FTG Blog - U.K.'s Fox in U.S. to Make Case for Quick Post-Brexit Trade Deal

U.K.’s Fox in U.S. to Make Case for Quick Post-Brexit Trade Deal

Trade Secretary Liam Fox will meet with his U.S. counterpart in Washington on Monday as the U.K. seeks to prepare for a trans-Atlantic trade deal as soon as possible after leaving the European Union. Fox, who said on Sunday it will be a “difficult discussion,” is expected to hold talks with U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross before meeting members of Congress during a two-day trip. He will then travel to Mexico and Texas in a search for post-Brexit trade partners.

“Our exit from the European Union offers an unprecedented opportunity to reshape our independent trading ambitions and build on the already strong trading relationship with our single largest trading partner — the U.S.,” Fox said in an email. A joint working group will “ensure we get to know each other’s issues and identify areas where we can work together to strengthen trade and investment ties,” Fox said.

Foreign Secretary Boris Johnson, who visited Japan last week, will be in New Zealand and Australia while Fox is in the U.S. Under EU rules, member states are not allowed to negotiate free-trade agreements, so the preliminary talks will only lay the groundwork for a deal after the U.K. leaves “consistent with our EU membership obligations,” Fox’s office said in a statement.

Removing commercial barriers with the U.S. could generate an additional 40 billion pounds ($44.6 billion) in trade with the U.K. by 2030, Fox said on Sunday, citing government calculations. Economists and trade specialists say any deal will be difficult to deliver because U.S. negotiators have more experience and could bulldoze the U.K. on issues such as agricultural and financial regulation.

‘Difficult Discussion’

“It will be a difficult discussion, but we’ve got great support from the United States and the administration,” Fox said on the BBC’s “Andrew Marr Show” on Sunday. “Agriculture’s always a very difficult issue” but “we’ll want to look at a whole range of other things, on financial services for example, and other parts of the service economy,” he said.

Fox will tell lawmakers in Washington on Tuesday that 700,000 U.S. jobs are supported by trade with Britain, and he’ll present them with a U.K. government report that outlines the impact on each of the 435 congressional districts, his office said.

The U.K. is already viewing a pact with the U.S. as a way for London-based banks to secure easy access to Wall Street, which might require weaker rules on financial services less than a decade after global financial markets collapsed. Washington could also demand looser regulations on food, such as allowing hormone-treated beef to be sold in Britain. There is also a split in Prime Minister Theresa May’s cabinet about allowing imports of chlorine-washed chicken from the U.S., according to Monday’s Daily Telegraph.

Talks on Hold

As Britain seeks its own agreement with the U.S., many of the same issues the EU and U.S. experienced in trying to negotiate a trade deal could resurface. Those transatlantic talks have been on hold since President Donald Trump took office in January, amid differences about data privacy and rolling back of financial regulation.

Opposition Labour Party leader Jeremy Corbyn challenged the U.K.’s willingness to strike a trade deal with the U.S. when Trump intends to withdraw from the Paris agreement on climate change. The EU has said it won’t enter deals with governments that haven’t joined the accord.

“That calls into question the whole of this government’s strategy on a one-off trade deal with the United States, which sounds awfully like the Transatlantic Trade and Investment Partnership to me,” Corbyn told the BBC.

While Fox said the trade agenda can be pushed forward with the U.S., the same can’t necessarily be said for negotiations with the EU. The second round of talks between Britain and the bloc ended with disagreements about the Irish border, the cost of the Brexit divorce, and citizens’ rights — issues that must be resolved before the two sides can turn to trade.

Transition Period

May has less than two years to secure her promised, wide-ranging free-trade arrangement with the bloc. Businesses and some ministers, including Chancellor of the Exchequer Philip Hammond, have advocated a transition period once the allotted time for exit talks is completed in March 2019.

Even the cabinet’s most hard-line Brexit supporters have been dropping opposition to the proposal.

“I don’t think that there’s any great ideological blockage on the concept of a transition or an implementation period,” Fox said on Sunday, backing away from a position he took two weeks ago. It could be as long as 25 months, he said, and the U.K. should be allowed to negotiate new trade deals during that time.

Fox said in a Bloomberg TV interview on July 13 that he would be “very happy” with a transition period of just “a few months.”