City thinking, local knowledge

Why Doesn’t the UK Have a Trade Deal with the US?

By Questa Chartered

“Get Brexit done,” Boris Johnson famously said in his party political spoof of Love Actually just before the last General Election.

Well, Brexit got done and – with International Trade Secretary (now Foreign Secretary) Liz Truss leading the way – the UK embarked on a series of deals with other countries, most notably applying to join the CPTPP, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

The CPTPP is arguably the world’s largest trading bloc, comprising 11 countries including Japan, Mexico, Australia and Singapore, with China also apparently looking at joining.

One country that is not a member of the CPTPP is the US, with Donald Trump having withdrawn from the agreement early in his presidency.

Neither, so far, does the US have a trade agreement with the UK, with the Guardian reporting in September that hopes of an early deal had all but vanished following Boris Johnson’s meeting with US President Joe Biden.

Very clearly Boris Johnson saw a US/UK trade deal as one of the key benefits of Brexit, and it is fair to assume that one would have been done – or close to being done by now – had Donald Trump still been in the White House.

The priorities of the new Democratic administration are very different, however. Previous Democrat President Barack Obama said that if the UK left the EU, it would be “at the back of the queue” for a trade deal, and the Biden camp seems to be taking a similar line.

Biden himself has made no secret of his love for Ireland. Ten of his 16 great-great-grandparents came from Ireland. Adapting a quote from James Joyce, Biden has said: “[When I die] north-east Pennsylvania will be written on my heart. But Ireland will be written on my soul.” Biden may look to tie any agreement on trade to deals over the Irish border – which will be strongly resisted by the UK.

At the time of writing, it therefore appears more likely that the UK may look to join the broader US-Mexico-Canada (USMCA) free trade agreement. This replaced NAFTA, the old North American Free Trade Agreement, updating areas such as intellectual property and digital trade.

This may not be quite the headline-grabbing, photo-opportunity trade agreement that a US/UK deal would have been, but it would still represent access to a significant trading bloc with a combined population of around 470m.

On the other hand, if Boris Johnson is still Prime Minister, he may only have to wait until 2024 to resurrect the prospect of a deal with the US. Who is the bookies’ clear favourite to be the Republican nominee in 2024? That would be one Donald J Trump…

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