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US, UK Initiate Trade Talks Amid Economic Gloom and Doom

The U.S. and U.K. have officially begun negotiating their trade future.

U.S. Trade Representative (USTR) Robert Lighthizer and U.K. Secretary of State for International Trade Elizabeth Truss on Monday announced the formal launch of trade agreement negotiations between the two countries.

In light of the ongoing global pandemic caused by COVID-19, the first round of negotiations will be conducted virtually, with U.S. and U.K. negotiators engaging in discussions over the next two weeks in nearly 30 different negotiating groups covering all aspects of a comprehensive trade agreement. Both parties agreed that a Free Trade Agreement (FTA) would contribute to the long-term health of their economies, which they said is vitally important as they recover from the challenges posed by the global pandemic.

“An FTA is a priority for both countries, and we share a commitment to secure an ambitious agreement that significantly boosts trade and investment,” Lighthizer and Truss said in a joint statement. “We will undertake negotiations at an accelerated pace and have committed the resources necessary to progress at a fast pace.”

Julia Hughes, president of the United States Fashion Industry Association, said the organization supports the agreement, though it has made recommendations on certain aspects.

“Since the fashion industry is already integrated and works closely together, we recommended to the Trump Administration that they should have simple rules of origin that encourage manufacturing, meaning not the yarn-forward rules of origin in most other U.S. agreements,” Hughes said. “And we also recommend provisions to encourage harmonization of regulations and mutual recognition of each others’ regulations. We look forward to the negotiations and are optimistic that this agreement can be a new standard.”

Yarn-forward rules of origin generally require that the yarn used to form the fabric or garment must originate in one of the countries in the FTA to qualify for duty-free status.

Beth Hughes, vice president of trade and customs policy at the American Apparel & Footwear Association, said it welcomed the opening of negotiations for a trade deal with the U.K.

“As with any free trade agreement, it is important that the resulting deal remove trade barriers and open business opportunities,” Hughes said. “It is also essential that this FTA reflect the role of global value chains in today’s market, meaning that the provisions must work seamlessly with other FTAs and trade preference programs.”

Noting the countries’ “unique relationship” that stands “among the most important alliances in human history,” Lighthizer said the U.S. wants to “negotiate an ambitious and high-standard trade agreement with the U.K. that will strengthen our economies, support good-paying jobs and substantially improve opportunities for trade and investment between our two countries.”

Truss noted that the United States is the U.K.’s largest trading partner and that increasing trade between the two allies can help the economies of both countries bounce back from the economic challenge posed by coronavirus.

“We want to strike an ambitious deal that opens up new opportunities for our businesses, brings in more investment and creates better jobs for people across the whole of the country,” she said.

Lighthizer emphasized the urgency posed by the pandemic. “This current COVID-19 health crisis makes these talks even more urgent. While this is at first a health crisis, each of us is also facing an economic crisis perhaps like never before,” he said. “But we need to prepare now for the day when the health crisis recedes and lay the foundations for stronger, more resilient economies.

“This crisis has demonstrated how important it is to have strong and diverse supply chains with trusted trade partners to support our economies. It has shown that we need to have a healthy manufacturing base and workers and farmers that are thriving,” he added. “It has shown that depending purely on cheap imports for strategic products can make us vulnerable in times of crisis. Moreover, it has confirmed that we need to think carefully about our trade policies and how we work with our trading partners.”

The U.S. and U.K. announced the formal launch of trade agreement negotiations between the two countries, looking to boost their economies.

U.K. Secretary of State for International Trade Elizabeth Truss

The U.S. negotiating team will be led by Dan Mullaney, assistant USTR for Europe and the Middle East, while the U.K. negotiating team will be led by Oliver Griffiths, director for U.S. negotiations at the Department for International Trade. More than 200 staff from each government’s agencies and departments are expected to take part in the negotiations.

An opening plenary on Monday kicked off detailed discussions and will be followed by multiple virtual meetings from Wednesday through May 15. The negotiations build on work conducted through the U.S.-U.K. Trade and Investment Working Group that was established in July 2017, partly to lay the groundwork for these negotiations.

A comprehensive U.S.-U.K. trade agreement will further deepen the already very strong trade and investment ties between the United States and U.K. by creating new opportunities for American and U.K. families, workers, businesses and farmers through increased access to the other’s market.

The U.S. and the U.K. are the first and fifth largest economies in the world, respectively. Two-way trade between the two countries is worth about $269 billion a year.

Each country is the other’s largest source of foreign direct investment, with about $1 trillion invested in each other’s economies. Every day, around 1 million Americans go to work for U.K. firms, while around 1 million Britons work for American companies.

USTR notified Congress in October 2018 of the Trump administration’s intent to negotiate an FTA with the U.K., and in February 2019, USTR published the U.S. negotiating objectives for the U.K.

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