Much has been made of the new UK prime minister Liz Truss saying this week that trade deal discussions with the US wouldn’t commence in the near future.
A deal with the US had been flagged as a Brexit opportunity and part of a wider UK plan to reorientate its trade across the world with less focus on the EU.
The merits of such a strategy were well disputed with views formed largely on which philosophical position the holder had on Brexit.
In any case, when the current prime minister was Foreign Minister, she did indeed lead a rapid negotiation of trade deals with Australia and New Zealand, which are currently going through the ratification process.
Even by the UK government’s own impact assessment, the deal with Australia will be miniscule – an increase of between 0.06% and 0.1% in the longer term, and in the case of New Zealand the impact assessment suggests it will add zero to the UK GDP in the longer term.
The only benefit to the UK is political in that it got the deals done quickly. However, for New Zealand and Australian agri food, the deals are a jackpot win in that in time they will deliver complete open access to the UK market for their meat and dairy exports.
US is different
When trade talks with the US were first mooted in the UK, there was concern about what it would mean by way of imports and there were fears that the UK market would be flooded with hormone-fed beef and chlorine-washed chicken.
Both of these are standard process in the US but banned in the EU and the question was which path would the UK follow – continue the precautionary approach of the EU or embrace the US approach which has scientific endorsement.
In a negotiation, this would be a red-line issue for US negotiators. However, this is not going to be an issue in the foreseeable future for the UK as no talks are planned.
When negotiations with the EU on a possible trade deal were launched in 2012 at a G7 summit in Lough Erne, Co Fermanagh, by a very pro-free trade President Obama, the issue of standards very quickly caused the negotiations to stagnate.
By 2016, the Trans-Atlantic Trade and Investment Partnership (TTIP), as the negotiation was titled, was going nowhere and after President Trump was elected, he formally ended the discussion as well as pulling the US out of the Transpacific Partnership deal, which had been agreed and the deal with Canada and Mexico which was later replaced.
Not Brexit or Good Friday Agreement
Under the Trump presidency, the US became much more inward-looking and sought to have a made-in-the-US approach to produce as opposing to encouraging free trade which many US citizens associated with imports that were undermining their own industry.
Interestingly, when President Trump was replaced by President Biden, while the tone may have moderated, the overall US protectionist policy has not. This, more than anything, is why the US is not keen on getting into a negotiation with the UK at this time, not the Good Friday Agreement (GFA) or Brexit as is often suggested.
On both of these issues, it was interesting to note a more constructive tone emerge this week on the UK desire to have the Brexit protocol issues resolved ahead of the 25th anniversary of the GFA which takes place next year.
If that issue could be solved and a positive EU-UK relationship emerge, it would be of much greater practical importance to UK business than the symbolic benefit of a US deal.
For farmers either side of the Irish border, it would be an immense relief if the threat that has been hanging over the sector for several years now was finally lifted.