UK Official Says US-UK Negotiations Progressing
United Kingdom Secretary of State for International Trade Elizabeth Truss said negotiations with the U.S. on a free trade agreement so far have been “positive and constructive,” and she sees a way forward for the deal. “I think it is possible to protect our red lines, protect our regulatory independence, whilst opening markets,” she said.
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Truss, who was speaking on a Peterson Institute for International Economics webinar July 8, said the U.K. is looking for a high-standard agreement with the U.S., and called out digital trade, services and data as important areas of coverage.
PIIE President Adam Posen, who also participated in the webinar, was dismissive of Truss's assertions, though he said a high-standard agreement in those areas would be beneficial to all.
He called the prospects of a high-standard deal during the Trump administration “very limited,” and said that while it's always true that faster deals are usually less ambitious, it's particularly true this time. “The U.S. has all the negotiating leverage, frankly,” he said. “The U.S. currently doesn't have difficulty in the U.K. market and the U.K. market isn’t a very big one. If Vice President [Joe] Biden were to be elected, I think the U.K. does go to the back of the queue.”
Moderator Anabel Gonzalez said that differences over market access emerged in the second round of negotiations (see 2007020037), and asked Truss how the U.S. trade representative's decision to launch a Section 301 investigation over a digital service tax proposal in Britain is affecting the talks.
Truss said Britain's taxation decisions have nothing to do with the trade talks. She acknowledged that Britain is frustrated over a U.S. ban on its lamb exports. “I could also mention the Airbus-Boeing dispute,” she said. The U.S. is levying 25% tariffs on some British goods after the World Trade Organization said that Airbus had not properly remedied launch subsidies for a past airplane model. “I urge for urgent resolution,” Truss said. “The beneficiaries are simply other competitors around the world.”
When asked about climate change, and how that affects trade negotiations, Truss said any deal should not have a negative impact on the U.K.'s domestic climate objectives, which is to reach zero carbon by 2050. A trade deal should also have additional environmental benefits, whether that's breaks for low-carbon goods, or disciplines to curb the disposal of plastic that ends up in the ocean. She said the WTO should also “be much more aggressive on low-carbon goods.”
Posen said he thinks there will be a reckoning in trade policy as some countries are more aggressive in combating climate change through carbon taxes, and others, perhaps China and the U.S., lag. “Can you have the right kinds of border adjustment taxes to make it a fair deal? It will matter if you have goods produced in countries that are dirty. Poor countries, that’s one thing, but your rich competitors is quite another,” he said. “It’s going to be quite hard to work out.”