Is the UK on track to agree a post-Brexit US trade deal? What leaked papers tell us

Written by David Henig on 3 December 2019 in Opinion
Opinion

Last week’s leak gives some insights on trade talks, but the government needs to be more open to get the best results

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One of the most misleading questions to ask when considering future UK trade agreements after Brexit is whether Department for International Trade has enough negotiators and is therefore ready. Modern trade agreements cover such a wide range of topics that they involve nearly all departments as well as the devolved assemblies.

Public debate about the impact of a US trade deal on the NHS and UK food standards show why the Department of Health and Social Care and the Department for Environment, Food and Rural Affairs have to be involved, and in both cases there will be a devolved interest. But there are many other examples, such as the Department for Business, Energy and Industrial Strategy having ownership of sectoral interests such as automotive; the Ministry of Justice for discussions on whether inward investors should have recourse to private tribunals (known as Investor State Dispute Settlement or ISDS); the Intellectual Property Office for discussions on patents; the Treasury on tariffs; HM Revenue and Customs on customs procedures; and so we could continue.

We need to ask whether the whole of government is ready, and the leak of notes from UK-US trade talks provide us with that opportunity. So it’s good news that, as we’d hope to see, the UK side includes representation from across Whitehall in meetings with US officials. For example, discussions on digital trade include the Department for Digital, Culture, Media and Sport as policy owner, and on mutual recognition agreements include the Medicines and Healthcare products Regulatory Agency as a relevant regulator.


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What we can’t see is that each of these sessions with the US is likely to be prepared and debriefed with an even wider range of relevant departments and agencies, to ensure that the UK’s approach truly represents the whole of government. This is one of the most time consuming parts of trade negotiations.

The discussions covered are not yet negotiations, and it is clear reading them that the UK has at present few agreed policies. For example, most of the sessions for which we have notes for meeting 5, in November 2018, consist of discussion of the chapters agreed by the US in their updated trade agreement with Mexico and Canada (USMCA). It is important to note that it is entirely normal for trade negotiations to start with both sides asking questions of the other.

However, this also indicates one problem the UK faces, and why talks may therefore take longer than is currently expected. For at the moment, when asked about the UK’s approach to different policy areas we can only talk about the current situation, not that which may evolve after Brexit. To take an example which arose in the election campaign, the US and other trade partners will want to know the UK approach to state aid, but this may take some time to develop after Brexit. When granting preferential access, you want to be sure that a country will not gain an unfair advantage – the sort that generous state aids could provide.

Another problematic area for future UK negotiation is the role of devolved administrations. For example, in discussions around state-owned enterprises, in round five the US asked about the UK’s “sub-central” level and was told that to an extent these details are still being worked out. In round three, a note says the UK will need to be ready to answer US questions “regarding the roles and powers of the devolved administrations”. Internal UK conversations have not been resolved at the time of writing, and we can expect the devolved administrations to make a strong case for inclusion on the UK side in talks.

The interface of US and EU talks is also made obvious in the notes. It is clear that the US expects the UK to move away from the EU regulatory approach, particularly in the area of food (SPS, or Sanitary and Phytosanitary in trade talks terms), and there was considerable deflation from the US around Theresa May’s Chequers proposals for a common rulebook with the EU, now of course abandoned by her successor. Another area in which the US wishes to see UK diverge from the EU is in voluntary standards and conformity assessment of products (TBT, or Technical Barriers to Trade). The UK will have to make a choice in these areas and as yet we know little about how this will be handled.

One interesting challenge the civil service faces is that the full extent of trade talks is not widely understood, including by those businesses who stand to gain or lose by provisions within them. Although the UK public consultation in 2018 yielded 600,000 responses, a huge number in any context, the level of detail in many I’ve seen from business is insufficient for government use in detailed talks. Subsequently, DIT has set up a number of expert advisory groups, but many of those involved remain sceptical the level of detail is right.

This leak may help a little with awareness, but the government needs to be more open to get the best results. This will include clarity that a trade deal sets rules for any part of trade between two countries, which could include elements such as the NHS and visas; that businesses have to be precise with their asks around removing current trade barriers; and that to get preferential access to a larger market like the US you need to pay a price, like adopting their food standards.

The papers do not help us to judge whether the UK is on track to conclude a successful trade agreement, not least given the uncertainty of the policy landscape. One final point of reflection is the difference between the message coming from the US to UK officials, of encouraging progress, and to other stakeholders in private, of a UK government hopelessly unprepared. This is all part of the game of trade negotiations, but speaks perhaps to a certain naivety on the part of UK officials. Trade talks take place between officials, but also involve businesses, NGOs, thinktanks and MPs, among others. The official-to-official exchanges are proceeding, but there’s a lot more to concluding a trade agreement.

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David Henig
About the author

David Henig is director of the UK Trade Policy Project at the think tank ECIPE, and a former UK civil servant who worked for three years on EU-US TTIP talks

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