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Telegraph: Britain could enjoy a new trade deal with America in just 180 days after Brexit

Date: 04 04 2017

Britain could enjoy a new trade deal with America in just 180 days after Brexit

DAVID CAMPBELL BANNERMAN

Now that the United Kingdom has officially given notice of leaving the EU under Article 50, the focus on preparing new free trade agreements (FTAs) outside of the central UK-EU trade deal ramps up a notch.

Whilst legally we cannot sign a bilateral trade agreement whilst still a member of the EU, we can prepare the ground – and even have three quarters of each new deal in place before leaving. Hence the new drive by senior figures including the Prime Minister for bilateral trade deals. Whilst there is much collective wailing and negativity about delivering fast deals, bear in mind the former Australian Prime Minister ordered 3 trade deals with their largest trading partners – Japan, China and Korea– and these were all done in one year.

The EU was initially opposed to the UK pursuing its own early deals as“a very aggressive action” as Trade Commissioner Malmstrom put it to me personally, but now the EU seems more relaxed. Their real concern is that one nation gets away with ‘cherry picking’, so the clean break outside the Single Market and the Customs Union is clear and reassuring to all.

As a member of the European Parliament’s Trade Committee for 7 1/2 years I know how the EU does trade deals and I cannot see any conflict where the EU either has abandoned or not stated their own trade deals – this includes China, TTIP (USA), India (paused after 8 years), and the Gulf Cooperation Council (stopped after 18 years). The New Zealand and Australian FTAs with the EU could run in parallel with UK bilateral deals, so again there does not seem to be a conflict.

One of the first in line, or perhaps I should say queue after President Obama’s unwise intervention in the referendum, is a US-UK free trade deal. It is a great place to start as trade relations are so developed and natural in any case.

Few people realise that the USA is Britain’s top export destination and the UK’s second-largest trading partner. There is $588bn of US investment in the United Kingdom whilst the UK had invested up to 2014 some $449 billion into the American economy. We are each other’s largest investors, employing over a million of each others’ citizens. Britain even has a trade surplus with the USA compared with a £71 billion deficit with the EU. All this after 44 years of membership.

So what should be in a US-UK trade deal and how long would it take? My Leave Means Leave paper ‘Right to the front of the queue’ suggests a two stage approach: go for a fast deal in 180 days after Brexit happens, but continue working on a longer term, deeper and more comprehensive deal over time.

The quick deal I suggest is educated by the Canadian-EU trade deal CETA I worked on through the European Parliament’s trade committee. The key elements of it would be: Zero tariffs and market access – lowering or removing all duties, taxes or other import fees for goods between the US and the UK, mostly immediately. That would mean more exports of Jaguar Land Rover,  Mini cars and British agricultural goods, whilst making US jeans, jeeps and Californian wine cheaper in the UK.  Numerical quotas too would be cut or removed.

On services it would mean co-operation over technical (normally meaning regulatory) barriers to trade under World Trade Organisation (WTO) guidelines, but through voluntary cooperation not EU-style harmonisation, diktats and fines. It should streamline customs procedures and make them more efficient too. There would be measures too to aid Cross-border trade in services.

On the arguably most controversial aspect – of Sanitary and Phytosanitary measures on plant and animal foodstuffs, the recommendation is not to change current UK standards, thereby not allowing chlorine chicken, hormone beef or Genetically Modified Organisms (GMOs) into the UK market, but to review this on the basis of scientific analysis and proper debate after five years.

Financial services would be an essential clause, enabling financial institutions and investors in the UK and the US to benefit even more from fair, equal access to each other’s markets. On the related Investment and Investor Dispute Settlement side the deal would avoid the pitfalls of ISDS which helped kill the US-EU TTIP deal, but to embrace a common new English law style mechanism based on one third US, one third British and one third independent adjudicators.

There would be strictly controlled Mode 4 temporary business visa entry which is not free movement, but provides legal certainty for trained workers, who temporarily enter the UK or the United States to do business. On workers too there would be mutual recognition of professional qualifications, which is a key part of the CETA deal. This would allow the UK to attract more well qualified US professionals to the UK, making up for some EU medical staff who choose to leave the UK. There would be an E-commerce clause which ensures personal information on the internet is protected and online services are spared customs duties.

Other aspects would include a Rules of Origin agreement to set out clearly what  counts as having been made in the UK or made in the USA, particularly where there is a complex component supply chain. A State Owned Enterprises rule would ensure  both parties have the full freedom of choice in the way they provide public services to their citizens. Whilst requiring a separate bilateral aviation agreement, the report argues for retention of the benefits of the incomplete US-EU “Open Skies” transport access agreement but to improve on this.

Finally on the short-term front, relevant Common Tax Reform – cooperation over where companies levy profits and where they sell products in order to address anomalies and to encourage the easier repatriation of profits to both jurisdictions.

The longer term agreement would build on this initial deal over a longer time period, and may contain clauses such as: Subsidies; Competition policy; Telecommunications; Domestic regulation; Intellectual Property (IP); International maritime transport services; Administrative and institutional Provisions; and Bilateral dialogues and cooperation.

Whilst focused on the trade aspects there is a political aspect possible to build on our strong bonds. Just as Canada has a separate “Strategic Partnership Agreement” now with the EU, and as Britain could with the EU, so an SPA could be be negotiated between the US and UK to cement many of the institutional arrangements such as a US-UK Joint Ministerial Committee to turn the UK into a “Transatlantic Bridge” between the USA and the EU via Britain.

In short a US-UK trade deal is rich in potential, is a natural addition to the well-established “Special Relationship” and could be delivered in just 180 days of pressing the button.

April 4th, 2017: Telegraph