U.K. hopes to increase U.S. trade after Brexit

A U.K.-U.S. investment working group has been created that could lay the groundwork for future free-trade deals

NEW ORLEANS, La. — The United Kingdom hopes that its strong trading relationship with the United States will help the two grow even closer after the U.K. severs ties with the European Union March 29.

A trade deal between the two could grow from a strong basis, said Sarah Clegg, head of trade policy in the British Embassy in Washington.

“The trade relationship is already very strong. We have a trillion dollars invested in each other’s economies and the trade relationship is worth over US$200 billion a year and every day one million U.K. citizens go to work in the U.S. and one million U.S. citizens go to work in the U.K.,” she said.

“We created a U.K.-U.S. investment working group that could lay the groundwork for future free trade agreements,” she said at the National Cattlemen’s Beef Association convention in New Orleans, held from Jan. 29-Feb. 2.

The NCBA is interested in future beef exports and wants to know the requirements. Clegg would not say whether a deal would accept hormone-treated beef.

“We will have regulatory autonomy but we may decide in certain sectors to stay aligned with the EU just to allow for frictionless trade because that will be in the interest of the U.K. economy,” she said.

The complex Brexit negotiations are fast approaching a deadline for a deal.

British Prime Minister Theresa May negotiated an economic partnership but on Jan. 21 the British Parliament rejected it. Since then an amendment to May’s plan was accepted that allows the prime minister to continue negotiations.

“It is quite clear now that there is a majority in the British Parliament for the U.K. to leave the EU with a deal. There is also a majority against a no-deal Brexit,” she said.

Once the British are on their own, new trade agreements can be negotiated.

“During that period, we will be able to negotiate and ratify free-trade agreements with third countries and that will include the U.S.,” said Clegg.

While some regulatory alignment with the EU will likely be necessary to promote frictionless trade with that bloc, the U.K. will have its own tariff rates and a new agriculture policy. A third of the EU budget goes to support the Common Agriculture Policy with it rich subsidies. The U.K. would likely phase out those subsidies in favour of supporting agriculture innovation and environmental programs, said Clegg.

If no exit deal is reached between the U.K. and the EU, trade would be governed by World Trade Organization rules. Agriculture tariffs could be high. Dairy averages 35 percent. If the U.K. does not place duties on EU goods, it must have no tariffs on goods from every other WTO member.

The U.S. beef industry is interested in exporting to the U.K., said NCBA trade attorney Gary Horlick.

Last year, the U.K. imported about $1.7 billion worth of beef but 86 percent of the imports came from EU countries. For those outside Europe, there is a 52 percent tariff on fresh and chilled beef.

“The U.K. has pretty high barriers to foreign beef imports and that is why most of the beef comes from other EU members,” he said.

The U.S. will not displace British beef producers but will target other exporters.

“There is competition but there is no reason we couldn’t sell beef there,” said Horlick.

The U.S. exports about 2,000 tonnes to the U.K. each year.

Ireland is a major supplier offering grass-fed beef.

Last year, Ireland exported 615,000 tonnes of beef, 247,000 tonnes of pork and 57,000 tonnes of lamb. About half of the red meat exports were destined for the U.K.

Brexit negotiations are top of mind because Ireland and the U.K. want to maintain strong trading relationships, said Dale Crammon, councillor for agriculture and food at the Embassy of Ireland in Washington.

“Ireland wants to grow exports. But there is a limit to what we can do as well. Land is restricted. Our major growth has come on the dairy side and there is a real possibility to drive dairy exports,” he said.

Agriculture is a major industry for Ireland and an ongoing point in negotiations is managing the border between the Republic and Northern Ireland. A hard border with customs checkpoints is not desirable because of the high number of crossings. There are currently no physical barriers between the two.

“I don’t think the British public, when they were voting for Brexit, gave much consideration to the issue of the border in Ireland,” he said.

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