Wednesday, May 27, 2020

U.S.-U.K. trade deal, President Trump boasted, would be 'fantastic and big.' Boosters may be dissappointed.

Mar 03. 2020
File photo of Trump/ Syndication Washington Post
File photo of Trump/ Syndication Washington Post
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By The Washington Post · William Booth · NATIONAL, BUSINESS, WORLD, US-GLOBAL-MARKETS

LONDON - As Britain and the Trump administration prepare to launch talks to craft a free-trade agreement between the two close allies, Prime Minister Boris Johnson's government revealed Monday that even a super deal won't be worth that much money to either side.

President Donald Trump has boasted that a trade pact with Johnson would be "fantastic and big."

Trump has heaped praise on Johnson for his winning campaign to leave the European Union. Both leaders have promised that once the United Kingdom is free of Europe's regulatory shackles, a boom in trans-Atlantic trade was in the offing.

But in the best-case scenario, in a tariff-free and quota-free deal, trade between the two countries would increase by $20 billion over the next 15 years, according to the British government.

The United Kingdom's end of that? About $4.3 billion by the mid 2030s.

One reason for the relatively humble sum is that Britain and America already do a brisk trade in goods and services - some $280 billion in 2019.

Britain is the world's fifth largest economy and the United States is its largest trade partner after the European Union, accounting for 19% of all exports and 11% of imports in 2018.

In an analysis published Monday by Britain's Department for International Trade, in anticipation of U.K.-U.S. trade talks set to begin in coming weeks, economists forecast that a free trade deal with the United States could boost the British economy by 0.16%. Brexit critics say that incremental increase will not come close to compensating for the economic hit Britain is forecast to suffer by leaving the European Union's single market next year.

No matter, Britain is raring to make a start talking with U.S. Trade Representative Robert Lighthizer, who was in London last week. About 100 negotiators from the two countries will likely start shuttling across the Atlantic in coming weeks.

The talks face brisk geopolitical head winds, as they are set to begin during the middle of a presidential election, alongside a possible coronavirus pandemic. The negotiations will also run in parallel with Britain's attempt to strike a new post-Brexit deal with the EU, which has its own set of demands, which run contrary to U.S. interests. 

Speaking ahead of the release of Britain's trade negotiating mandate, Johnson on Monday said, "We have the best negotiators in the business and of course we're going to drive a hard bargain to boost British industry."

The prime minister said, "Trading Scottish smoked salmon for Stetson hats, we will deliver lower prices and more choice for our shoppers." 

And while the dollar benefit might not be all that fantastic, Johnson said the most important thing is "this transatlantic trade deal will reflect the unique closeness of our two great nations."

The U.S. Congress and the Trump administration will surely press Britain to open its markets to American agriculture goods.

Britain, while a member of the European Union, essentially banned imports of America's hormone-injected beef and its chlorine-washed chickens. 

On Monday, Britain's International Trade Secretary Liz Truss told the BBC, "We will not diminish our food safety standards."

She also said that country's National Health Service "is not on the table," nor will Britain bend to see the U.S. set the prices that the NHS pays for drugs. 

"Those are two very clear red lines in our trade deal," she said.

 

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