US Trade Representative Robert Lighthizer had bad news for Boris Johnson last week.
Lighthizer told the House ways and means committee — the chief tax-writing committee of the House of Representatives — that securing a US-UK trade deal by the end of the year is unlikely.
It is Britain’s stated objective to strike deals with the US, Australia, New Zealand and Japan that would make up the shortfall of no deal with the EU — and open the way for Britain to join the Comprehensive and Progressive Agreement For Trans-Pacific Partnership (CPTPP). That agreement covers Canada, Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.
Lighthizer was asked if a deal with Britain could be struck this year. He responded by saying “that would be a very, very, very quick time. I think it’s unlikely that that happens. I would say it’s possible, although unlikely, that we could get an agreement this year. It is almost impossible unless the members decided they wanted to do something extraordinary to have it actually come before the Congress before November.”
Lighthizer said the timelines established in the 2015 Trade Promotion Authority law make it “nearly impossible” for Congress to consider a US-UK trade deal this year if the two sides manage to reach an agreement.
He did say that he was confident the two sides eventually would reach a deal, saying the question was only a matter of “when.”
But that was bad news for Johnson as he is desperate to get a deal in the bag before the November US presidential election, but to do that Democrats would have to agree to the deal at the same time as they are in a massive election fight with Trump.
Government models say Britain’s GDP would fall by 7.6 per cent over 15 years if a trade deal with the EU is not reached, and that a deal with the US would deliver an increase in GDP of just 0.16 per cent. “Some deal,” a US union official told me.
If Biden wins the presidency don’t expect the Democrats to be softer on trade as they too will have their eyes on agri-food, pharma and the NHS.
US and British negotiating teams have begun a second round of “virtual” trade talks. The US has tabled its proposals in most areas, expected to be around 30 to 32 chapters. Britain has tabled text only in “some” areas, he said.
The coronavirus pandemic means that there is an inability to conduct in-person negotiations. Lighthizer is on record as saying he didn’t think a major trade deal could be negotiated virtually.
“The biggest single problem is you don’t have face-to-face meetings and I’m not one that believes that are you ever going to negotiate a major trade deal over video or over the telephone. I just don’t think it’s possible. The video tends to be sort of scripted sort of things and you end up not having 10 to 12 to 15 hours together in a room, which I think is necessary to come to compromise. So that’s the biggest problem.”
The US negotiators are expected to drive a hard bargain and see Britain being in a weak position with overly optimistic statements and previous promises from Johnson hobbling Britain — while trying to get deals on five fronts, which Britain previously claimed would be a “walk in the park.”
‘Johnson desperate for a deal’
Lighthizer has already said that he believed discussions with Britain on agriculture would be “less contentious” than talks with the EU as Johnson is desperate for a deal and will perform a U-turn on previous commitments – particularly allowing US poultry washed in a chlorine solution to be sold in Britain..
The US wants science-based standards on agriculture and will not agree to a deal without them, Lighthizer said and if Britain adopts the EU’s regulatory standards, which include a ban on poultry washed in a chlorine solution, the US will give Britain less in a trade deal.
In addition the US has its eyes firmly on the pharma industry and the NHS and its ability to sell US manufactured drugs at higher prices on the British market.
Equally the US-EU talks have made little headway, but the US still sees a deal with the EU as a priority.
We also learnt that International Trade Secretary Liz Truss has “opened talks” with Australia and New Zealand as a step towards joining the CPTTP trading bloc. The CPTTP has clauses to set up secret investor state dispute courts. It has no enforceable protections on workers’ and consumer rights — and would risk an increase of dumped imports from Vietnam putting British jobs on the line.
However, despite Liz Truss’s optimism in saying trade deals with Australia and New Zealand would be “ambitious and wide ranging,” an analysis by the Department of International Trade (the department she heads up) predicts a trade deal with Australia could only boost Britain’s GDP by between 0.01 per cent and 0.03 per cent in the long term, and a trade deal with New Zealand would only boost the economy by no more than 0.001 per cent while in a worst-case scenario such a deal could actually shrink the UKs GDP.
This bad news comes at the same time that Bill Emmott, chairman of the Japan Society of Britain and former editor-in-chief of The Economist, said there is zero chance of a UK-Japan trade deal until the EU-UK trade arrangements have been agreed.
Johnson’s hopes of securing quick and ambitious trade deals are being dashed by the day.
By Tony Burke, Unite assistant general secretary and TUC general council lead on employment and union rights @TonyBurke2010
This feature first appeared in the Morning Star, June 22