Liz Truss has admitted that a UK-US trade deal, long seen as one of the biggest prizes of Brexit, is not on the horizon, as she arrived in New York on her first overseas trip as prime minister.
Brexit supporters insisted that the 2016 Leave vote would open the way for a free trade agreement with the US, which would dwarf trade deals with countries such as Australia or New Zealand.
But President Joe Biden has made it clear that such a deal was not a priority and on the flight from London to New York, Truss admitted it was not on the agenda.
“There aren’t currently any negotiations taking place with the US and I don’t have an expectation that those are going to start in the short to medium term,” Truss told reporters en route to the UN General Assembly.
Her frank assessment ahead of a meeting with Biden in New York leaves a hole in the government’s post-Brexit trade strategy, a core part of Truss’s ambition to boost the UK’s growth rate.
Boris Johnson’s government replaced a deep trade deal with the EU, Britain’s biggest trading partner, with a more basic trade agreement that threw up numerous barriers.
The argument ran that Britain would compensate for lost trade with Europe by striking trade deals around the world, such as the one agreed last yearwith Australia.
Truss said her focus was to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, along with trade deals with India and the six countries of the Gulf Cooperation Council.
“Those are my trade priorities,” Truss said. Asked when she thought a trade deal with the US might be feasible, she declined to comment.
A leaked UK government document in 2018 assumed a US trade deal might boost Britain’s gross domestic product by 0.2 per cent in the long term, compared with official forecasts suggesting that Brexit would cut GDP by 4 per cent in the long term.
The analysis said deals with countries including India, Australia and nations in the Gulf and south-east Asia might add a further total of 0.1-0.4 per cent to GDP over the long term.
Truss’s downbeat comments on a putative US deal partly reflect the fact that Biden and the US Congress are in no hurry to conclude a trade deal with Britain, as well as the wider politics around her visit to New York.
When Truss meets Biden on Wednesday, post-Brexit trading arrangements in Northern Ireland are expected to come up.
Biden wants Truss to settle a row with the EU on the issue and some Democrats have warned the UK that there can be no trade deal unless the matter is resolved.
Truss’s allies said the prime minister wanted to “decouple” the issues, making it clear that her tough stance on the Northern Ireland protocol would not be affected by threats of trade reprisals, especially as no deal was on the table.
In May, Nancy Pelosi, Speaker of the US House of Representatives, warned that unilateral UK legislation to scrap the protocol, which is being pushed through parliament, could endanger Britain’s prospects for a free trade deal.
“Our relationship with the US goes far beyond talk of trade deals,” said one ally. Talks with Biden at the UN on Wednesday will also focus on policy towards the war in Ukraine and broader security co-operation.
Truss said: “The number one issue is global security and making sure that we are able to collectively deal with Russian aggression and ensure that Ukraine prevails.”
The prime minister added that it was important that Europe and G7 countries worked together “to make sure we are not strategically dependent on authoritarian regimes”.
Source: Economy - ft.com
