Transatlantic Business

The Time To Reach A Transatlantic Free Trade Agreement Is Short - Let’s Use It Wisely

It Finally Happened

On the 2nd of March 2020, it finally happened: After a long wait, the United Kingdom (UK) published its objectives for a future UK-US Free Trade Agreement (FTA). Spanning over 180 pages, the document consists of an impressive bundle, laying out the UK Government’s strategic approach, objectives, as well as comprehensive evidence supporting the case for an FTA with the United States (US).

The Case For UK-US Economic Integration Is Strong

Despite critics pointing out that the economic benefit of a UK-US FTA would not outweigh the economic damage should the UK and the EU not reach a trade agreement by the end of the year, the case for future deeper economic integration between the US and the UK is strong.

For the UK, the US is already the single most important destination for exports. Over 30,000 British businesses export to the US. British businesses are present in every single US State, employing over 1.5 million Americans. For American businesses, the UK is the 7th most important trading partner. Over 40,000 US businesses export to the UK; over 7,500 businesses have a presence in the UK, equally employing well over a million people.

Building on such an important trading relationship makes sense. Looking beyond the numbers, every single simplification, whether it be less processing time in customs or increased market access can make a difference to a company and to local and regional communities.

Time Is Short

With the UK objectives for a UK-US FTA now released, negotiations are likely to start soon. Historically, when starting negotiations for a (comprehensive) trade deal, one would look at least several years of negotiations to find compromise, draft and then implement the texts. It is true that both UK and the US have done a lot of work over the past two years towards this. Earlier this year, US Secretary of the Treasury, Steven Mnuchin, said that the US would dedicate a lot of resources to secure a deal. Yet, when looking at successful policy-making through the necessary interplay of policies and politics, time seems rather short.

In particular, the UK has to balance its trading interests with the EU and the US, two economic entities with fundamental differences in some areas. While understandable and economically reasonable, this delicate balancing act will delay decision-making on policy issues between the UK and the US. This is in addition to areas where the UK and the US will most likely have to spend a significant amount of time to iron out differences, such as food safety, sustainability, or online harm protection.

Second, the UK Government has ruled out a scenario in which both the UK and the EU would allow more time to negotiate post- 2020 should they not come to an agreement. This will mean that after summer, business attention in the UK will move back to ‘no-deal’ preparation, taking away momentum and resources from supporting a UK-US deal.

Even if negotiations between the UK and the EU were to make quick progress, the focus of the US will soon be squarely on the upcoming election. No matter who is in the White House come November, political standstill on policy issues is likely towards the end of the year.

This takes us to a final signpost that defines the timeframe the UK and the US have got. By July 2021, the US Congress will need to renew the Trade Promotion Authority (TPA), the laws that guide the US Administration in how to pursue trade deals. Should the new TPA be different from the current version, a negotiated text may have to be amended, if not re-negotiated.

Let’s Use it Wisely

In my view, we are looking at a trade honeymoon of 5+ months. That is short. The good news is that there is enough common ground between the UK and the US negotiating objectives to be optimistic about an agreement. Areas like digital trade or trade facilitation are particularly relevant to smaller businesses, and can help the UK and the US lead the way. It is these areas where there is common ground that should set the direction.

While ambitious, the UK and the US should focus on these areas of commonality so that something can be agreed before the summer. To acknowledge and celebrate the release of the UK negotiation objectives, BritishAmerican Business published a White Paper making a case for making labour mobility between the UK and the US easier. We know that immigration issues are challenging to include in trade talks, but if the UK and the US can agree on tangible issues like this, then we have truly reason to be optimistic about the future transatlantic economic relationship.

Emanuel Adam is Executive Director of BritishAmerican Business in London. As an influential advocate for transatlantic trade, he has been a leading voice for combining a positive vision for trade with a realistic approach that delivers local, and tangible benefits to businesses. Visit www.babinc.org for further information.

The ‘Special Relationship’

The United Kingdom has no closer ally than the United States. Jointly our two countries take action to meet the challenges we face locally, nationally and globally. Our bilateral co-operation reflects the common language, ideals and democratic principles of two nations built over the centuries.

Despite the current period of uncertainty, largely owing to the UK’s decision to leave the EU and a new Administration in Washington DC, there is considerable reason for optimism as the British-American economic relationship remains a source of strength. We are the largest investors in each other’s economies and every day more than one million Americans go to work for a UK company headquartered in the US. Similarly, more than one million British people go to work every day for an American company in the UK. The business activities of thousands of companies drive trade and investment across our two nations.

It was in this spirit that BritishAmerican Business recently launched two new publications, in partnership with the UK Embassy in Washington DC. Across the Pond looks at 32 transatlantic success stories, featuring companies who have successfully branched out across the Atlantic Ocean. Featuring stories from companies including Boeing, National Football League, BT, NBC Universal, Brompton and Jaguar Land Rover among others these stories highlight the best qualities of the ‘special relationship’. Take a company like Zebra Technologies, founded in the US in 1969, who entered the UK market in 1991 with the establishment of their European HQ in Buckinghamshire. Since that time, the company has grown to more than 470 employees in the United Kingdom. Or Pavegen, founded in the UK in 2009, who have grown to become the global leader in converting footfall into energy and data. The company recently completed installations in Dupont Circle, Washington DC, powering outdoor street lights and has worked with leading US brands including American Express, Ford and Nike. We were delighted to welcome more than 100 guests to the iconic One Great George Street venue for the official launch of Across the Pond, including senior MPs, representatives from the UK and US Government and BAB members.

