Hopes fade for UK-US trade deal: what’s the alternative?
London eyeing US-Mexico-Canada pact but economists say benefits of joining would be extremely limited
Four years after Boris Johnson promised that the UK would be “first in line” for a post-Brexit trade deal with the US, hopes of such an agreement being reached are being played down by both London and Washington.
Asked about the possibility of a UK-US free trade agreement ahead of private talks with Johnson yesterday at the White House, Joe Biden said: “We're going to talk about trade a little bit today and we’re gonna have to work that through.”
Johnson also dampened expectations, telling reporters that “the reality is that Joe has a lot of fish to fry”.
The prime minister refused to speculate whether such an agreement could be reached by the 2024 general election. And according to The Telegraph, “UK government figures have given up hope of striking a deal next year”.
“The development is a stark admission of a changed trade strategy,” the newspaper continued. In the years since the 2016 Brexit vote, a UK-US trade deal has been “a key foreign policy goal” for London, but “government officials are now looking at other ways to boost Transatlantic trade”.
One option would be joining the US-Mexico-Canada trade deal (USMCA), a low-tariff pact negotiated by then president Donald Trump that came into effect in July last year.
The pact was a revamp of the North America Free Trade Agreement, which Trump had criticised. The USMCA updated old agreements relating to issues including intellectual property and digital trade, and will expire in 2036.
A senior government figure told The Times that “there are a variety of different ways” that the UK could try to get in on the deal.
“The question is whether the US administration is ready,” the unnamed source added. “The ball is in the US’s court. It takes two to tango.”
Joining the deal would mark a realignment of British trade away from Europe and across the Atlantic.
However, the BBC’s global trade correspondent Dharshini David warned that the pact has “limited coverage of the UK's biggest strength when it comes to selling to America, namely services”. The overall gains “may be very limited, perhaps less than 0.1% of GDP”, she wrote.
According to The Times, Downing Street is also believed to be “examining whether it could deepen trade with the US via the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)” - a trade deal with 11 signatories including Canada, Mexico, Japan, Australia and Singapore.
Britain applied to join the pact in February, and “the US has recently indicated it is considering joining” too, said the paper.
Another option reportedly being considered by London is to pursue a series of smaller UK-US deals on separate issues, such as aligning data and digital standards.