A potential US-UK trade agreement is back in the spotlight as US President Donald Trump tweeted on Thursday that “the potential is unlimited” for a large-scale deal between the two sides.
His enthusiasm on Twitter (TWTR) failed to acknowledge the deep opposition and controversy that has already plagued these talks, which are expected to last for years. Experts told Yahoo Finance UK that the talks may not lead to any deal at all.
“It’s already in trouble,” according to David Henig, a former trade negotiator who is now director of the UK Trade Policy Project at the European Centre for International Political Economy. “Right now, the way it looks, it’s not happening anytime soon.”
Just last week, former UK agriculture minister George Eustice publicly called out the US for their questionable and antiquated agricultural practices, raising the hot-button issue of chlorine-washed American chicken.
The US must “learn to abide by British law and British standards, or kiss goodbye to any trade deal and join the back of the queue,” Eustice said in an opinion article in the Guardian. “A modern trade deal is not simply about commerce, it is also about values.”
My Administration looks forward to negotiating a large scale Trade Deal with the United Kingdom. The potential is unlimited!
— Donald J. Trump (@realDonaldTrump) March 14, 2019
The US and the UK have been discussing a potential free trade deal since July 2017. Negotiations are expected to drag on for years as the nations tussle over politically sensitive topics like food safety standards and market access for Big Pharma.
Dmitry Grozoubinski, a consultant and founder of ExplainTrade.com, said the US has “aggressive” expectations, but could easily walk away from this deal if it doesn’t extract the terms it wants.
That happened when the US walked away from the Trans-Pacific Partnership (TPP) deal in January 2017. The US also recently called it quits on extended negotiations with the European Union on the now-defunct Trans-Atlantic Trade and Investment Partnership (TTIP).
Unfortunately for the UK, the Americans are in a much stronger position. The UK government has promised its citizens that it will work to strike free trade deals with countries around the world after Britain leaves the European Union. The US — which is Britain’s largest trading partner after the EU — is under less pressure to follow through.
The ability to get this deal done within the next few years all “depends on how much flexibility the two parties have,” Grozoubinski said. “If the UK just gave in on everything, it could be done in a year.”
But the UK won’t want to allow the US to extract too many concessions. The British government will want to protect its food standards and guard its industries from unfair competition, as well as ensure fair government procurement standards and dispute resolution policies.
The US is known to move faster than other developed nations in striking trade deals. However, it could easily take two to four years to get this deal done, if it’s done at all, Henig told Yahoo Finance UK.
Unfortunately for both sides, true negotiations can only start after the United Kingdom has finalised its future trading relationship with the EU. The timing of that is still uncertain as the Brexit divorce deadline this month is expected to be extended.