US and UK in early talks over trade deal

Posted on July 14, 2016

U.S. Oil Workers Threaten To Expand Strike To California Port...An Orient Overseas Container Line (OOCL) container ship waits to unload cargo in this aerial photograph taken above the Port of Los Angeles in Los Angeles, California, U.S., on Wednesday, Feb. 18, 2015. United Steelworkers members who help run crude terminals at a California port are threatening to join a national oil workers' strike at U.S. refineries. Photographer: Patrick T. Fallon/Bloomberg©Bloomberg

The Obama administration has begun preliminary discussions with senior UK officials about how they might pursue a trade agreement between the two countries following Britain’s exit from the EU, according to Washington’s top trade official. 

The discussions, which Mike Froman, the US trade representative, revealed on Thursday, coincide with a growing push by Republican Brexit supporters in Congress for President Barack Obama to launch talks on a commercial pact quickly.

    They also highlight how quickly the president and his administration have backed away from his warnings before last month’s referendum that Britain would be at the “back of the queue” for any trade deals with the US if it voted to leave the EU. 

    Mr Froman said he had discussed Britain’s plans and a possible bilateral trade pact with a number of senior British officials since the referendum. In the past week alone he spoke with Sajid Javid and Mark Price, the UK’s outgoing business and trade secretaries. He had not yet spoken with Liam Fox, the incoming minister for international trade in the new government of Theresa May, who took over as the UK’s prime minister on Wednesday. 

    But Mr Froman warned that there was still significant uncertainty surrounding what sort of agreement the US and UK would or could negotiate, primarily because a lot depended on the exit deal and trading relationship with the EU that Mrs May’s government ended up negotiating. 

    “What precisely they negotiate with their other trading partners will depend in part on what model they develop in their relationship with the EU,” Mr Froman told a breakfast discussion organised by the Christian Science Monitor.

    “Will they have sovereignty over tariffs? Will they have sovereignty over regulations? . . . Until you get more clarity around that it’s hard to determine precisely what kind of trade relationship they might be able to negotiate with others.” 

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    Members of the EU are not allowed to negotiate their own trade deals with other countries outside the bloc. However, Mr Froman said British officials clearly believed that they could have “discussions” with the US and other trading partners while the UK was still in the EU. 

    “Where discussions end and negotiations begin I think is quite a grey area and I think this is something we are going to have to continue having dialogue about,” he said. 

    The UK’s vote to leave the EU, Mr Froman said, was also prompting the US to revisit its three-year-old negotiations with the EU over a Trans-Atlantic Trade and Investment Partnership, with Britain accounting for 25 per cent of US exports to the EU. 

    “The UK is a very significant part of the EU and a very significant part of what makes TTIP attractive,” Mr Froman said. 

    Among the options being batted around was the idea that the UK might eventually join a TTIP deal once it had worked out its relationship with the EU, he said. 

    The special relationship between our two countries must be fortified as the UK navigates the process of withdrawing from the EU

    – Orrin Hatch, Senate finance committee chairman

    The administration’s preliminary discussions come alongside a groundswell of support from Republicans in Congress for the UK’s move to leave the EU, with many seeing it as an opportunity to strengthen the relationship between London and Washington. 

    Trade already sits at the centre of that. Kevin Brady, chairman of the influential House ways and means committee, and Orrin Hatch, who chairs the Senate finance committee, introduced a resolution on Wednesday calling for the president to begin discussions over a trade agreement with the UK. 

    “The special relationship between our two countries must be fortified as the UK navigates the process of withdrawing from the EU,” Mr Hatch said. 

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