Liz Truss has claimed bolstering transatlantic trade could help the economy bounce back from the Covid-19 crisis, as negotiations with Washington over a free trade deal begin by video link.
Despite the government’s negotiating objectives for the deal pointing to a modest economic gain of 0.16% of GDP over 15 years, the international trade secretary said she was keen to “make it even easier to do business with our friends across the pond”.
“The US is our largest trading partner and increasing transatlantic trade can help our economies bounce back from the economic challenge posed by coronavirus,” she said.
What are the UK government’s ‘five tests’ for ending lockdown restrictions?
The UK government has said that these five tests have to be met before they will consider easing coronavirus lockdown restrictions:
- The NHS has sufficient capacity to provide critical care and specialist treatment right across the UK
- A sustained and consistent fall in daily deaths from Coronavirus
- Reliable data to show that the rate of infection is decreasing to manageable levels across the board
- Operational challenges including testing and personal protective equipement (PPE) are in hand with supply able to meet future demand
- Confident that any adjustments to the current measures will not risk a second peak of infections that overwhelms the NHS
The independent Office for Budget Responsibility has suggested that if the lockdown lasts 12 weeks, it could knock 35% off GDP – although the impact is expected to be temporary.
Priorities for the government in the talks include securing more access for the City of London’s financial firms to the US market – though the prime minister has also highlighted the potential gains for small exporters, pointing to trade barriers affecting products including British pork pies and shower trays, for example.
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Donald Trump, meanwhile, has previously described the potential for a deal as “massive”.
The first round of talks, which begin on Tuesday and last a fortnight, will involve 100 officials in Truss’s Department for International Trade (DIT), and 100 on the US side.
Truss and her US counterpart, Robert Lighthizer, will kick off the negotiations with a conference call. “As we sit down at the negotiating table today be assured that we will drive a hard bargain to secure a deal that benefits individuals and businesses in every region and nation of the UK,” she said.
Prof Anand Menon, of the thinktank UK in a Changing Europe, said prioritising the US deal appeared surprising at a time when long-distance trade was being hampered by the absence of transatlantic flights.
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“On the surface, Liz Truss is right: if you trade more with the US it can help,” Menon said. “But it will help only a tiny amount; and the other thing is, the vast majority of freight is transported on passenger planes – and there aren’t any. So at the moment, it is far harder to trade with places far away: and it’s not at all clear when that’s going to change. So it’s a peculiar moment to take that gamble.”
The negotiations begin against the backdrop of scant progress in talks with the EU27 over the details of the future relationship – including the practical implications of the Irish protocol.
Ministers have nevertheless insisted they will not request an extension to the status quo Brexit transition period, which is due to come to an end in December.
The shadow international trade secretary, Emily Thornberry, said: “We should all be extremely wary of a President in search of a diplomatic victory, and a Tory government desperate to fill the post-Brexit trade void with a deal on any terms that Donald Trump wants.
“Labour will therefore insist that any proposed trade deal is subject to proper parliamentary scrutiny, and we will not let the interests of the British people be sacrificed, either to boost the profits of US corporations or to fill the Tory trade void.”
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