Jo Biden is the designated President of the United States. We take a look at what's at stake for European and UK businesses. All for reset between the EU & US? US-UK off the table?
A Biden Administration - more opportunities for EU/UK-US trade?
While the battle for the White House is never truly finished, EU and UK business owners and entrepreneurs are looking with excitement over the Atlantic for signs of opportunities for more trade with the US. So, what are the prospects of a US-UK or EU-US FTA in the next months and years to come? How can EU & British businesses leverage the opportunity for a closer relationship with the US after these elections? We take a look.
Getting a deal with America is not as easy as one may think Trading with America has never been straightforward, especially if you are European, and regardless if a Democrat or a Republican occupied the White House.
More than five years ago, under the Obama administration, the EU and the US froze far advanced negotiations on what was known the Transatlantic Trade and Investment Partnership (TTIP), amongst fierce criticism and public opposition and fear of possible negative impacts on democracy, influence, health, economy, society and the environment. What would have been a far-reaching trade agreement between the European Union and the United States with an estimated potential to increase trade between the two regions and boost economies by €120 billion (EU) or €90 billion (US), never came to be. Today, the deal is "obsolete and no longer relevant" by the European Commission.
Under Trump: US Lobsters win big, Harley Davidsons lose out Today, a Republican White House is engulfed in a trade conflict with the European Union on its subsidies for aircraft maker Airbus and gained support from the WTO (subsequently the WTO also supported a counterclaim by the Europeans on illegal subsidies of the US for Boing). Both camps threaten to charge additional customs duty on various products, ranging from steel to Tennessee Whiskey and Harley-Davidson. If enacted, these products would be much more expensive to import into the EU, whilst other EU products also face punitive duties. Yet one US sector is about to win big under a Republican White House: Under a mini deal struck, the EU will eliminate tariffs on imports of U.S. live and frozen lobster products. U.S. exports of these products to the EU were over $111 million in 2017. Some may even speculate that this is why President Trump won one electoral vote in Maine in the 2020 race?
Lessons for a UK-US trade deal For the UK, a Biden Administration might be more challenging that a Trump administration, as Biden is on record as not supporting Brexit and favouring multilateralism rather than unilateralism. But maybe it's not that simple. So, what can the British learn from the past for our negotiations with the US? I think there are three lessons:
First, I would argue that trade agreements of this magnitude are a highly political affair and the negotiations strategies can change when trade negotiators and their leaders change. As Biden prefers a multilateral rather than a bilateral approach to trade negotiations, could his priorities shift to resurrecting a withering WTO or picking up the abandoned trade deal with Europe, rather than pushing through a deal with Britain?
Secondly, to be successful, negotiations with the US should be transparent and ensure that all voices in the United Kingdom are heard, from farmers to environmentalist, to the finance sector and NGOs. People will only buy into a deal with the US, if the way they live, work, eat can be maintained and the environment, animals and plants protected. Failing to involve civil society at an early stage can spell disaster, as the EU deal has shown. Remember, if it would be easy to get a deal with America, the EU would have already gotten one.
Thirdly, FTA negotiations are complex and usually lengthy. Negotiators spent years debating, drafting and re-drafting, then politicians need to ratify such deal with national and even regional parliaments to become law of the land. This cannot be rushed and done overnight. We should not expect a deal in the next couple of months, it could even be years or, even, never.
Should we ever get one, brace yourself! A leaked draft T-TIP agreement had over 1000 pages. Businesses hoping for zero-tariff market access to the US will find themselves flicking through pages and pages of lawyer talk to figure how to apply the rules of such agreement.
In particular, businesses wishing to leverage the benefit of this agreement would need to understand the particulars of the so-called “rules of origin”, which determine the economic nationality of the good shipped. You need to make sure that the goods are actually from the UK or the US and not secretly from the “loathed” EU. Getting this right required knowledge, finesse and patience.
Conclusion: In America we trust, right? Getting an FTA with America appears to depend on what the US priories of the President are in 2021. A White House occupant sceptical of the UK’s Go-It-Alone strategy may tackle domestic issues, like the fight against Covid-19 or healing racial divisions rather than push through a trade deal.
Regardless, FTA negotiations are not a one-way street. Britain has a say, too and should exercise the right to speak up and defend our way of life and our people’s priorities. And, speaking as the Brit in me, if the deal is just not right, we would expect our leaders to say so and walk away – just like we threaten to do with the EU ever so often! As a truly independent nation, having fought so hard to get to where we are right now, we should be very selective for whom we give up or limit our newly found independence.
Finally, I will leave you with a thought leadership piece on chlorinated chicken! My favourite subject :-)
https://www.customsmanager.info/post/it-s-not-that-the-chicken-was-washed-in-chorine-its-why-it-had-to-in-the-first-place If you like to learn how to leverage the opportunities from free trade agreements, get advice or training, do not hesitate to reach out to Arne at email@example.com