Source: US/UK trade agreement a long way off

Source: US/UK trade agreement a long way off

The campaign to take the UK out of the EU was characterised by rejection of expertise. For the more gungho Brexiteers, leaving and its consequences are still largely impervious to reasoned argument or even simple arithmetic. A case of sorts can in fact be made that a hard Brexit and loss of markets doesn’t matter because Britain will just get new trade agreements all around the world, but it is not a very good case. When it comes to timing, there is no case at all.

When Theresa May visited President Trump with undue haste, there was a lot of talk of an early UK/US trade deal. The Centre for Transatlantic Relations at Johns Hopkins University reckons that is not going to happen. In its annual ‘Transatlantic Economy‘ report for AmCham EU it says that America would be wise to let UK-EU relations settle down before shaping its own relationship with the UK.

The report authors reckon it will take until the middle of the next decade for a new UK-EU agreement to take effect.

“Keeping this in mind, both the U.S. and the UK (would)have more to gain from achieving some agreement with the EU than simply with each other, (and) each will want to ensure that whatever agreements they reach with each other serve to strengthen, rather than disrupt, their more significant commercial connections with the EU.”

“EU rules mean that London cannot legally begin negotiating a trade deal with Washington before the UK leaves the EU, which at the earliest will be March 2019. When Washington sets out to negotiate a formal bilateral deal with the UK, it will want to understand the UK’s new WTO commitments and the nature of UK-EU transitional arrangements following Brexit, as well as London’s end goals with regard to a deal with the UK’s largest trade partner, the EU. This will all take time.”

It is likely that Britain will eventually achieve a deal for tariff-free access of goods, but there will be barriers to services in general and financial services in particular. ” This will make a huge difference with regards to London’s role as a financial hub, may accelerate the rise of other European financial centers, for instance Frankfurt, and will reinforce U.S. interest in strong and predictable financial services procedures with the EU. It will also affect the U.S. approach to financial services in any U.S.-UK arrangement.”

Various versions of that point emerge again in this report: the US does business with the UK as an Anglophone EU country and as a point of access to the whole EU market. When that component is removed, the relationship and any agreement governing it would not just be different, it would be lesser.