Promoting the US-UK relationship lies at the very heart of what BritishAmerican Business does, and in that context it was a welcome opportunity to be invited to address the UK House of Commons International Trade Committee looking at UK-US relations. Addressing our Submission entitled, Moving Forward, we identified ten key areas that serve as a starting point for collaboration between the two countries that could serve as a framework for a future trade agreement. Below are the 10 areas that we see as a starting point for collaboration, which can help leaders strengthen this special relationship and shape objectives for the future:

1. Investment

The UK and the US share the world’s largest foreign direct investment partnership. We encourage the UK and the US Government to make a joint commitment on investment, reflecting the largest bilateral investment relationship of one trillion dollars between the UK and the US and offering joint leadership to sustain open, inclusive and competitive markets as a basis for prosperity. As part of this commitment, the UK and the US should develop new approaches for a state-of-the-art dispute resolution mechanism. Further, the UK and the US should explore incentive schemes for bilateral investment and capital flows, particularly around public-private partnerships and with respect to government procurement opportunities.

2. Regulation

The UK and the US should continue searching areas and sectors where the alignment of bilateral regulatory systems can lead to new business opportunities and reduce costs of unnecessary regulation. Future alignment should be around science based pursuit of norms that ensure balance and proportion between risk and precaution, while supporting innovation led approaches to deliver better outcomes in healthcare, consumer safety, environmental management and emerging technologies.

3. Research And Innovation

The UK and the US have world leading research and innovation systems, benefitting our economies and citizens. We encourage leaders to develop a joint agreement that builds on the existing Horizon 2020 EU-US Agreement and enables further collaboration in science and research between UK and US scientists and researchers. The UK and US Governments should also explore increasing collaboration in higher education, particularly between our world-leading universities, which will allow for our countries to build on their joint leadership role and to draw on the great economic potential linked to it.

4. Financial Services

The UK and the US are home to the leading financial centres in the world. UK – US financial services offer deep pools of liquidity and agile product and service structures and share many common features including an overriding commitment to prudence over excessive risk taking. UK and US Governments should make a joint commitment to the UK-US financial services relationship that seeks to explore how UK and US markets can be integrated under one regulatory umbrella.

5.Talent Mobility

Attracting and employing skilled workers by drawing on an international pool of talented professionals is imperative in yielding a successful economy, particularly to address shortages of high-skilled labour. Our history of immigration and the role played by immigrants has been closely tied to the economic success of our nations. The UK and the US should therefore examine new visa arrangements for UK and US citizens to foster the bilateral movement of talent, with enhanced abilities to live, study and work.

6. Data

The free flow of data is more crucial than ever to companies operating across the Atlantic. Building on progress being made with the EU-US‘Privacy Shield’ mechanism, the UK and the US should lead driving new pragmatic solutions that protect citizens’ privacy while allowing for the free flow of data. In any innovation economy, data is the heart and soul of growth. The pragmatism of the UK and the US can offer a path that is globally compelling for sustainable deployment of data driven technologies.

7. Services

The UK and the US economies are characterised by large and growing services sectors. The UK and the US should explore ways of enhancing trade in services, particularly in business services, which are a key input for global values chains. The UK and the US should also investigate ways to further enhance competition and encourage growth in the market for ICT and services.

8. A Rules-Based System For Trade

The UK and the US have been leading in creating a global rules-based system for trade. The UK and the US should assess if and how both countries can help further develop global governance structures of trade, particularly through the World Trade organisation (WTO). With that, the UK and the US should commit their leadership role in the Trade in Services Agreement (TiSA) negotiations.

9. A New Trade Policy

Both the UK and the US benefit from trade, but trade also changes economic infrastructures. The UK and the US should be leading in developing a new trade policy that includes improved mechanisms, such as trade Adjustment Assistance Programmes, designed to help workers to adapt to global trade and protects public service obligations, while spurring innovation and growth for our economies.

10. Trade Outreach And Consultation

In light of future formal trade arrangements, the UK and the US should prepare trade education campaigns aimed to showcase the benefits of mutual trade and investment for our economies and its citizens. Governments should also use the opportunity to map out future stakeholder consultation processes on trade.

BritishAmerican Business – Join Our Community Today!

The special relationship remains the talk of the town in both the United Kingdom and United States – and it should come as no surprise. Both the UK and USA remain the top sources of Foreign Direct Investment in one another’s economies, directly employing 1.25m people in the USA, and 1.5m people in the UK. But this relationship doesn’t stop at business – indeed, with record numbers of flights between the UK and USA, alongside new direct routes, and the use of speedy e-gates in the UK being extended to US citizens arriving here, each day the Atlantic is looking less like an ocean and more like a puddle for transatlantic travellers.

Our mission is to ensure that this relationship grows in all ways, bringing our two countries closer together than ever before. Only recently, we published the latest in our Trade & Investment Guide series – Finding Your Way: The Trade & Investment Guide to the UK 2019/20 which provides guidance on a range of business issues such as Tax, Intellectual Property, Logistics and Immigration for US companies looking to take their business transatlantic.

Business support is a key component of our mission, illustrated best by our regular Accelerate Series Roundtables. Taking place throughout the year in both New York and London, the Accelerate Series brings together household names, unicorns, and SMEs just finding their feet to discuss, learn and support one another to grow and take their business transatlantic.

But at BritishAmerican Business we understand that underpinning this relationship is a community of friends passionate about the special relationship. That’s why throughout the year we hold events to bring this community together for a celebration of all things transatlantic, away from the politics.

So, whether it’s to take advantage of our fantastic programming, get support for your transatlantic expansion, or you just want to be a part of this growing community, we say “Welcome!” Get in touch today and find out what opportunities await.

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