Trade Tuesday: The ‘Special Relationship’
For #TradeTuesday, in honour of Valentine’s Day, we took a look at one of the most well-known political relationships, the so-called ‘Special Relationship’ between the UK and the US.
Peter Tulupman from SEC Newgate US explains the US’ approach to trade with its partner across the Atlantic
When it comes to international politics, the USA and UK’s ‘Special Relationship’ is often viewed through the lens of foreign affairs. But our trading relationship is just as romantic. As the world’s largest economy, it is no surprise that most global economies are keen to forge and maintain a relationship with the US and the UK is no different. America remains the UK's number one trading partner, responsible for around 16.7% of the UK’s total trade. For the US, the UK makes the top ten as America’s seventh-largest trading partner, with trade between the two being $273 billion in latest figures. Given the significance of this economic relationship, it is perhaps surprising that trade negotiations have stalled, especially as there is appetite for an agreement on both sides. From a US perspective, this is true for particular states. For example, the state of Nebraska is pushing hard to resume talks with the UK. Nebraska is the leading beef exporter to Europe and wants to see a deal with the UK to help open markets. While with the UK is desperate to increase its ethanol blending requirements for all gasoline from 5 per cent to 10 per to midwestern farmers.
As Prime Minister Boris Johnson wished President Joe Biden a Happy Valentine’s Day yesterday, both partners will be hoping the ‘Special Relationship’s strength endures in the trade arena, and momentum returns for free trade agreement (FTA) negotiations between the two countries to expand this relationship.
Emily Chen from SEC Newgate UK writes about the British position to trade between the two countries
The FTA negotiations between the UK and the US stalled following the 2020 election, and no schedule has been announced for talks to resume and instead, there have been discussions between both on the threat of tariffs. Last March, the US, EU and UK agreed to end tariffs for four months, and in June 2021 it was agreed that tariffs (previously 25% as part of the Airbus/Boeing trade dispute) for single malt Scotch and Irish whisky would be suspended for five years. In January 2022, UK Secretary of State for International Trade Anne-Marie Trevelyan and US Secretary of Commerce Gina Raimondo met in an effort to reach an “expeditious outcome”.
Johnson’s No 10 was said to be nervous about the Biden administration’s approach to trade, particularly after the warm overtures of the Trump administration to getting a deal done (notwithstanding the pressure points around agriculture, food and drink, and digital services). It is no secret Biden is not a fan of the UK’s decision to leave the EU, and he has been vocal in his criticism of the UK Government and concern over the Northern Ireland Protocol and the potential risk to the Good Friday Agreement.
However, given the US is the UK’s largest trade partner, a dialogue on trade between our two nations is essential and indeed, does continue in other forums aside from official negotiations. Most recently, the Secretary of State for International Trade Anne-Marie Trevelyan visited the US in January 2022 to discuss steel negotiations, with Trevelyan commenting that “more can be achieved” in the economic partnership.
In a speech in Atlanta, Minister of State for Trade Policy Minister Penny Mordaunt argued that a trans-Atlantic agreement between our two countries would be centred around the shared democratic values, and that a deal would improve communities, businesses, and investment opportunities in both nations. These ideas and arguments are not novel, nor specific to the UK and US, and while the relationship between the UK and US is referred to as ‘special’, the current situation that ‘special’ does not always necessarily mean ‘close’.