US economy

UK has no plans to strike US trade deal during Sunak visit

Rishi Sunak is set to ignore calls to secure a UK-US trade deal when he visits Washington next week for a bilateral meeting with President Joe Biden.

Talks to strike a post-Brexit trade deal were derailed by the Covid-19 pandemic and contentious issues such as whether to allow some US agricultural products into the UK market.

Some members of the US Congress had hoped that the negotiations could be revived after Britain and the EU struck a deal over trading arrangements in Northern Ireland earlier this year, removing a huge source of tension between Washington and London.

Brendan Boyle, a Democratic congressman from Pennsylvania, said in March that he hoped there would be trade discussions “in short order” as a result of the agreement — although the Biden administration has not prioritised forming full trade deals with other countries.

But when announcing Sunak’s trip to the US, Downing Street said on Tuesday the prime minister was not trying to secure a trade agreement, pointing out that there were already strong bilateral trading relations.

“We are not seeking to pursue a free trade deal with the US,” a Number 10 spokesman said. “It’s worth remembering the trade relationship, as it currently stands, is worth £279bn already. We have achieved all of that without an FTA.”

However the spokesperson said that the government would seek closer partnerships with some specific states including Utah, Texas, California and Oklahoma. The UK has already set up deals with North Carolina, Indiana and South Carolina.

These state-by-state agreements have typically been “memoranda of understanding” to cut barriers to trade and paperwork while promising collaboration in areas such as clean tech and energy infrastructure.

US states do not have the power to strike full trade deals with other sovereign nations, however, and so piecemeal agreements with individual states are potentially less lucrative for UK businesses than a full congressionally approved trade agreement, which could include elimination of tariff barriers. 

Last March, Washington agreed to ease steep tariffs on UK steel and aluminium as the two countries moved to resolve a Trump-era trade dispute. 

Downing Street said Sunak’s visit, on Wednesday and Thursday, would be a chance for the two countries to enhance their “co-operation and co-ordination” on issues including securing supply chains and transitioning to zero carbon.

“It will also be an opportunity to discuss issues including sustaining our support for Ukraine as we build on the success of our G7 summit in the run-up to the Nato summit in July.”

Meetings with business leaders and congressional figures are also on the agenda.

Sunak and Biden have met several times in recent months — in San Diego in March, in Belfast in April and during the G7 summit in Japan in May.

The UK did not have any bilateral trade deals for the 40 years it was inside the EU because all such policies for member states are conducted through Brussels.

Two of the new free trade agreements it has since struck — with Australia and New Zealand — will take effect this week.

White House press secretary Karine Jean-Pierre said the two leaders would discuss “efforts to continue strengthening our economic relationship” and that they would also “review developments in Northern Ireland”.


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