Monday, June 17, 2024

The issue of the United States – United Kingdom trade deal


British Prime Minister Boris Johnson says he has negotiated an “excellent” pact with the European Union, but opposition MPs say it’s worse than his predecessor Theresa May’s deal. Britain’s manufacturers have responded to the Prime Minister Jonson’s Brexit deal with deep misgivings. According to media reports, the lobby group for the engineering and manufacturing industries, “Make UK”, said though it was relieved at the possibility of leaving the European Union with a deal, the new agreement failed in several important ways to overcome the concerns of its members, not least the transition deal, which stretches to just 14 months, and the lack of commitments to maintaining the closest possible trading relationship with the European Union.
The Guardian reported that warning follows a letter last week from industry chiefs to the Brexit Secretary, Stephen Barclay, warning him the deal posed a “serious risk to manufacturing competitiveness”. Clearly distressed by the government’s push for a harder Brexit than was agreed by Theresa May, chief executives from the aerospace, automotive, food and drink, chemicals, and pharmaceutical sectors, said their main concern was being excluded from European Union regulatory institutions which is a move that would diminish their influence and increase their costs.
In any case, the 31st of October, the last day of Britain in the European Union looms large. British Prime Minister Boris Johnson’s career may be ‘dead in a ditch’ or maybe the ‘do-or-die’ strategy produces a deal or possibly something else. One thing is for sure, Britain does not need a specific trade deal with America, other than the one it already has. The proof of that statement comes from a largely unreported but an extensive 2018 cross-Whitehall study of the costs and benefits of Brexit. It estimated, in its own words – “that a United States free trade agreement would increase United Kingdom GDP by only 0.2 per cent after 15 years“, a tiny fraction of the expected loss of trade from the European Union and additional costs of Brexit during that time.
The warnings given to government about Brexit have come thick and fast, especially in the last 12 months where time has allowed more in-depth analysis of the likely effects of Brexit – deal or no-deal. These warnings have come from the most respected organisations and institutions in Britain such as the Confederation of British Industry, Department for International Trade, Bank of England, The Office for Budget responsibility, and Centre of Economic Performance. Then there have been industry sectors such as financial services, motor, agricultural and even the United Kingdom Warehousing Association that have issued warnings of the scale of problems that various forms of Brexit brings.
Last week, another warning was also issued. This time according to a leaked government document written by civil servants at the Department for Environment, Food and Rural Affairs. The Financial Times has published an article that highlights this warning where Ministers have been bluntly told that the United Kingdom’s efforts to strike a United States trade deal after Brexit could “severely limit” Britain’s ability to negotiate an equivalent agreement with the European Union.
The document written by civil servants at the Department for Environment, Food and Rural Affairs suggests the United States is likely to press the United Kingdom to relax measures to protect humans, animals and plants from disease, pests and contaminants ahead of finalising a trade deal. President Donald Trump’s administration is pushing for access to the British market for United States chlorine-washed chicken and hormone-fed beef, which both fall short of the European Union’s so-called sanitary and phytosanitary standards (SPS).
Richard Cook, a retired federal government analyst argued that the United Kingdom is expected to come under pressure from the United States to allow more imports by American agri-foods companies by relaxing rules governing animal welfare and pesticide residue levels, among other things. The leaked document, which was prepared for United Kingdom’s Environment Secretary Theresa Villiers last month, outlines the potential consequences of the United Kingdom acceding to President Trump’s demands for a less stringent approach to sanitary and phytosanitary standards standards as Britain seeks free-trade agreements with countries across the world.
The document further stated that “Any significant movement could have implications for our other free-trade agreements or export arrangements, which are based on existing standards. In particular, agreeing to the United States asks could severely limit our ability to negotiate an agreement with the European Union.  European Union concerns about the risk of non-compliant goods entering its territory would, for instance, be heightened if the United Kingdom acceded to United States demands on chlorine-washed chicken.”
The Defra document also acknowledges that relaxing sanitary and phytosanitary standards standards in the United Kingdom in order to get a United States trade deal could damage public health. “Weakening our sanitary and phytosanitary standards regime to accommodate one trade partner could irreparably damage our ability to maintain United Kingdom animal, plant and public health, and reduce trust in our exports,” it says. In certain circumstances it could even lead to the European Union imposing a hard border on the island of Ireland to protect the bloc’s single market, adds the paper. The leaked document also suggests that the Department for International Trade will press Defra to accede to the President Trump administration’s demands.
European Union has a more conservative approach to environmental and food policy than the United States, including on sanitary and phytosanitary standards. Liz Truss, United Kingdom’s Trade Secretary, said that while she was “proud” of Britain’s high environmental standards she wanted to take “a much more free-market approach”. In the meantime, the United States is pressing the European Union even harder for it to reduce its standards by ramping up the beginnings of its trade war – a trade war that the European Union could do without as its economy is stalling, especially with the threat of Brexit and a global economic slow-down becoming more certain. And like Britain’s warning, the European Union has its own report published in late August which cautioned of the serious risks of a trade agreement for public health, consumer rights and the environment by doing a deal with the United States.
In “Trading Away Protection” lobby watchdog Corporate Europe Observatory laid out the attempts of United States negotiators to launch a renewed attack on European Union precautionary measures for the safety of chemicals, food and GMOs, while also explaining that European Union negotiators are pushing for United States acceptance of European Union product approval rules, so-called conformity assessment, which has proved highly flawed in sensitive areas such as medical devices.
The trouble is – it looks like the European Union will buckle first under the pressure of fighting on multiple economic fronts. The result is that the spectre of an emerging Transatlantic Trade and Investment Partnership (TTIP) style deal has just raised its ugly head once again. These meetings are being held in secret given that public reaction to the last Transatlantic Trade and Investment Partnership deal caused waves of protest across the 28 nation trading bloc and America before it was dropped two years ago. Corporate Europe Observatory trade researcher Kenneth Haar said “The worst thing that could happen would be both sides getting their way. European Union safety standards for chemicals, GMOs, pesticides, and foods would take a massive hit and the United States would see some of its product approval systems undermined by a more lax European approach.
Kenneth Haar further noted that the result could be consumers in the European Union being forced to eat non-labelled gene-manipulated foods that have been treated with toxic pesticides, while patients in the United States could wind up with unsafe implants. This must not be allowed to happen. It is provoking to see European Union negotiators once again keeping their moves in the dark. There is even less transparency around the current negotiations than there was around Transatlantic Trade and Investment Partnership. While the European Commission is consulting in-depth with European corporations, the public is not kept informed in any meaningful way.

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