In visits to London on the eve of Brexit last month, top Trump administration officials were publicly enthusiastic about the prospects for a trade deal with the UK. Mike Pompeo, the US secretary of state, said Washington would work as “quickly as we can” on a deal with London, and Steven Mnuchin, the Treasury secretary, said the UK was “top of the list” for a new commercial pact.
But the optimistic statements masked concerns that disagreements between London and Washington in areas ranging from trade itself to security are clouding the launch of the negotiations.
While both Donald Trump, the US president, and Boris Johnson, the British prime minister, have pointed to a sweeping bilateral trade deal as one of the biggest prizes of Britain’s departure from the EU, the talks may struggle to rapidly yield the comprehensive pact that the two leaders had imagined.
The biggest strain between the two countries — over Huawei’s access to Britain’s 5G networks — came to the forefront last week, as London decided to give the Chinese telecommunications company a limited role in building out its platforms, despite the White House’s desire for it to be shut out.
“Certainly from a tone perspective, it’s not a great way to start,” said Amanda Sloat, a senior fellow in the Center on the US and Europe at the Brookings Institution.
The two longtime allies have also been increasingly at odds over London’s planned digital services tax, the Trump administration’s threats of more tariffs on automotive imports and the fate of the Iranian nuclear deal — all areas in which Britain has been more aligned with European capitals than it has with Washington.
“The US is discovering just how European the UK really is,” said Heather Conley, director of the Europe programme at the Center for Strategic and International Studies, a Washington-based think-tank. “There are so many differences right now, I don’t know how tough the Trump administration is going to be.”
Ever since Donald Trump won the White House in 2016, successive conservative British governments have known that Washington was sympathetic to Brexit and eager to reward London for its decision to leave the EU.
Trade officials in both capitals set up a joint US-UK working group to begin preparations for the formal talks, and the US administration even published its negotiating objectives for a wide-ranging agreement.
For Mr Johnson, a trade pact with the US offers an opportunity to show the opportunities of Brexit, even though the government’s own internal estimates suggest that any gains would be negligible. Yet the symbolism of a deal appears more important to Downing Street than the economic reality.
Many Conservative MPs, including the prime minister, see themselves as Atlanticists rather than Europeans and talk up a deal with Mr Trump over an agreement with the EU, Britain’s biggest trading partner. Liam Fox, who served as international trade secretary under former prime minister, Theresa May, described a UK-US agreement as a “big prize”.
Ms Sloat said that on a “macro level” an agreement was still in the “interest” of both governments. But she warned that there were also “a lot of things in the bilateral relationship that are going to make it more complicated”.
For all his effusiveness, Mr Pompeo last week refused to put any firm timeline on a possible deal and cautioned that the talks could well get testy. “Sure, it’ll be complicated. And there’ll be places that will be very contentious. Both negotiating teams will want to preserve things for their own country,” he said in an interview on the LBC radio channel.
There is still no formal date for the beginning of the talks, since the UK itself has yet to publish its own negotiating objectives. The White House, Treasury and US trade representative declined to comment.
The negotiations come as the Trump administration’s economic team is turning its attention increasingly towards Europe, after securing a pause in its trade war with China, and securing a renegotiation of the Nafta pact with Canada and Mexico.
But US officials will be wary of closing any meaningful deal with London until the terms of Britain’s trading relationship with the EU are clear, since that will determine how closely, and in what areas, the UK’s regulations will remain aligned with Brussels. US business groups have said it is more important to get a comprehensive agreement in place than conclude a shallow one more rapidly.
“With the UK we should be talking about a full-on [free trade agreement] but we don’t know when we can do such a thing,” said one US business lobbyist tracking the talks. “The reality of these negotiations is going to come up against the realities of all trade negotiations instead of the timelines that politicians like to talk about.”
Trade-related tensions have intensified notably in recent weeks. The US has vowed to hit the UK with tariffs on cars and car parts if it proceeds with its digital services tax — and has not given any indication that it would exempt Britain from tariffs placed on EU imports in retaliation for subsidies to Airbus.
Liz Truss, Britain’s trade secretary, has been in dialogue with her American counterparts and is pressuring the Trump administration not to impose further tariffs on British exports, such as Scotch whisky.
British officials have insisted that politically sensitive issues are off the table for any trade deal. These include loosening agricultural import standards to let US farmers sell more goods to Briain, from chlorine-washed chicken to genetically modified crops. London has also denied that they would allow provisions giving US pharmaceutical and healthcare companies greater access to the British market.
The Trump administration has already hinted that it plans to take a hard line, particularly on farm goods, which could make it hard for the talks with the UK to advance. “I’m sure the ag issues will be difficult. Our ask will be as it has been in the other negotiations, we need to be open and honest about competitiveness,” Mr Pompeo told LBC. “We need to make sure we don’t use food safety as a ruse to try and protect a particular industry.”
Source: Economy - ft.com
