The negotiation of a free trade agreement between the United States and the United Kingdom comes at a time of enormous economic and political uncertainty. The economic impact of Covid-19, which has had a devastating impact on the UK, has fuelled an unprecedented large-scale government lending programme to mitigate the slowdown. There is also a growing likelihood of a minimal deal between the EU and the UK – or not at all – by the end of the year, which could lead to a significant loss in value of the pound sterling against the dollar. Although British exports would become cheaper, making the market for goods, services and intellectual products more competitive, household budgets would be under severe pressure and thus limit the potential to purchase American goods. Every trade agreement aims to eliminate tariffs and other barriers to trade. It will also aim to cover both goods and services. On 23rd October the British government signed a new trade agreement with Japan, which means that 99% of British exports there will be duty-free. British and U.S. negotiators have created a general framework for a comprehensive free trade agreement, but the upcoming U.S.
presidential election puts pressure on the timeline to reach a broad agreement (the U.S. trade promotion agency that allows Congress to accelerate a potential agreement ends in July 2021). January 2021 could also be a particularly difficult time for the UK in the event of an abrupt halt to its participation in European supply chains and standards. But if both sides can overcome these hurdles, a free trade agreement between the US and the UK could align the UK economy with North American markets and perhaps justify closer steps towards integration with the US-Mexico-Canada deal. If a UK-US free trade agreement cannot be concluded by the end of the year, the British government will not be able to immediately demonstrate the benefits of Brexit, while the British people will know the costs vividly. But even if satisfactory formulas are found for all these delicate issues, a “free trade relationship” would be less “free” than the internal market and would entail real economic costs. When RAND produced its 2017 After Brexit Study, we tried to estimate the economic impact of these non-tariff barriers in a free trade agreement scenario. We used as a criterion the non-tariff barriers that now exist (and are well documented) for TRADE between the US and the EU. The UK and the EU are negotiating a trade deal that will start on 1 January 2021, when the new UK-EU relationship will begin. The European Union (EU) and Australia have officially launched a negotiation process on a free trade agreement (FTA), a process that is expected to take as many as 5 years. Public statements by both sides announcing the start of the process of negotiating a free trade agreement marked a significant departure from the well-known tensions and difficulties that date back to the late 1950s.
Britain`s accession to the then European Economic Community in 1973 meant that it had to align its trade policy with the much-contested European Common Agricultural Policy (CAP). This had been implemented in the late 1960s and provided unlimited reasons for the antagonism between Australia and the EU. But over time, the trade agenda of both sides has changed with new players and agreements, and some of the previous mechanisms no longer provided for trade liberalization as planned. Both the EU and Australia have evolved – part of this change is due to new political actors and new economic realities. Despite the tormented history between them, and aware that some might be skeptical of this change of heart, realpolitik often forces its own political will, and new needs can contrast sharply with past relations. The prospect of a free trade agreement shows how the badges of history could be hijacked by a stronger, almost opportunistic, sense of economic benefits, no matter how small they may seem. As these two maritime nations map new bilateral trade waters, there will be exciting economic benefits to deal with and dangerous shoals to avoid while using a new navigation compass: the UK`s withdrawal from the European Union and its single market. Over the past 47 years, the UK has adhered to EU standards and regulations rather than the US.
The reorientation of the UK market away from the European Union, its largest export market, is in itself an important strategic decision. The overall economic impact of Brexit could reduce UK GDP by 5-10%. In addition to a free trade agreement between the US and the UK, the UK will also have to negotiate its trade relations with other countries, particularly with Commonwealth countries such as India and Australia, which may be promising and potentially challenge or reduce elements of a US-UK free trade agreement. But where will the country go in the future? A selective and independent way? The United States or a North American trade orientation? A Commonwealth approach? An orientation towards the Pacific? In the nineteenth century, the United Kingdom was the most powerful trading nation in the world. The United States took its global place in the twentieth century. If the twenty-first century is indeed the century of the Pacific, with China as the dominant new trading nation, the combination of the world`s largest and fifth largest economies (the United States and the United States, respectively). the UK) create enough geoeconomic ballast in the form of a US-UK free trade agreement (FTA) to offset China`s rise? With a common culture and language, would these two digital commerce innovators be able to “win” the future of technological innovation and shape the digital economy? Can they penetrate the digital future with democratic norms? Interview with Bruce Gosper, CEO of Austrade, May 2015. . .