On his recent visit to the UK, the US president Donald Trump said that “the US is committed to a phenomenal trade deal between the US and UK”. He said that there is “tremendous potential in that trade deal” and that it could increase by 2 or 3 times the trade being done now.
A UK trade deal with the US
The groundwork for a potential future free trade agreement was begun in July 2017 with the establishment of a US-UK Trade and Investment Working Group. The aim of the Working Group is to provide commercial continuity for UK and US businesses, workers and consumers as the UK leaves the EU and to explore ways to strengthen trade and investment ties. In October 2018, the Trump Administration notified Congress that the President intended to negotiate a trade agreement with the UK once it leaves the EU. The US then set out its specific negotiating objectives in February 2019 including addressing both tariff and non-tariff barriers. Formal discussions on a US-UK trade deal can only start once the UK leaves the EU. There will be many hurdles to be overcome in concluding a trade deal not least what is to be included in the deal.
The UK-US Mutual Recognition Agreement (MRA)
In the meantime the UK and US have signed the UK-US MRA which covers the conditions under which each country will accept conformity assessment results from the other. It covers electromagnetic compatibility, telecommunication equipment and good manufacturing practice of pharmaceuticals. These UK goods can be tested in the UK against US regulations and can then be sold in the US without additional testing in the US and vice versa. The UK and US also have a separate MRA covering marine equipment. Agreements on trade in wine and on the mutual recognition of certain distilled spirits/spirit drinks have also been signed.
These agreements will take effect when the EU-US agreement no longer applies to the UK and will ensure there is no disruption to trade of these products when the UK leaves the EU.
An EU-US trade deal
Following the ending of the negotiations on the Transatlantic Trade and Investment Partnership (TTIP) with the US in 2016, Commission President Jean-Claude Juncker met with President Trump in 2018 to discuss ways of easing trade tensions. Both sides pledged to work together towards zero tariffs, zero non-tariff barriers and zero subsidies on non-auto industrial goods. In a Joint Statement signed by both sides in July 2018 they also agreed to work to reduce barriers and increase trade in services, chemicals, pharmaceuticals, medical products as well as soybeans. They agreed to launch a close dialogue on standards in order to ease trade, reduce bureaucratic obstacles and costs. Finally they agreed to work together to protect American and European companies better from unfair global trade practices. This would include working on reform of the WTO, addressing unfair trading practices including intellectual property theft, forced technology transfer, industrial subsidies and distortions created by state-owned enterprises and overcapacity.
Since July 2018 the EU and US have been working to implement the actions agreed in the Joint Statement and the Commission has now been given the green light to start formal negotiations on a trade agreement strictly focussed on industrial goods, excluding agricultural products, and on an agreement on conformity assessment to make it easier for companies to prove their products meet technical requirements on both sides of the Atlantic. President Juncker said “we want to slash tariffs on industrial products as this could lead to an additional increase in EU and US exports worth around €26 billion”.
Last reviewed 21 June 2019