US states courted for deals on financial services after US tariffs on steel and aluminium lifted.
A look at the improving UK trade with US and Canada
While all eyes have been on the possibility of a large bilateral deal with the US, the two governments have been reaching across the pond to strike small deals that amount to great improvements in future trading opportunities – in part because of the poor trading relationships between the US and EU.
"Despite Biden" deals with the US are being struck
1. British beef and lamb
In September 2020 the US lifted its 1996 ban on British beef introduced because of 'Mad Cow disease'. Its value is estimated at £66m over five years.
In December 2021 the US lifted its 1989 ban on British lamb estimated at £37m over five years to British farmers.
2. US mini deal to limit metals tariffsUnder the negotiated agreement, the US is suspending its 25% tariff on the first 500,000 UK steel exports per year, and likewise the 10% levy on the first 21,600 aluminium products. Any imports above the quotas will have to pay the tariff rates and there will be certification and audits to ensure that there is no subsidised product coming via China.
To balance the concessions agreed to by the US, the UK Government agreed to lift its corresponding tariffs on US bourbon whiskeys, motorbikes and jeans.
The origin of the tariffs was due to the trade dispute between the EU and the US over the various subsidies claimed to have been made by the EU to Airbus in the form of soft loans. The World Trade Organisation eventually ruled in favour of the US, the fine to be recouped through tariffs. These hit all EU members even though the UK was in the exit zone after voting to leave in 2016.
3. US States start unlocking the door to UK financial services
Trade minister, Penny Mordaunt, undertook a tour of New York and Washington in December last year and has again been on the road to US States to discuss improving mutual business opportunities.
In February Mordaunt held discussions in California, Tennessee, Georgia, South Carolina and Oklahoma. California has an economy larger than France.
Although tariffs on goods can only be negotiated by President Biden, agreements can be reached on non-tariff barriers dealing with financial services with individual States.
OBSERVATIONS
"Despite Brexit" should become "Despite Biden"
It was meant to be the 'jewel in the crown' – winning a trade agreement with the United States – but it wasn't to be. The idea was killed when President Donald Trump was not re-elected and the misty-eyed Irish romanticist Joseph Biden became US President. After that, the chances of any movement towards a deal were always going to be held hostage against the falsehood that ending the Northern Ireland Protocol would undermine the Good Friday Agreement. And so it has proved.
Still, there is always a Plan B – and that has been to win the incremental gains that make sense for both countries. So, "Despite Biden" the US bans on British lamb and beef and the substantial part of tariffs on British steel and aluminium have been ended. These are significant victories and at least make a start. Likewise the removal of tariffs on Single Malt Scotch Whisky, UK cheese, cashmere and machinery agreed in March 2021.
And then there is Plan C – approaching individual States to set up agreements to remove non-tariff barriers that get in the way of financial services – the most lucrative export that Britain could have to the US. This could be worth billions through joint ventures. Were these deals to be realised – and Britain has better relationships with State Governors than it does with the White House – then not having a formal FTA with the US may become an irrelevance.
Then comes setting up improved deals with Canada and Mexico and from that the Pacific-rim CPTPP (Comprehensive and Progressive Agreement for Trans-Pacific Partnership). "Despite Biden" might just become like "Despite Brexit" – no obstacle at all. Oh, the irony!
This article first appeared on Facts4EU.org
