Bloomberg | 23 March 2022
US, UK seek to deepen ties in absence of free-trade deal
By Eric Martin and Alex Morales
U.S. and U.K. officials said they’re looking at new ways to deepen economic cooperation, even as President Joe Biden’s negotiator suggested that a traditional free-trade agreement may not be the best approach to addressing the challenges faced by the two nations.
The sides finished two days of talks in Baltimore on Tuesday, dubbed the “Dialogues on the Future of Atlantic Trade,” by saying that they’ve started an important conversation about trade aimed at better spreading benefits, broadening cooperation and boosting prosperity. They plan to meet again next month in Scotland.
Yet differences were on display at a closing news conference. U.K. International Trade Secretary Anne-Marie Trevelyan said that her government “absolutely” stands ready to work on a free-trade deal, a prize long eyed by Prime Minister Boris Johnson. U.S. Trade Representative Katherine Tai suggested that such a deal may be archaic and that new approaches are needed — though she didn’t want to hastily rule out such a pact either.
A free-trade deal is “is a very 20th-century tool,” Tai said. “It has its place certainly in the toolbox,” Tai added, saying that she wants to make sure that the approach by the two nations is “maximally responsive, and that we don’t spend years and spend a lot of blood, sweat and tears working on something that isn’t going to be relevant to the needs of our people and our economy.”
The signaling from the U.S. is a blow to the U.K. prime minister, who held out the prospect of a quick FTA with the world’s biggest economy as one of the great prizes of Britain’s departure from the European Union. Business groups on both sides of the Atlantic also have made clear that they would like to see the nations negotiate an agreement, though such deals have often proved controversial with progressive Democrats.
Asked if the U.S. plans to resume official negotiations started under President Donald Trump, Tai deflected, saying she preferred instead to focus on the outcome of the current dialogue and the conversations happening behind closed doors.
“I don’t want to prejudge or predetermine or prescript where these dialogues take us,” Tai said. “Give us some space behind closed doors to innovate, almost like in a tech incubator. Let us talk through and ask ourselves new sets of questions. Not, how do I beat your regulatory system into submission, or fend off your attempts to beat mine into submission, but how can we align.”
Traditional free-trade deals involve a lowering of each country’s tariffs to allow more market access and boost export opportunities. Over the years they’ve been criticized by progressive groups, who say that they lead to unfair competition, and that aspects like investor-state dispute settlement mechanisms, where companies can sue countries through FTAs, unfairly benefit corporations and weaken the standing of workers and consumers.
The U.K. recently signed free-trade deals with Australia and New Zealand, and Tai was a key architect of the labor provisions of the U.S.-Mexico-Canada free-trade agreement that went into effect in 2020.
Whether it’s called a trade agreement or something else, the important point is for the U.S. to demonstrate leadership to write the rules of the global economy at a time of immense change and conflict, said Jake Colvin, president of the National Foreign Trade Council, a business-lobbying group.
“The great thing about trade pacts is that they evolve to meet current needs,” said Colvin, who attended the dialogue on Monday. “USMCA looks a heck of a lot different than the U.S.-Canada pact of the 1980s.”
The conclusion of the two-day meetings also saw an agreement to ease tariffs on British steel and aluminum, resolving a longstanding irritant as the nations work to strengthen trade and integration.