Global Economy

Trade deal with the EU is a priority ahead of one with the US, Britain's finance minister says


Boris Johnson and U.S. President Donald Trump meet at the UN headquarters in New York on September 18, 2017

Brendan Smialowski  | AFP | Getty Images

The U.K.’s priority is to strike a trade deal with the European Union ahead of the U.S., the country’s Finance Minister Sajid Javid said. This came after U.S. Treasury Secretary Steven Mnuchin said that the U.S. was a “bit disappointed” not to have been able to negotiate with the U.K. first.

“In terms of our next steps on free trade, one of the big ones is with our European friends and partners, getting that new comprehensive free trade agreement where the principles have been agreed upon. That’s off to a good start,” Javid said Wednesday as a panelist on CNBC’s ‘Future of Financial Markets’ panel alongside U.S. Treasury Secretary Steven Mnuchin, IMF Managing Director Kristalina Georgieva and UBS Chairman Axel Weber.

Getting a deal with the U.S. is also “a huge priority for us,” he added, while noting “we’ve already started working closely together (toward that goal).”

Pressed on which deal was the priority, one with the U.S. or EU, Javid said, “Of course our first priority is getting the agreement with the EU.”

The U.K. is due to leave the EU on Jan. 31, and the government has set a deadline for a trade deal with the EU for the end of 2020, a short time frame that many officials in Europe see as unfeasible.

While the U.K. is free to negotiate other trade deals during this “transition period” out of the EU, any other trade agreements — for example, one between the U.S. and U.K. — could only enter into force at the end of the transition period with the EU.

Going first

Earlier in the panel, U.S. Treasury Secretary Mnuchin had said that the U.S. wanted to strike a trade deal with the U.K. in 2020 but said the U.S. would have preferred to “go first” in terms of negotiations, rather than the U.K. negotiating a trade deal with both the EU and U.S. at the same time.

“I was pleased to see you say that you’d do us and Europe at the same time,” Mnuchin said tongue-in-cheek to Javid during the panel, quickly adding: “I was a bit disappointed. I thought we’d go first. They (the Europeans) might be a little bit more difficult to deal with than we are, anyway.”

Earlier Wednesday, President Donald Trump told CNBC that “we’ve already started negotiating” a trade deal with the U.K. Javid said that having a trade deal between the largest economy in the world and the U.K., the sixth-largest economy in the world, was going to mutually benefit consumers and the jobs market.

One point of contention between the U.K. and U.S. will be Britain’s intention to introduce a digital services tax in April that will place a 2% tax on the revenues of search engines, social media platforms and online marketplaces that derive value from U.K. users.

France planned to impose a similar tax on sales generated by tech firms in the country, but on Tuesday the U.S. and France declared a temporary truce pausing the tax that would hit U.S. tech giants hardest.

Javid said the U.K. would not do a U-turn on the digital services tax but wanted to find an international solution.

“We plan to go ahead with our digital services tax in April, and it’s important, as we said when we first introduced it. It is a proportionate tax, and it’s deliberately designed as a temporary tax, so it will fall away once there is an international solution,” he said.



READ SOURCE

Leave a Reply