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Hello from Washington, which is generating a lot of excitement as we enter the home stretch of this 2020 presidential election. Last week saw the final debate, with President Donald Trump and Democratic candidate Joe Biden clashing to find out if the United States is “turning the corner” on the coronavirus, as well as on topics ranging from race and immigration to energy and fracking.
Our main room today is about how the UK might change its mind to deal with a Biden government on trade. Tit for tat is with Susan danger, Managing Director of the American Chamber of Commerce to the EU, while the chart of the day illustrates the seasonal increase in fruit and vegetable imports from Europe for UK customers.
Is it time to “Bidenise”?
With the US presidential election just over a week away, foreign diplomats and traders are seriously bracing for the possibility of a Joe Biden administration. No one is doing it more than the “Global Britain” of British Prime Minister Boris Johnson, for whom the conclusion of this very important trade deal with the United States will prove the fruits of going it alone after leaving the EU.
Economically, even at best, the deal isn’t worth much to the UK. But politically, it matters a lot. At least for now. However, the Johnson government faces a difficult task. After dealing with Trump’s protectionist trade czar Robert Lighthizer, the UK faces a potential Democratic government with different diplomatic and trade priorities – in the words of one UK official, it must ‘bidenise’.
What does it look like? In a previous life, Biden supported many free trade agreements that Trump tore up or that Trump denounced against. He backed the Nafta’s much-hated trade deal with Mexico and Canada that voters in the Rust Belt states almost blame for the loss of factory jobs. He voted for the normalization of trade relations with China which paved the way for its ascent to the World Trade Organization in 2001.
China’s mood among American politicians and voters has changed dramatically since the early 2000s. Biden, knowing this, pivoted. Like Trump, he is now a Chinese hawk and advocates a certain protectionist trade policy designed to stop the rampage of globalization, including taxing US companies for their relocation and implementing federal government procurement rules that incentivize agencies. government to purchase products made in the United States. If he wins, we’ll likely see differences in approach and implementation compared to the Trump administration, but they share a common skepticism about unchecked globalization.
However, when it comes to concluding trade agreements, there will be differences in focus between Biden’s Democrats and Trump’s Republicans. Democrat lawmakers on Capitol Hill have traditionally focused more on environmental protection, workers’ rights and labor standards, and the UK will need to get the job done to ensure it can show itself. cares about a green future. It is already clashing in Brussels over including guarantees on meeting international climate change commitments in its trade deal, and now is expected to face the same from Washington.
When it comes to labor matters, you might think the UK, with its relatively developed laws and regulations, would be on safe ground. But a Democratic congressional aide pointed out that the party paid very close attention to labor abuse – and cited British media reports of garment factories operating under conditions similar to sweatshop conditions in Leicester (such as covered my colleague Sarah O’Connor) as something they noticed and didn’t like.
Also on Brexit, the UK will face a difference in attitude from Democrats. While Trump officials yesterday and today welcome the UK’s exit from the EU and favor a no-deal scenario, Democrats value alliances and will not applaud the withdrawal of the EU. UK without a deal in place. That said, the British are hopeful that as long as the Irish border issue is not messed up, Democrats can be appeased on anything that emerges from the deal negotiations.
But a huge difficulty is Biden’s own admission that commerce will take a back seat in his administration. “I will not sign any new trade agreement until we have made significant investments in our workers and our infrastructure,” he said last year, adding that his trade policy “would start at home, by investing in strengthening our greatest asset – our middle class “. That could mean Biden isn’t blazing fast in appointing his new chief trade representative, either. If he doesn’t win the Senate, it will also take a bit longer to confirm his nominations (as Republicans will have control over all the key committees to confirm his candidates).
For all of these reasons, the UK is hoping they can get a “kiln-ready deal” that Biden won’t waste any energy on. And, as we’ve previously reported, U.S. law governing how trade bills are passed by Congress expires in July. To be covered by this legislation and to ensure that the deal passes through Congress relatively quickly, lawmakers need to be notified that the deal is ready in April, and then come forward with the text about a month later. British officials are still fighting for this deadline. Hopefully they will find out how to Bideniser quickly.
Will the British have jam in January? As the graph below shows, UK imports of fruit and vegetables from the EU typically peak in the first quarter – just as customs chaos stemming from a brand new Brexit deal (or not) is likely to hit. ‘Being at its worst, like Chris Rogers, research points out S&P Global Market Intelligence analyst. This year has been a little unusual: Imports fell more sharply than usual as we approached summer, during the lockdown. Maybe all those cans of beans stored in March will come in handy after all.
Tit for tat
Susan Danger, Managing Director of the US Chamber of Commerce to the EU, joins us in answering three questions.
Do you expect a UK-EU trade deal to be concluded in the coming weeks and what form do you think it will take?
US companies remain very cautious but are encouraged by the latest statements from both sides. Negotiators should make the most of the little time left to strike a deal. Remember that a no-deal scenario would be a disaster for businesses of all sizes on both sides of the Channel. It is in the interests of both parties to remove barriers and ensure regulatory cooperation. I hope the deal will be as comprehensive as possible, within the limits of what is politically feasible. With citizens and businesses affected by a global pandemic, we must limit the uncertainty caused by Brexit, ensure stability in financial markets and urgently focus on recovery and growth.
What is the best way to heal transatlantic relations in the face of recent trade tensions?
The EU and the US must focus on a positive trade and investment agenda and work together on common challenges, such as WTO reform, digital standards and industrial subsidies. A step-by-step approach – making agreements on specific issues – is the best way to build trust, strengthen the relationship and ensure an ongoing dialogue. I would like to caution against terms such as “strategic autonomy”. Emphasis must be placed on intense transatlantic cooperation, especially as we all face the impact of Covid-19. Sixteen million jobs on both sides of the Atlantic depend on the EU-US partnership.
What is the most realistic way forward for the WTO that is likely to please the US and the EU?
The EU and the US both agree on the need to reform the WTO, so cooperation remains the only way forward. I see three priority areas in the revision of the WTO rules. First, plurilateral negotiations should be given a greater role in negotiations between member states. Second, the Secretariat’s surveillance role should be strengthened to improve the way governments submit notifications to the WTO. Third, the EU and the US should continue to discuss the future of the dispute settlement mechanism, as it remains an instrument of the multilateral trading system.
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