

[4] Cf Heather A. Conley, Allie Renison, Kati Suominen ‘US-UK Digital Policy Roadmap for the Future’ CSIS/ IoD (November 2019) available at <https://csis-prod.s3.amazonaws.com/s3fs-public/publication/191126__US-UKDigitalTrade_WEB_v2.pdf>

[5] https://www.gov.uk/government/publications/explanatory-framework-for-adequacy-discussions

[6] See Oliver Patel and Nathan Lea, ‘EU-UK Data Flows, Brexit and No-Deal: Adequacy or Disarray?’ (23 August 2019) available at <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3441698>

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