• Bryan

UK-US Trade Deal In 2020

US Treasury Secretary Steve Mnuchin said that he was optimistic that a trade deal could be done with the UK this year.

Mr Mnuchin made the comments during a question and answer session at Chatham House in London on Saturday.

It seems the US Secretary of the Treasury is being more of a diplomat and saying what he thinks people in the UK want to hear, rather than the realism of a trade negotiator.

Trade agreements can be lengthy, complicated and difficult to resolve. Fact. This not just because of tariffs, but more significantly from existing non-tariff barriers, which are the rules and regulations that govern how countries trade.

For instance, in the area of health, the US is of the view that health and environmental standards in the EU are barriers to trade. Some of the commonly cited issues in this area are things like hormone-treated beef and chlorine-washed chicken, which are not permitted in the EU but allowed in the US.

The US has lower food safety standards than the UK and the EU, and would like to remove many of the valuable consumer health protection standards in order to agree on a trade deal.

If the UK decides to bring its food safety standards in line with the US, then that would make a trade deal with the EU difficult to achieve.

Environmental standards also pose a major challenge to the UK and the US reaching a comprehensive trade deal. For instance, the Withdrawal Agreement between the UK and the EU stipulates that current environmental standards should be maintained to ensure a level playing field in trade. 

It would be extremely difficult for the UK to lower its environmental standards in order to agree on a trade deal with US, because that would be a deal-breaker in any future comprehensive trade agreement with the EU.

The incentive for President Donald Trump to push for a deal with the UK this year is about politics - the US presidential election in November. Trump wants to have as many trade deals ready - partial (China) or comprehensive - by the time of the election.

Treasury Secretary Steve Mnuchin is pursuing the president's political agenda, but knows that there are major hurdles that may be impossible to overcome in any UK-US trade deal.


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