Potential free trade between the UK and U.S. post-Brexit

Last week I was in Washington D.C. taking the temperature of U.S. businesses and government on a possible free trade agreement between the UK and U.S. after Brexit. I also spent 24 hours in Ottawa, talking to the Canadian government and business community about what it’s like to negotiate on trade with the U.S.

I came back with three overall reflections:

For businesses both sides of the pond, negotiations start with Europe

The key message from the U.S. business groups I met was that American businesses want the UK to strike a deal with the E.U. The need for a “negotiated settlement”, “smooth landing” and continued close alignment on rules and regulations between the UK and Europe were a constant feature of these conversations.

Interestingly, while there is clear support from American business for making trade easier with the UK, the businesses I spoke to were equally clear that this mustn’t be at the expense of the UK’s future trade with Europe. The message was clear: the UK should take a “Europe first” approach to any trade negotiations with the United States.

China looms large

In all my visits to D.C. over the past three years almost every conversation on trade – with business and the administration – starts with China. Whether it’s prospects for the ongoing trade negotiations, the involvement of Chinese firms in UK critical national infrastructure, or the race for global leadership on technology, China dominates. This was summed up in one meeting I had at a leading D.C. think tank who told us that if the UK was going to be negotiating with the U.S. on trade, it better come prepared with it’s talking points on China.

This was reaffirmed in Ottawa where the Canadian government were clear that the UK should expect that the non-market economy clause in the updated North American Free Trade Agreement (USMCA) will be included in any trade agreement negotiation.

There’s bang for our buck beyond the Beltway

Finally, a consistent message in all meetings was the need for British companies to talk up their investment credentials across the U.S. and seek greater market access at the state level, not just focusing on the things that can be achieved in Washington D.C. For example, 13 U.S. states are not currently covered by the commitments of the World Trade Organisation (WTO) Government Procurement Agreement (GPA) which means that there continue to be restrictions on British investors’ ability to secure contracts in state level procurement.

The British government has expanded it’s footprint at the state level, appointing a Her Majesty’s Trade Commissioner for North America and increasing the number of trade specialists from two to 15 in the past three years, but there is more to be done.