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Trump-backed US-British free-trade deal faces hurdles

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Wall Street Journal | 27 August 2019

Trump-backed US-British free-trade deal faces hurdles

By Emre Peker in Brussels and Jason Douglas

President Trump and U.K. Prime Minister Boris Johnson want to quickly strike a free-trade pact after Britain leaves the European Union. Resistance is already rising on both sides of the Atlantic.

The two leaders touted bilateral ties after Brexit, particularly on trade, at the Group of Seven major economies’ summit in France this past weekend. Once the U.K. isn’t bound by EU membership, Mr. Trump said Sunday, there won’t be an obstacle for an agreement.

“We’re working on a very big trade deal and I think it’s going to work out very well,” Mr. Trump said, without providing any details but adding that he expected to move forward “pretty quickly.”

Mr. Johnson echoed the sentiment, saying talks would yield a “fantastic” agreement, “once we clear up some of the obstacles in our path.”

Any U.S.-U.K. pact is only theoretical before Britain leaves the EU, now slated for Oct. 31. The U.K. will also be unable to strike any independent trade deal if it remains within the EU common customs area and subject to the bloc’s regulations. Mr. Johnson wants to rewrite a divorce package hammered out with Brussels by his predecessor, Theresa May, for a cleaner break.

Yet EU resistance to reopening negotiations and British opposition to such a decisive split cloud Mr. Johnson’s bid to deliver Brexit on his terms.

The stalemate has raised the specter of a messy no-deal Brexit that could further complicate the pursuit of a U.S. pact. Congressional Democratic leaders say they won’t approve an accord if Brexit undermines peace in Ireland by erecting a customs border between the Irish republic, an EU member state, and Northern Ireland, part of the U.K.

Britons in a poll of attitudes to a U.S. deal last year cited reduced food standards and American corporate involvement in public services among their greatest concerns. Two-thirds of those surveyed last year said they supported an agreement in principle.

Now, a broad coalition is mobilizing against a U.S. trade deal. British interest groups have called on London to align with European rules to safeguard their biggest market and integrated supply chains. Petitions expressing concerns over Britain’s public health system, farmers’ livelihoods, food standards and digital privacy have garnered roughly one million signatures.

The main opposition Labour Party is hostile to a U.S. trade deal on grounds including labor and environmental standards. It favors closer EU ties. Other opposition parties are also critical of a U.S. deal.

When Mr. Trump visited London in June, tens of thousands protested. Some dressed in chicken suits to mock American industrialized agriculture.

“Americans are, frankly, eating a lot of crap and it’s built into their production system,” said Nick Dearden, director of U.K.-based Global Justice Now, which campaigns against U.S. farming methods. “We don’t want to go down that road.”

Still, London and Washington aim for a quick trade agreement following six preliminary discussions between the two sides since 2017.

An agreement would boost U.S. exports to Europe’s second-biggest economy after Germany. It would also help Washington advance its trade agenda while talks with the EU and China are stuck and Congress holds up Mr. Trump’s renegotiated pact with Canada and Mexico.

For London, an accord would demonstrate Britain’s ability to secure major economic deals as it divorces from the EU, its biggest trading partner. It could also provide a lifeline to crucial U.K. industries, including finance and business services.

American and British businesses from tech companies to farmers are keen to export their goods, and standards, across the Atlantic.

Annual trade in goods and services between the U.K. and U.S. tops $230 billion. Roughly 20% of British exports each year go to the U.S., making it the U.K.’s largest market outside the EU. Americans account for the biggest share of foreign investment in Britain at some $425 billion.

Mr. Johnson on Sunday urged Mr. Trump to lift trade barriers that prevent U.K. exports and services from lamb to shipping. The prime minister previously singled out Britain’s powerful services industry as a priority.

While championing Britain’s exit from the EU, the White House is also making tough demands on London, such as access to British markets for American farmers, who have been largely shut out because of strict EU rules. The U.S. is also targeting the low prices the U.K.’s state-run National Health Service pays for pharmaceuticals, calling for fair, transparent and nondiscriminatory access to Britain’s drug market.

U.S. industries called on the administration to press the U.K. to untether from strict EU rules that have impeded American access.

The U.K. hasn’t yet formally declared its goals for the U.S. negotiations. Mr. Johnson pledged to uphold strict food and animal-welfare standards in any trade accord, despite risking a clash with the U.S.

The NHS, he said, would be off-limits to U.S. firms.

“There is a lot of pressure from the U.S. side to have the NHS opened up as part of a trade deal,” said Sonia Adesera, a doctor and Keep Our NHS Public campaigner.

Her petition to keep the health-care system from trade talks garnered half a million signatures after Mr. Trump suggested it would have to be part of the deal. She said, “I’m not reassured when I hear Boris Johnson making statements that NHS ‘is not for sale.’ ”

Farmers and consumer groups echo similar sentiments.

The U.K.’s National Farmers Union wants verbal guarantees translated into law, said Tom Keen, the organization’s EU exit and international trade adviser.

“We have been consistently clear that we will not compromise our standards in pursuit of a trade deal,” said a U.K. Department for Environment, Food and Rural Affairs spokeswoman. British officials say Brexit is a historic opportunity to launch new support programs for agriculture and boost farm exports, based on the U.K.’s tough animal-welfare and environmental rules.

The farmers union and other groups—representing agriculture environmental activists and consumer interests—are lobbying Parliament for legislation to safeguard U.K. standards in trade deals. Otherwise, some farmers said, Mr. Johnson could sacrifice British agriculture to secure a pact with the U.S.

British agriculture could struggle if it gets shut out of the EU, its biggest market, while having to compete domestically with an influx of low-price American goods.

“U.S. producers have a scale that we don’t have in the U.K.,” Mr. Keen said. “They’re very price competitive, but there are some reasons behind that—they don’t have some of the regulations we have on environment and animal welfare.”


 source: Wall Street Journal