With the Brexit done it is crucially important to search for additional ways to improve economy. Brexit and COVID-19 are challenges but it is also an opportunity. United Kingdom and US certainly are allies in many ways. Amid the chaos caused by the virus, the US and UK are starting negotiations for a new trade relationship. Some questions are crucial.
How long the development of new trade agreement will take?
Both leaders are not known for their patience when it comes to concluding trade agreements. As early as August at the G7 summit in the French resort town of Biarritz, Trump said a ‘bigger deal than ever’ with the British would be settled quickly.
In addition, the British government has repeatedly mentioned how lucrative a new free trade agreement with the US would be. And US senators wrote a letter to their chief negotiator Robert Lighthizer in February to make a priority of closing such a trade deal, which normally takes years.
And then came corona. Johnson became very ill and both the British and American free market economies are rapidly crumbling under all government restrictions. Since then, priorities have been elsewhere.
What do the Americans want?
There are several spearheads. For example, the US has been in conflict with the EU for some time about the import of American food that does not meet the strict European guidelines. The Americans hope that now that they are no longer part of the EU, the British will be less difficult about food quality requirements. Think of the many-spoken ‘chlorine chickens’ or hormone meat.
Trump noted a few months ago that US companies want access to the UK’s famous central health service, the National Health Service. That led to sharp criticism in London, and it seems Trump is abandoning that requirement.
What do the British want?
America is the number one export country for Great Britain. Just under 20 percent of British exports cross the Atlantic. Liz Truss, Secretary of International Trade, promised that the British will be a tough negotiator when it comes to low import tariffs on British cars, fish and ceramics, for example.
Conversely, access to the National Health Service seems a bridge too far for the British. The NHS is praised and is a sacred cow that no one is allowed to touch. The greatest fear is that prices of medicines will be pushed up. Or that British hospitals or institutes will become prey for Americans through privatization. That is politically impossible to sell.
Closer cooperation between the financial heart of the UK, London City, and that of the US, Wall Street, may well be possible. Financial services currently account for over 20 percent of UK services exports to the United States.
The British are also negotiating with the EU, is that throwing a spanner in the works?
Although the United States is therefore the most important export country for the British, it is still largely lost to trade with the EU. No less than 45 percent of British exports go to the EU, worth just under £ 300 billion.
After more than a month’s delay, negotiations on the future relationship between the UK and the EU resumed on 20 April.
For Britain it will be a tightrope act to keep the relationship with the EU and the US good. A riot about chlorine chicken will really start. Especially because the EU will not accept that the British adhere to the American food standard.
In addition, Boris Johnson does not yet want to request a postponement from Brussels for the transition phase that runs until December 31. Should it turn into a no-deal Brexit, these negotiations with the Americans will also become more important.
Trump wants to be re-elected at all costs in November. Then every new trade deal helps, right?
It is not the hottest topic at the election battleground, for sure. The chances for re-election are full.
For the time being, negotiations with the British in the US are barely receiving attention. The country is mainly concerned with the question of whether there should be an extra rescue package for American companies. Internationally, the focus is mainly on the dire relationship with the Chinese, a much larger trading partner.
Still, the American president is in favor of new accords. Think of the most important agreement he made, with neighbouring countries Canada and Mexico. Trump can use an agreement with the UK in his campaign as proof that he is modernizing trade agreements. He was elected on the message that American workers were ‘screwed’ by free world trade.