Liam Fox pins his hopes on a US trade deal in services
But as the UK already has a trade surplus with the US, it won’t be a piece of cake to get. The US manufacturing & agricultural bodies aren’t likely to be happy about being sidelined either.
According to the Financial Times, UK trade secretary Liam Fox has set his sights on an ambitious UK-US trade deal on services. The newspaper reports allies of the trade secretary saying such a trade deal would be “the big prize”. It would also avoid disputes and controversy over imports from the US that don’t currently meet UK (and EU) standards – their chlorinated chicken and hormone-injected beef are just two examples.
But just as negotiating a new trade deal with the EU hasn’t turned out to be as easy as Fox has previously said it would be, negotiating a services trade deal with the US is not going to be a piece of cake either. There are several reasons for this. As the Financial Times highlights in its report, a trade deal on services is unlikely to be high priority for the US – particularly as the president is more interested in boosting its manufacturing sector. The US also has powerful manufacturing and agricultural bodies who won’t take too kindly to being cut out of the picture.
Also important to note is that the UK currently has a trade surplus with the US in both goods and services. The latest ONS report on trade with the US shows the UK had a trade surplus in services of £27bn. The US priority for any trade deal with the UK would be to reduce this. And like the EU, the US is a powerful trading power. It has a market of 300 million people to the UK’s 65 million people. With the UK about to leave the biggest trading bloc in the world, there is more impetus for it to agree new trade deals.
So not only is the UK more motivated to get a trade deal, the US will only support a trade deal that will reduce its trade deficit with the UK. The odds certainly seem stacked against the trade secretary. There is also another complication to agreeing a trade deal focussed only on services: the fact that services trade deals are so difficult to negotiate, they very rarely happen. Indeed, the UK’s successful services economy is in large part to the single market and the fact it reduces non-tariff barriers to zero. There is no other trade deal in the world that matches it.
Perhaps, a bigger worry for Britons over a trade deal with the US is what the UK will be willing to concede to get one. The Financial Times reports the US already refused to include financial services in the failed trade negotiations (for the Transatlantic Trade and Investment Partnership) with the EU. And financial services is the UK’s most profitable sector. So, to help smooth the path for a services trade deal with the US, would the government, for instance, open up the NHS to US companies? This is certainly a piece of detail that Britons will want to be aware of before the government rushes into a deal.